Compare bank interest rates Australia

Compare and calculate interest rates, returns, fees and more. - Last updated on 21 Oct 2019

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Comparing bank interest rates for term deposits in Australia is simple enough if you understand how interest rates are awarded.

Once you know, you can jump on a comparison site like RateCity and start comparing.

Term deposits are one of the most secure ways to invest your money. A term deposit in Australia offers a fixed return over a set term, with a government guarantee for deposits up to $250,000.

Being able to predict the return on your investment is what makes term deposits so attractive. This is possible is due to the interest rate being fixed to the term (or duration) of the deposit.

There are three things that will determine the fixed interest rate you're awarded on your term deposit:

  • The size of your deposit
  • The duration of the term
  • The frequency of interest paid

Banks generally operate on the premise that the longer you choose to invest your money in a term deposit, the higher the bank interest rate you will receive.

Term deposits vary in duration from one month to five years or more (in special cases). Interest rates generally work on a sliding scale; shorter terms get a lower rate, longer terms get a higher rate.

Of course, the larger your cash contribution, the compound effect on your fixed interest rate will result in a larger net profit at the end of the term.

Whether you secure the highest interest rate on offer from your chosen bank will also depend on how often you want the interest earned paid to you.

For some term deposits less than 12 months, you might only have the option of receiving interest at maturity. Other banks, though, may give you the choice of monthly interest payments.

However, if you opt to be paid interest at maturity (or the end of the term), you will usually be given the highest rate on offer for the term you’ve chosen.

Here are a couple of examples of how interest is applied to term deposits. This should help you understand how to compare bank interest rates in Australia.

  • A $10,000 term deposit taken out over 12 months, with interest paid at maturity, might receive a fixed interest rate of 2.20 per cent.
  • A $10,000 fixed term deposit taken out over 12 months, with interest paid quarterly, might receive a fixed interest rate of 2.00 per cent.

How do I choose the best term deposit?

Everyone’s financial situation is different, which is why term deposits are a great way to invest. You can open a term deposit with a small investment of $500.

The key to choosing the best term deposit for yourself is to first think about the term. The earning potential of a term deposit comes down to the bank interest accrued over a period of time.

If you open a term deposit and start dipping into your funds during the term, you’ll reduce the interest-earning potential of your principal. Not only that, you’ll be penalised for doing so.

Most institutions will reduce the bank interest rate you started the term with if you withdraw money within the term. They might also charge an administration fee for the service.

Something to keep in mind is that nearly all banks require a notice period of 31 days to withdraw money. That’s why when you invest in a term deposit, you need to ensure the term suits your situation.

When you’re shopping around for a term deposit, keep an eye out for special offers or bank deals. These are term deposits with higher bank interest rates offered for shorter terms.

Special offers come with set terms and conditions. You have a limited time to sign up for a special term deposit, and you will usually need a minimum deposit to open the account.

How do I sign up for a term deposit?

Signing up for a term deposit is the easy part. It means you’ve spent the time to carefully compare bank interest rates with the help of a comparison tool and maybe even a term deposit calculator.

If you found a term deposit you like at RateCity, you can simply click on the link for that product to go through to the bank’s website and join.

A term deposit can be opened in the same way you would open a bank account. This can be done in as little as 10 minutes online or at a branch.

The basic information you would need to provide is:

  • Identification (passport, driver’s licence, proof-of-age and/or Medicare card)
  • Australian residential address
  • Tax file number (TFN) or a TFN exemption

If you’re a tax resident in another country, you may need to provide a foreign tax number.

In addition to this, you would need the minimum deposit required and, depending on the bank, an existing (or new) bank account with that institution.


​Nick Bendel is a senior property and personal finance writer for RateCity, and an experienced journalist with numerous writing credits to his name. To date. He covers property, home loans, credit cards, superannuation and other bank products, and loves getting elbow-deep in the latest ABS, APRA and RBA data.​


^Words such as "top", "best", "cheapest" or "lowest" are not a recommendation or rating of products. This page compares a range of products from selected providers and not all products or providers are included in the comparison. There is no such thing as a 'one- size-fits-all' financial product. The best loan, credit card, superannuation account or bank account for you might not be the best choice for someone else. Before selecting any financial product you should read the fine print carefully, including the product disclosure statement, fact sheet or terms and conditions document and obtain professional financial advice on whether a product is right for you and your finances.

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