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Australia's best term deposits for May 2020

Australia's best term deposits for May 2020

Getting the most out of your savings can be a challenge when term deposit interest rates are currently sitting at historic lows. However, in this growing period of uncertainty, one thing term deposits may offer your savings is (almost) guaranteed returns.

Some experts are tipping that Australia’s economy is potentially heading towards a recession due to the impact of the COVID-19 pandemic.

And it’s not just the experts who are nervous. A recent poll by The Australian found that of the 50-64-year-olds surveyed, 83 per cent expect a recession. In fact, the poll found that most Australians older than 35 believe Australia is facing a recession lasting several years.

As Australia potentially enters its first recession since 1991, finding stable ground in an otherwise shaky economic environment is crucial for your savings. This is where term deposits may offer a lifeline.

A safe port in a storm

It’s no secret that interest rates are currently at record lows across a range of financial products. It’s good news for mortgage holders, but bad news for savers.

While term deposits may not be paying as much as they did ten years ago, they do offer (almost) guaranteed returns at a locked in rate. As savings account interest rates continue to fall every other month, locking in an interest rate through a term deposit may be one way of securing a return on your savings.

Another advantage of term deposits during uncertain economic times is that you cannot touch the money without facing costly break fees. If you have specific savings goals, such as for a property deposit, and feel tempted to dip into your savings in the next few months or years, a term deposit can help to protect your nest egg from yourself.

However, if you needed the money for an emergency, such as losing your job, you would have to pay said break fees to do so. It’s worth reading the terms and conditions of your term deposit account around break fees before applying.

RateCity analysis found that the average 1-year term deposit rate has fallen 1.03 percentage points from May 2019 to May 2020.

The average 3-year term deposit fell 1.22 percentage points, and the average 5-year term deposit fell 1.24 percentage points in the same time frame.

Term deposit market average difference year on year

Date1-year rate3-year rate5-year rate
30 May 20192.32%2.38%2.41%
27 May 20201.29%1.16%1.14%
Difference-1.03-1.22-1.24

Source: RateCity.com.au. Note: Interest rates based on term deposit balance of $20,000 paid at maturity.

This shows that doing your research around which are the most competitive term deposits on the market is more invaluable than ever. Luckily, RateCity has done the work for you.

Best 12-month term deposits

Maybe you’re unsure of what the market will look like in a year? If you’re looking to lock your savings away for a shorter term, these are the 12-month term deposits with the highest interest rates on the RateCity database.

Company
Product

Term Deposit

Real Time Rating™

3.83

/ 5
Max rate

3.00

% p.a

for 36 months

Min. deposit

$5,000

Interest rate

1.10

% p.a

for 6 months

Real Time Rating™

3.83

/ 5
Go to site
Company
Product

Term Deposit

Real Time Rating™

4.46

/ 5
Max rate

3.50

% p.a

for 48 months

Min. deposit

$1,000

Interest rate

2.10

% p.a

for 6 months

Real Time Rating™

4.46

/ 5
Go to site
Company
Product

Term Deposit

Real Time Rating™

4.62

/ 5
Max rate

3.15

% p.a

for 12 months

Min. deposit

$5,000

Interest rate

2.45

% p.a

for 6 months

Real Time Rating™

4.62

/ 5
Go to site

Best 3-year term deposits

If you’re looking to lock away some certainty that your savings will survive a longer storm than 12 months, a high rate 3-year term deposit may be a competitive choice for your needs.

Company
Product

Personal Term Deposit (At Maturity)

Real Time Rating™

4.47

/ 5

Winner of Best Term Deposit 6 Month 50k, RateCity Gold Awards 2022

Max rate

4.25

% p.a

for 60 months

Min. deposit

$1,000

Interest rate

1.85

% p.a

for 6 months

Real Time Rating™

4.47

/ 5
Go to site

special

Receive a loyalty bonus

Winner of Best Term Deposit 6 Month 50k, RateCity Gold Awards 2022

Company
Product

Term Deposit

Real Time Rating™

3.83

/ 5
Max rate

3.00

% p.a

for 36 months

Min. deposit

$5,000

Interest rate

1.10

% p.a

for 6 months

Real Time Rating™

3.83

/ 5
Go to site
Company
Product

Term Deposit

Real Time Rating™

3.88

/ 5
Max rate

2.75

% p.a

for 36 months

Min. deposit

$5,000

Interest rate

1.25

% p.a

for 6 months

Real Time Rating™

3.88

/ 5
Go to site
Company
Product

Term Deposit

Real Time Rating™

3.43

/ 5
Max rate

2.25

% p.a

for 60 months

Min. deposit

$5,000

Interest rate

0.75

% p.a

for 6 months

Real Time Rating™

3.43

/ 5
Go to site

Best 5-year term deposits

When it comes to the highest term deposit rates, these are generally reserved for the longest terms. If you’re able be patient and wait on your potential savings growth, here are the highest rate 5-year term deposits on the RateCity database.

Company
Product

Personal Term Deposit (At Maturity)

Real Time Rating™

4.47

/ 5

Winner of Best Term Deposit 6 Month 50k, RateCity Gold Awards 2022

Max rate

4.25

% p.a

for 60 months

Min. deposit

$1,000

Interest rate

1.85

% p.a

for 6 months

Real Time Rating™

4.47

/ 5
Go to site

special

Receive a loyalty bonus

Winner of Best Term Deposit 6 Month 50k, RateCity Gold Awards 2022

Company
Product

Term Deposit

Real Time Rating™

4.46

/ 5
Max rate

3.50

% p.a

for 48 months

Min. deposit

$1,000

Interest rate

2.10

% p.a

for 6 months

Real Time Rating™

4.46

/ 5
Go to site
Company
Product

Term Deposit

Real Time Rating™

3.96

/ 5
Max rate

2.40

% p.a

for 48 months

Min. deposit

$2,000

Interest rate

1.25

% p.a

for 6 months

Real Time Rating™

3.96

/ 5
Go to site
Company
Product

Term Deposit

Real Time Rating™

3.43

/ 5
Max rate

2.25

% p.a

for 60 months

Min. deposit

$5,000

Interest rate

0.75

% p.a

for 6 months

Real Time Rating™

3.43

/ 5
Go to site

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This article was reviewed by Personal Finance Editor Mark Bristow before it was published as part of RateCity's Fact Check process.

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