Compare Australia’s best term deposit rates

Information verified correct on October 22nd, 2016

A term deposit is a safe and secure way to grow your savings balance.

If you’re looking for a guaranteed return on the money you invest, a term deposit offers a secure and reliable solution. But if you want to make your money work as hard as possible and build a larger savings balance, you’ll need to find the financial institution with the best term deposit rates. The higher the interest rate that applies to your funds, the more money you will receive when your deposit matures.

But in order to find the best term deposit interest rates in Australia, you’ll need to compare a range of account options and shop around for the best deal.

Compare Australia's term deposit interest rates below

Rates last updated October 22nd, 2016
3 Mths p.a. 4 Mths p.a. 6 Mths p.a. 12 Mths p.a. 24 Mths p.a. 36 Mths p.a. 48 Mths p.a. 60 Mths p.a. Min Deposit Interest Earned
RaboDirect Term Deposit
RaboDirect Term Deposit
2.40% - 2.85% 2.70% 2.90% 3.00% 3.05% 3.30% $1,000 Open More
Bankwest Online Term Deposit
Bankwest Online Term Deposit
2.30% 2.50% 2.70% 2.70% 2.60% 2.60% 2.65% 2.65% $1,000 Open More
St.George Term Deposit
St.George Term Deposit
2.20% 2.00% 2.30% 2.60% 3.10% 3.20% 2.80% 2.95% $1,000 Open More
Bank of Melbourne Term Deposit
Bank of Melbourne Term Deposit
2.20% 2.00% 2.30% 2.60% 3.10% 3.20% 2.80% 2.95% $1,000 Open More
BankSA Term Deposit
BankSA Term Deposit
2.20% 2.00% 2.30% 2.60% 3.10% 3.20% 2.80% 2.95% $1,000 Open More
Citibank Term Deposit ($75,000)
Citibank Term Deposit ($75,000)
2.90% 2.60% 3.20% 2.35% 2.35% 2.35% 2.35% 2.35% $75,000 Open More
Westpac Term Deposit
Westpac Term Deposit
2.10% 2.00% 2.20% 2.50% 3.00% 3.10% 2.70% 2.85% $5,000 Open More

The importance of term deposit interest rates

As they are specifically designed to help you save money, term deposits offer a higher rate of fixed interest than you would find on an everyday transaction account. The interest rate is locked in for the entire term, offering the consistency of earning a fixed interest rate and protecting you against any interest rate falls like the one that occurred in May 2016.

But while a fixed interest rate offers security, it also means you will miss out on taking advantage of any interest rate rises that may occur. Even if the official cash rate goes up, the fixed rate on your account will stay the same until the deposit matures.

It’s important to find the best term deposit interest rates because the higher the interest rate that applies to your account, the more interest you will earn and the more your savings balance will grow. Let’s take a look at a case study to demonstrate just how much difference a slightly higher interest rate can make.

Use our calculator below to see how much you can earn on your term deposit

Case Study: George’s Term Deposit

George has $10,000 he would like to invest in a term deposit account for a maximum period of two years.  He knows this will guarantee him a fixed return on his investment and he likes the security that term deposits offer, so George decides to compare term deposit accounts between his current bank and one of its main competitors to see which one offers the best interest rates.

George’s current bank offers an interest rate of 2.25% p.a. and compounds interest monthly, which means at the end of 24 months George’s $10,000 deposit will have earned $459.84 of interest.

Meanwhile, the competitor bank offers an interest rate of 3% p.a. on term deposits of $10,000 or more, which will allow George to earn $617.57 interest. Simply by choosing the second account with the better interest rate, George can save an extra $157.73.

FeatureTerm Deposit A Term Deposit B
Term24 months24 months
Minimum deposit amount$5,000$10,000
Interest rate2.25% p.a.3% p.a.
Amount invested$10,000$10,000
Interest earned$459.84$617.57
Total balance at end of term$10,459.84$10,617.57

The good and bad of investing in a term deposit

The good

  • You can look forward to a guaranteed return. When you invest your money in a term deposit account, you can be sure that you will get a guaranteed return when the deposit matures. You are also protected against any interest rate drops because your account’s rate is locked in.
  • The interest rates are fairly attractive. Term deposits allow you to earn a much better interest rate on your savings balance than transaction accounts do.
  • There’s plenty of choice. Term deposits are offered by banks, credit unions and building societies across Australia, giving you the ability to compare a wide range of options before choosing an account.

The bad

  • Interest rates could rise, which means you lose out. If interest rates rise while your money is locked away in a term deposit, the interest rate on your account will stay the same.
  • It’s hard to access your funds. If you want to access your funds before the end of the term, you will need to give your bank 31 days’ notice and also pay a fee.

How do I compare term deposits?

Make sure to compare the following factors when comparing your term deposit account options.

The interest rate, which is your return

The interest rate payable on your term deposit balance is a critical factor

when deciding which account offers the best deal. A high interest rate means better returns for you, so look for the account that exceeds the rate offered by the rest. However, remember that accounts with higher interest rates may have higher fees or may have special conditions attached, such as the need to exceed minimum opening balance requirements in order to receive the best available rate.

When the interest is compounded

When interest is calculated on your term deposit will have an effect on the amount of interest you can earn. For example, an account that compounds interest monthly will end up paying more interest over time than one that compounds interest annually. For a demonstration of just how much this can affect your final balance when the deposit matures, check out the finder.com.au term deposit calculator.

Where the interest is paid

Next, look at where the interest your account earns will be paid when the deposit matures. For example, will you need to have a linked account with the same bank which the interest will be paid into, or will you be allowed to have the money sent to any other Australian financial institution?

Any minimum balance requirements (you’ll usually need $1,000)

Check to see what the minimum and maximum balance limits are for the term deposit. Are they suitable for the amount of money you are looking to invest? Make sure that you are comparing accounts that match your requirements — for example, term deposit accounts for balances of more than $10,000.

The terms available

Compare how long you are able to invest your money for with each account. Terms typically range from one year term deposits through to five year term deposits, so make sure the time period you choose suits your needs.

Term deposits provide a secure, convenient way to build a sizable savings balance, but it’s important to find the best term deposit rates to ensure that the money in your account is working as hard as possible. Start comparing term deposit interest rates and other account features at finder.com.au today.

Shirley Liu

Shirley is finder.com.au's publisher for banking and investments. She is currently studying a Masters in Commerce (Finance) and is the author of hundreds of articles. She is passionate about helping Aussies make an informed decision, save money and find the best deal for their needs.

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