While some people love high-risk, high-reward investments, others prefer lower-risk options. High-interest term deposits are investments that can provide rewards while helping to minimise risk.
If you’re seeking investment options that are safer and more secure than some high-risk investments, then high-interest term deposits might be worth considering.
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Product | Max rate | Min. deposit | Company | Interest rate | Next rate increased | Features | Real Time Rating™ | Go to site | |
|---|---|---|---|---|---|---|---|---|---|
1.00% p.a for 36 months | $50,000 |  Term Deposit | 0.65% p.a for 6 months | Automatic Maturity Rollover Early Withdrawal Available Is Covered By Government Gurantee Joint Application Available Maturity Alert By Email Maturity Alert By Phone | More details | ||||
1.00% p.a for 12 months | $50,000 |  Term Deposit | 0.70% p.a for 6 months | Automatic Maturity Rollover Early Withdrawal Available Is Covered By Government Gurantee Joint Application Available Maturity Alert By Email Maturity Alert By Phone | More details | ||||
1.00% p.a for 12 months | $5,000 |  Term Deposit | 0.90% p.a for 6 months | Automatic Maturity Rollover Early Withdrawal Available Is Covered By Government Gurantee Joint Application Available Maturity Alert By Email Maturity Alert By Phone | More details | ||||
1.00% p.a for 5 months | $50,000 |  Term Deposits | 0.75% p.a for 6 months | Automatic Maturity Rollover Early Withdrawal Available Is Covered By Government Gurantee Joint Application Available Maturity Alert By Email Maturity Alert By Phone | More details | ||||
1.05% p.a for 3 months | $10,000 |  Term Deposit ($10k - $250k) | 1.05% p.a for 6 months | Automatic Maturity Rollover Early Withdrawal Available Is Covered By Government Gurantee Joint Application Available Maturity Alert By Email Maturity Alert By Phone | More details |
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What’s the difference between a term deposit and a savings account?
Term deposits and savings accounts have a lot in common. Both let you deposit your money in a bank or other financial institution, and both let you earn interest on your savings over time.
However, the two also have their differences, especially when it comes to accessing your money. With a savings account, you can deposit and withdraw money as you please. With a term deposit, you put a pre-set amount of money in the bank, which you can’t add to or withdraw until it “reaches maturity” at the end of the term. If you want to access your funds early, you’ll likely need to pay a penalty fee, and you may receive less interest.
What are the most important features of high-interest term deposits?
As the name suggests, one of the most important features of a high-interest term deposit is its interest rate. Many Australians search for the term deposits offering the best interest rates because this will affect how much interest they can earn on their investment. Because a fixed interest rate won’t change after the term has begun, it’s possible to calculate ahead of time how much interest you can earn on your term deposit.
Apart from a high interest rate, there are other features you can look for in a term deposit, such as the payment frequency. This refers to how often interest is paid on your investment, with common options including annually, quarterly, monthly or at maturity. This interest may be paid into a separate bank account to help support your household budget, or it may be added to your term deposit to earn compound interest.
Another feature to keep your eye out for is partial withdrawal allowance. Some banks allow you to withdraw a portion of your money before the end of your term without being charged a penalty fee. If you suspect you may need to withdraw some of your deposit during its term, you might consider choosing a term deposit with partial withdrawal allowance.
Keep in mind that term deposits offering more features and flexibility may not offer the highest interest rates. It’s important to compare your options and calculate how much interest your could earn on your deposit before making your choice.
How can you make sure you’re getting a high interest rate?
One of the best ways to work out if you’re getting a good interest rate is to compare term deposits. By looking at a range of different term deposit options from a variety of banks, you can not only work out which ones offer the best rates for you, but which ones also offer the features and benefits that should suit your needs.
It’s important to remember that the financial market is always changing, with average rates moving higher and lower. An excellent interest rate today might be entirely different to a great interest rate a year from now. When your term deposit approaches maturity, it may be worth doing some more research to work out if you’d prefer to roll your savings over in the same term deposit, or switch to another option.
How can I increase my term deposit earnings?
It can sometimes seem like you won’t have much control of your term deposit after your money is locked away. If you want to maximise your interest earnings, it’s important to do your research before you apply for a term deposit.
One way to maximise your earnings without too much effort is to find the highest interest rate possible by comparing different term deposits.
Another is to choose a special term deposit that offers compounded interest rather than simple interest. Compounded interest means that the interest you earn on your original deposit is reinvested, so you can earn interest on your interest, and potentially make more money in less time. However, term deposits that offer compound interest may not have the highest interest rates.
Keep in mind that the term deposit offering the highest interest rate may not always be the best option for your finances. For example, longer term deposits often have higher interest rates, but you’ll need to wait longer until you can easily access your money again, which may not be suitable for everybody.
What do I need to apply for a high-interest term deposit?
Applying for a high-interest term deposit can be similar to applying for a bank account.
First, you’ll need to provide your name, address and phone numbers, and verify your identity using your driver’s licence number or identification card. If your term deposit allows more than one person to hold the account, you’ll also need their name and personal details.
You may also need to supply your tax file number, so your bank can withhold the appropriate amount of tax.
You should also provide your bank account details, so you bank knows where to transfer your money at the end of the term.
Nick Bendel
Property Personal Finance Writer
A property and personal finance writer, Nick Bendel covers property, loans, credit cards, superannuation, and other bank products. Nick has previously written for The Adviser, Mortgage Business, Lifehacker, Business Insider, Yahoo Finance, and InvestorDaily, and loves getting elbow-deep in the latest ABS, APRA and RBA data.
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FAQs
The best interest rate for a fixed term deposit changes all the time, as interest rates move up and down and banks compete with each other to win market share.
To find the best interest rate for a fixed term deposit, it’s helpful to understand how interest rates are applied to term deposits.
There are three factors that determine the fixed interest of term deposits:
- The size of your deposit
- The duration of the term
- The frequency of interest paid
Term deposits vary in duration from one month to five years or more. Interest rates generally work on a sliding scale; shorter terms get a lower rate, longer terms get a higher rate.
Here are a couple of examples of how interest is applied to term deposits.
- 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.
Using the size of your deposit, the duration of the term and how often you want to be paid interest, you can shop around for the best interest rate for a fixed term deposit.
If you’ve been shopping around for a term deposit, you might be wondering which bank has the best term deposit rates.
Term deposit rates will generally be affected by the amount you choose to deposit and whether you opt for a short or long term deposit.
Longer term deposits tend to have higher interest rates than shorter terms. The trade-off for earning a higher interest rate on your term deposit is that you can’t access your funds for the duration of the term deposit.
When comparing which bank has the best term deposit rates, it pays to do your research and compare how your funds will fare over the short and long term.
Unlike home loans or savings accounts which give you the option of fixed or variable rates, term deposits are always fixed, which means you get a guaranteed amount of interest over the term of the deposit.
If you are a student who has managed to save some money and are looking for a safe investment option, you may be considering a term deposit. Most term deposits (and other bank accounts) are open to anyone who is at least 18 years old.
There are also some term deposits open to younger students, some even without an age limit. These term deposits are usually opened on the student’s behalf, by their parent or guardian.
A term deposit is generally a safe investment option, especially if you want to make sure you can’t touch your savings for a set period of time. If you are 18 or older, shop around for a competitive interest rate before committing. If you are under 18, speak to your parent or guardian to get started.
When you open a term deposit, you agree to lock your money away for a set period and earn a fixed amount of interest during that period.
Where everyday transaction accounts give you the flexibility to deposit and withdraw funds as frequently as you like, term deposits trade flexibility for higher interest rates.
Once your funds are deposited in a term deposit, they’re fixed for the length of the term, meaning you can’t add additional funds midway through the term.
When the term deposit matures, you may have the option to add additional funds and roll the funds over for another term, or you may choose to withdraw the money at that point.
If you have extra funds to invest, you could consider opening an additional short term deposit account or a high-interest savings account.
It’s worth noting that you can withdraw the funds midway through the term, but a penalty is likely to apply.
Yes, term deposits are covered by the Australian government guarantee.
Under the Financial Claims Scheme, the Australian government guarantees term deposits up to $250,000, capped at one person, per financial institution.
This means that your term deposit (if it’s $250,000 or less) is protected in the unlikely event the bank, building society or credit union collapses.
If you have more than $250,000 in a term deposit with one the one bank, for example, then only up to $250,000 of your principal is covered.
If you’ve got more than $250,000 and you wish to invest in a term deposit, you could consider dividing your money between term deposits and banks (limiting each deposit to $250,000 per bank).
That way all of your deposits are protected by the Australian government guarantee and you will not suffer any financial losses.
Term deposits are flexible, low-risk, and earn you interest over time. But before you apply to open a term deposit, you might be wondering: how do term deposits work?
A term deposit is an agreement you make with a financial institution. This agreement will specify a certain amount of money that you will give the bank for a certain amount of time. In return, you’ll earn a fixed amount of interest on your deposit throughout your term.
Term deposits work as an exchange between a financial institution and an individual. You can think of your term deposit as a loan to the bank. Because you’ve loaned the bank your money, they’re willing to pay you interest on your deposit.
The term deposit rate is the agreed interest rate for your term deposit. It remains fixed for the term of the deposit.
For example, if you deposit $5,000 for 12 months at a 2.5 per cent term deposit rate, that 2.5 per cent term deposit rate will be fixed for the entire 12 months and won’t change until the term matures.
The term deposit rate is one of the most important factors to consider when comparing your term deposit options. The general rule of thumb is that the longer the term, the higher the term deposit rate.
Term deposits are a popular type of investment because they’re safe and provide reliable returns.
The return you get on your term deposit will be determined by the amount you initially invest, the amount of time you choose to invest it for, and the term deposit rate.
Sometimes you only want to tie up your money for a short period, maybe because you want to make a quick return on a large sum, or just to have more flexibility and access to your money. That’s where a short term deposit can come in.
Short term deposits are usually less than 12 months (e.g. 30 days, 90 days, six months or 12 months), though you will still not be able to access your money for the length of the term without incurring a penalty fee.
At the end of the term, you can roll your deposit over, or you can withdraw it. An advantage of short term deposits is that you can take advantage of higher interest rates with a different financial institution, if they are available.
Term deposits can be a great way to build your savings, but before you invest, you might have one important question. Are term deposits safe?
When it comes to investing your money, you can choose between high-risk and low-risk options. High-risk options tend to have a better potential payout, but you also risk earning no profit at all or even losing your original investment.
Low-risk options tend to earn less profit than high-risk options, but they’re also safer, with little to no risk of losing money. Term deposits fall into the low-risk category.
Term deposits are safe because they’re low-risk, but they’re also protected by the Australian government’s Financial Claims Scheme. This government guarantee will insure your deposit for up to $250,000 per person, per institution, meaning that even if the bank collapses, the government will reimburse you for your deposit.