Compare the best term deposit interest rates December 2023

What is a term deposit?

A term deposit is a type of savings account that offers a fixed interest rate in exchange for you locking your deposit away for a set period of time. You can choose a term deposit length from just 1 month long up to 5 years, and you'll earn a set interest rate for the duration of your term length. The term deposit rate will not change until your term length comes to an end, even if the bank has adjusted rates in the meantime.

Term deposit rates are typically a bit lower than what you can get with a high interest savings account. However unlike a savings account, term deposits don't require you to meet any monthly account conditions or ongoing deposit requirements to earn the rate.

Which Australian banks have the best term deposit rates?

Term deposit rates are changing a lot at the moment - and for the better. Here are some of the highest rates for December 2023:

What's the best term deposit overall?

The best term deposit overall will be different for everyone and depends on the amount you want to invest, the term length you choose and any other features you're looking for.

In our latest Finder Awards, Judo Bank was named the best term deposit for its 12 month term. The Judo Bank 12-month term deposit was the highest rate in the market for the most amount of months in 2022. You can open this term deposit with a low minimum balance of just $1000, and there's also a 0.10% p.a. loyalty bonus available if you roll over your term.

Term deposit rates for $100k+

If you've got a large balance of $100,000 or more, make sure you look for a term deposit that can be opened for larger balances. Some term deposits are only for smaller deposits of $10,000, $25,000 or $50,000 max.

Here are a few of the best 12-month term deposit rates for balances over $100,000:

• 5.35% p.a. with Judo Bank.
• 5.3% p.a. with ING.
• 5.3% p.a. with Bank of Sydney.

How to get the best term deposit interest rate

Here are a few ways to make sure you're getting a good rate:

• Consider smaller lenders, credit unions and digital banks
• Compare term lengths: 6-month rates are often better than 3-month rates, and 24-month rates are often better again
• Look for providers that offer extra interest as a loyalty bonus
• Negotiate your rate with the bank to see if you can get a better deal

How to compare term deposits

Consider the following when you're choosing a term deposit:

• The term length. There are term deposits available from 1 month to 5 years. A 1-year term could be helpful for short-term goals like an overseas holiday, while a longer term of 2+ years could be better for larger goals like a house deposit.
• The interest rate. Once you know your ideal term length, compare term deposits that offer this length and look for one with the highest rate.
• The penalties. No-one thinks they will need to break into their term deposit early, but emergencies do happen. Check what the bank's penalties are for making an early withdrawal (some are more severe than others).
• The interest options. Some term deposits allow you the choice to receive interest monthly, bi-annually, annually or at maturity (when the term ends). Keep in mind you could get a higher rate if you choose to receive your iterest at maturity.
• The linked bank account. Some banks will require you to open a bank account with them along with your term deposit, to receive your interest payments. Other banks will allow you to open the term deposit on its own and use your current bank account.

Pros and cons of term deposits

Pros

• Term deposits offer a fixed rate, so you can guarantee your exact return.
• Term deposits have no set up fees, account keeping fees or ongoing conditions to meet.
• Term deposits are backed by the Australian government bank guarantee scheme.
• You can choose between a large range of term deposit lengths, from 1 month to 5 years.

Cons

• Fixed rate means you won't benefit from rising interest rates until your term matures.
• Term deposits offer simple interest, not compound interest.
• Many term deposits offer rates that are equal to or even lower than savings accounts.
• Withdrawing money early incurs penalty charge and/or forfeits interest.

As well as increasing rates, with increased volatility in the share market, a term deposit is one of the safest places for your cash. Your deposit up to $250,000 in a term deposit with an Australian bank is protected by the government bank guarantee scheme.

Alison Banney
Finder's banking editor

How do savings account rates compare to term deposit rates?

Like a term deposit, a savings account also allows you to earn interest on your money. However unlike a term deposit, you can access the money in your savings account whenever you need. You will usually need to meet a monthly deposit condition to earn the full interest rate on your savings account, which can act as a good incentive to keep growing your balance and building your savings.

Savings account rates have been going up quickly over the past few months, with several accounts now offering 5% p.a. or higher.

Rabobank High Interest Savings Account

Go to site

5.75%
Max variable rate p.a.

4.4%
Base interest rate p.a.

$0
Minimum deposit

• Info
• Pros & cons

The Rabobank High Interest Savings Account is the best savings intro rate account. This account has a maximum variable rate of 5.75% p.a. for the first 4 months. After that it reverts to a rate of 4.4% This account has no deposit or withdrawal conditions. Available on balances below $250,000.

• Introductory rate of 5.75% p.a. for first 4 months
• Flexible, transfer funds in and out and still earn the bonus rate
• $0 Account keeping fees

• Interest rate drops to 4.4% after the introductory period
• No branches available
• Online or phone access only

Rewards program	N/A
Annual Fee	$0
Purchase Rate
Welcome offer
Interest-free period	Up to days on purchases
Balance transfer	N/A
Bonus points	N/A
Rewards points per $ spent	N/A
Foreign currency conversion fee

ME HomeME Savings Account

Go to site

5.55%
Max variable rate p.a.

0.55%
Base interest rate p.a.

$2,000
Minimum deposit

• Info
• Pros & cons

The ME HomeME Savings Account is the best high interest savings account. This account has an ongoing, variable bonus rate of 5.55% p.a. on balances up to $100,000 when you deposit $2,000 into the linked SpendME transaction account and grow your balance each month.

• Ongoing bonus rate is one of the best in market
• Tiered bonus rates means you still earn interest on larger balances
• Savings tools offered in the app

• High monthly deposit of $2000 required for bonus interest
• Low variable base rate if bonus interest criteria isn’t met

Rewards program	N/A
Annual Fee	$0
Purchase Rate
Welcome offer
Interest-free period	Up to days on purchases
Balance transfer	N/A
Bonus points	N/A
Rewards points per $ spent	N/A
Foreign currency conversion fee

ING Savings Maximiser

Go to site

5.5%
Max variable rate p.a.

0.55%
Base interest rate p.a.

$1,000
Minimum deposit

• Info
• Pros & cons

The ING Savings Maximiser is the best overall savings account. With this account you can earn an ongoing, variable rate of 5.5% p.a. if you deposit $1000 into a personal ING account (excluding Orange One and Living Super), make 5 eligible transactions and grow your nominated Savings Maximiser balance (excluding interest) each month. The total bonus interest rate is available on balances up to $100,000 on one Savings Maximiser account.

• Won Best Savings Account in 2023 Finder Awards
• Competitive ongoing bonus rate of 5.5% p.a. is one of the highest in market
• $0 Account keeping fees
• Fee-free ATMs in Australia and no international transaction fees with the linked transaction account (conditions apply)

• Several monthly conditions to meet to earn the bonus rate
• Bonus interest rate only applies up to balances of $100,000

Rewards program	N/A
Annual Fee	$0
Purchase Rate
Welcome offer
Interest-free period	Up to days on purchases
Balance transfer	N/A
Bonus points	N/A
Rewards points per $ spent	N/A
Foreign currency conversion fee

Term deposits vs high-interest savings: What's best for you?

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FAQ: More questions about term deposits

• Is a term deposit a good idea at the moment?

  Interest rates on term deposits are going up (and very quickly!). The RBA has increased the interest rate 12 times since May 2022 and has recently paused the rate at 4.10%. As a result of the cash rate going up, we've seen term deposit rates go up too. Now, you can easily find rates above 3.00% p.a. and even above 5.00% p.a. on longer terms.

• How does the RBA cash rate affect my term deposit?

  The Reserve Bank of Australia's (RBA) cash rate is one of the factors that banks consider when setting their interest rates for deposit products. When banks increase their home loan rates, they often increase their savings and term deposit rates too. However, banks aren't required to do this.

• Can I have more than 1 term deposit?

  Yes, you can have more than 1 term deposit. There are a few reasons why you might want to do this. If you have a large deposit over $250,000, splitting your deposit up between more than 1 bank will ensure all your money is covered under the bank guarantee scheme. You might also choose to open a few different length term deposits for different short or long-term goals.

• Are there any fees for term deposits?

  Term deposits typically do no charge any set-up fees or account keeping fees. You may be required to pay a fee if you want to break your term deposit early, however instead of a fee this usually results in a reduction of interest.

• Do I need to pay tax on my term deposit?

  Yes. If you've invested money in a term deposit, you will need to pay tax on the interest you earn (the same goes for savings accounts). Interest is classified as another form of income, so the amount of tax you'll need to pay on your term deposit interest will depend on your overall taxable income.

• What happens if my bank changes the interest rate?

  Once you open a term deposit the interest rate is fixed for the life of the term. This means if your bank changes the interest rate, whether it increases or reduces, your rate will remain unchanged.

• How do I close my term deposit?

  If your term deposit has reached maturity, then you withdraw all the funds like with a regular bank account. However, if your term deposit is still maturing, then your bank will charge a penalty for withdrawing your funds early. To do this, you'll need to get in touch with your bank directly.

• I'm not an Australian resident. Can I open a term deposit?

  Most banks will require an Australian residential address to open a term deposit.

• What does it mean when your term deposit matures?

  When your term deposit matures or reaches maturity means the term length has come to an end. You can then choose to reinvest the money into a new term at the current term deposit rate offered by the bank or switch to a term deposit with a different bank. You can also withdraw the money and add it into a savings account, invest it or spend it - the choice is yours.

Looking for something else?

Business term deposits

Business term deposits provide fixed interest rates and the security of guaranteed returns. If you're looking for a safe place to invest some of your business funds, here are the current business term deposit rates on offer.

Long-term term deposits

A long term deposit rate can be anywhere from 12 months to five years. Generally longer term deposit lengths offer more competitive rates than terms of less than 12 months.

Kids term deposits

Looking for term deposits for your kids? Then check out the listed term deposits suited for children.

SMSF term deposits

An SMSF term deposit is a term deposit designed to help build your savings for retirement. They work in much the same way as normal term deposit accounts, however they're designed specifically for self-managed super funds.

Term deposit vs savings account calculator

Both savings accounts and term deposits allow you to earn interest on your money. To help you decide which account is right for you, use our term deposit vs savings calculator.