Challenger banks and credit unions are currently offering some of the highest interest rates in Australia for one-year term deposits.
Investors who want to lock away $5,000 for 12 months can earn 2.90 per cent interest from both Teachers Mutual Bank and UniBank.
At the end of investment period, the $5,000 one-year term deposit would grow to $5,145 (see table below).
Bank Australia is paying 2.85 per cent for its 12-month term deposits, ME Bank is paying 2.80 per cent and G&C Mutual Bank is paying 2.75 per cent.
A $5,000 term deposit could also earn an interest rate of 2.70 per cent from Greater Bank, Heritage Bank, People’s Choice Credit Union, RACQ, Rural Bank and The Mutual.
Australia annual inflation rate is 1.90 per cent, so investors will get a minimal after-inflation return even if they choose a one-year term deposit with the highest interest rate.
| Lender | Interest rate | Final total |
|---|---|---|
| Teachers Mutual Bank | 2.90% | $5,145 |
| UniBank | 2.90% | $5,145 |
| Bank Australia | 2.85% | $5,142.50 |
| ME Bank | 2.80% | $5,140 |
| G&C Mutual Bank | 2.75% | $5,137.50 |
| Greater Bank | 2.70% | $5,135 |
| Heritage Bank | 2.70% | $5,135 |
| People’s Choice Credit Union | 2.70% | $5,135 |
| RACQ | 2.70% | $5,135 |
| Rural Bank | 2.70% | $5,135 |
| The Mutual | 2.70% | $5,135 |
Please note that the highest-rate one-year term deposit won’t necessarily be the best term deposit for your situation.