Compare the highest term deposits rates in Australia

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:

1. The size of your deposit
2. The duration of the term
3. 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.

While there’s no definite way to predict when term deposit rates will increase, it may help to understand some of the factors that influence term deposit interest rates.

The official cash rate is set by the Reserve Bank of Australia (RBA). When the RBA either increases or cuts interest rates, it influences the interest rates set by banks.

The other factor that determines when term deposit rates will rise is competition between banks. Banks may increase their term deposit rates or offer higher rates as an incentive to win new customers over or increase their market share.

Term deposit interest rates will also change, depending on how much you invest and how long you invest.

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.

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.

If you’re ready to add a term deposit to your financial strategy, there’s likely one question on your mind: what is the best term deposit rate in Australia?

Unfortunately, there’s no one right answer to this question.

That’s because if you want to find the best term deposit rate in Australia, you first need to understand the nature of interest rates themselves. The financial market is always moving, with interest rates moving up and down and special offers being introduced and withdrawn.

As a result, whatever the best term deposit rate in Australia is today might not be tomorrow.

So to find the best term deposit rate in Australia, it’s best to ignore the past and to instead focus on today’s market. Compare term deposits to find out the current rates and find the right term deposit for you.

“Can I negotiate a fixed term deposit rate with the bank?” you may be wondering.

Many banks welcome negotiation when it comes to term deposit rates, especially with deposits of over $100,000. Even if your deposit is lower than $100,000, it may be worth a discussion with your bank.

Negotiating with your bank could secure you a higher fixed rate, which will earn you extra interest over your term. You may also discover bonuses or special offers you can acquire through your bank.

Securing the highest interest rate possible is the key to making the most of your term deposit. You may have compared deposits online or discussed your options with a financial adviser, but you also might be wondering about negotiation in order to get a better rate.

One of the advantages of a term deposit is that this type of investment enjoys a fixed interest rate. This means that the interest rate that you have signed up for will not change during the period of your term deposit, regardless of rising or falling market interest rates.

However, it is important to be aware of the end of your term deposit. Once your term ends, whether this is in three months or three years, many banks will default to rolling over your deposit into a new term, sometimes with a lower interest rate. Once your term deposit rolls over, you will then be locked into this new fixed interest rate for another term.

Make sure to use the grace period at the end of your term to your advantage. Shop around for a competitive interest rate and reinvest your money accordingly.

If you’re ready to open a term deposit, there’s a lot you’ve already figured out. You’ve decided on the length of your term and found the best interest rate, but there’s something you still might be wondering. How do you calculate term deposit interest?

One of the easiest ways to calculate term deposit interest is by using a term deposits calculator. However, you can also estimate your total earnings on your own.

A fixed interest rate signifies what percentage of your original balance your term deposit will earn annually. For example, a deposit of $1,000 at an interest rate of 3 per cent will earn three per cent of $1,000 annually – meaning you’ll earn $30 of interest each year.

You can estimate your interest using three variables. Multiply together your deposit amount, interest rate, and term length and you’ll approximate the interest a deposit will earn. For example, if you invest in a term deposit for $5,000 at an interest rate of 3 per cent for two years, your interest would total $300.

A term deposit refers to when you lock your money in an account for a certain period of time and at a specified interest rate. You will not be able to access your money for the length of the agreed term without incurring a penalty fee.

A long term deposit generally refers to a term deposit that lasts for more than 12 months – which in some cases may be as long as 10 years.

Usually, the longer you store your money, the better the interest rate you’ll get, so a long term deposit will tend to pay higher interest than a short term deposit.

At the end of the term, you can roll over the money (plus the interest you’ve made during the term), or you can withdraw it all.

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.

Ultimately, whether term deposits will work for you will depend on your particular financial needs.

Term deposits can be a great way to get your money working for you. By locking it away and forgetting about it for a period of time, it can earn interest for you. If you have the interest paid on a regular basis, rather than at maturity, you can either have some extra spending money or you can reinvest it into the term deposit to compound.

Of course, locking your money in a term deposit means you cannot access it for the length of the term, without paying a penalty for early withdrawal. This can remove the temptation to spend the money, while it also earns interest.

Term deposits can be compounded, depending on what you choose to do with the interest.

There are two ways to receive interest from a term deposit: either a lump sum at maturity; or paid on a regular basis, usually monthly. If you get your interest paid regularly, you can get it paid into a transaction account, or back into the term deposit account. By using this second option, you’re getting interest paid on your interest. In other words, it’s compounding.

Having the money paid into a transaction account means you can access it for your day-to-day spending, while compounding the interest means you get a better overall return on your investment. Both have advantages, depending on your needs, but be aware that some term deposit accounts that pay interest regularly may offer a lower interest rate to offset the effect of compounding.

ING Direct offers several term deposit options for businesses looking to save over some time. 

The business term deposit rates ING offers are compounded annually, meaning that the interest earned after the first year is added to the amount you originally deposited. 

During the second year, the interest is calculated on the new amount. If you close the term deposit once it matures, you can ask for the money to be transferred to your business account either with ING or another bank. You can also renew the term deposit and choose to reinvest the total amount earned through the earlier term deposit. Alternatively, you can opt to renew with just the sum you originally deposited, and withdraw the interest earned.

You’ll need to deposit a minimum of $10,000 for at least 90 days if you open a term deposit with ING. In the current low-interest environment*, the annualised interest rate for a 90-day deposit is 0.05 per cent. This means you’d earn $1.25 over a three-month term if you deposit $10,000. 

If you opted for a longer time frame, such as two years, you’d get an annualised interest rate of 0.30 per cent on your deposit. If you deposited $10,000, in two years the interest accrued would amount to approximately $60. Again, this is an estimate only based on current rates.

* Rates correct as of January 2021

You may have heard that a term deposit is a type of investment, different to a traditional savings account. All investment comes with inherent risk, so it’s important to know how safe a term deposit is before committing.

Term deposits offer a fixed interest rate which is guaranteed, so you do not have to worry about rising or falling interest rates when investing. You can add up how much interest you will earn over your fixed term, and this will be paid into your account per the conditions of your term deposit.

Term deposits with authorised deposit-taking institutions are also guaranteed for up to $250,000 by the Financial Claims Scheme, so you don’t have to worry about the bank collapsing either.

The only inherent risk of a term deposit is if you may need to break it early. If this happens, you will need to pay a breakage fee and possibly sacrifice some of your interest as a penalty. But if you know you can invest a certain amount of money for a fixed period of time, you can rest assured that a term deposit is a safe investment option.

A term deposit is an investment savings account. A term deposit usually pays a higher rate of interest than a regular savings account, with the interest rate fixed for the term (or duration) of the deposit.

You can open a term deposit account for one month or up to five years depending on your investment goal, and invest as little as $500 to start earning a profit.

With a term deposit, you get to decide how much you want to invest (the principal or deposit), for how long (the term or duration) and the frequency of interest payments.

A term deposit represents a secure form of investment, unlike trading in shares or purchasing real estate. And a term deposit up to $250,000 is protected by the government guarantee.

Bendigo Bank offers businesses two types of term deposits - Standard and Gold. You can open a Standard term deposit by investing at least the specified minimum amount for a flexible investment period ranging up to five years. A Gold term deposit requires a larger minimum investment over a fixed term, which is currently one year.

However, you can’t add funds to a Standard term deposit after the first seven days, and any withdrawals before the review date need to be done on request. If you’ve opened a Gold term deposit, you can add more funds over the year, but withdrawals may be restricted just as with a standard term deposit.

A Standard term deposit’s interest rate depends on the amount deposited, the frequency of compounding interest, and the deposit term. Further, this interest rate may apply irrespective of how often interest is compounded. On the other hand, Gold term deposits usually offer a flat interest rate no matter how large or small the deposit, with the interest likely compounded every quarter. 

To find out about Bendigo Bank’s current business term deposit rates, visit the banks’ website.

The interest that you earn from your term deposit is considered taxable income. Because your term deposit interest is taxable, it should be disclosed on your annual tax return.

It’s important to note that circumstances may differ depending on whether you provided the account holder with your tax file number (TFN). If you did not supply your bank or other financial institution with your TFN, they are typically required to withhold tax from your interest earnings.

If you’ve invested in a deposit that lasts longer than 12 months, you’ll need to claim your earned interest in the year that you received it. For example, if you receive interest monthly, you’ll need to claim your earnings at the end of the financial year. However, if you only receive interest at maturity, you should claim your earnings in the year that you received the lump sum of interest.

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.

If you are considering a term deposit, you may be wondering if you can take out your money early. It is possible to break a term deposit, but it will cost you both time and money.

Many banks require 31 days’ notice if you wish to break a term deposit. This means that if you need money urgently for an unexpected expense, it may not be worth breaking your term deposit. Make sure to read the fine print to see if this wait period applies to the term deposit you are considering.

You will also most likely need to pay a breakage fee in order to access your funds, and you may also incur a reduced amount of interest. All of this information – including the fee amounts – should be available in the term deposit product disclosure statement (PDS), so ensure that you read the fine print before committing.

ME Bank offers a variety of rates for business term deposits, depending on the amount of time you choose. You won’t have to pay any set-up or account-keeping fees for your business deposit. You can invest as little as $5,000 or as much as $2 million with a term duration between one and 60 months. 

The ME business term deposit rate is determined based on the term and when you wish to receive interest payments. 

While rates are set by the lender, you should always check with ME Bank to find out what the term deposit rates are, and which are applicable to your situation.