Savers need to shop around to get the highest rates on 12-month term deposits

Nick Bendel

Nick Bendel

Jun 19, 2019( 3 min read )

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Record-low mortgage rates are great for home owners – but the downside is that they also mean historically low interest rates for savers.

Australians who invest their money in term deposits will struggle to earn much more than the inflation rate, which is 1.3 per cent.

If you wanted to invest $20,000 in a 12-month term deposit, here’s how much you’d earn with the big four banks:

Institution Interest rate Final total
ANZ 1.95% $20,390
Westpac 1.95% $20,390
NAB 1.90% $20,380
Commonwealth Bank 1.80% $20,360

With interest rates so low, it’s important to compare term deposits before locking away your money.

Competition is fierce, because there are dozens of institutions that offer term deposits.

And quite a few of them pay higher interest rates than the big four banks.

Here are some of the institutions offering the highest interest rates on 12-month term deposits for a $20,000 investment:

Institution Interest rate Final total
Australian Unity 2.60% $20,520
Credit Union SA 2.55% $20,510
Qudos Bank 2.50% $20,500
Teachers Mutual Bank 2.50% $20,500
UniBank 2.50% $20,500
Police Bank 2.45% $20,490
Bank First 2.45% $20,490
Firstmac 2.45% $20,490
Bank Australia 2.40% $20,480
QBank 2.40% $20,480
Woolworths Employees Credit Union 2.40% $20,480
Gateway Bank 2.40% $20,480

How to take out a term deposit

If you want to invest in a 12-month term deposit, the first thing to do is use a comparison site like RateCity to find the best term deposit for your situation.

Once you’ve chosen your preferred term deposit, you can apply online.

This is a simple process that can be done in 10 minutes. All you’ll need is some identification, your contact details and your tax file number.

Many term deposits automatically ‘roll over’ at the end of the term. Even if your term deposit had the highest interest rate in Australia at the time you opened it, the market can shift a lot in 12 months, so it’s possible the institution will no longer have such a competitive rate and that you would be better off taking your business elsewhere.

The moral to the story is to do your research before allowing your term deposit to roll over. If you’re still happy with your interest rate, staying might make sense, but if you find a better alternative, you might prefer to switch.

Research savings scenarios with the RateCity term deposit calculator.

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