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If you're looking for somewhere risk-free to boost your savings balance, a term deposit offers a guaranteed return. Just set, forget and let it do the hard, interest-earning work.
Here are a few ways to make sure you're getting a good rate:
In comparison, take a look at the 6-month term deposit rates offered by the Big Four: ANZ, CBA, NAB and Westpac.
| Product | Interest rate | Min. deposit |
|---|---|---|
| ANZ term deposit | 0.1% p.a. for 6 months | $5,000 |
| CBA term deposit | 0.1% p.a. for 6 months | $5,000 |
| NAB term deposit | 0.15% p.a. for 6 months | $5,000 |
| Westpac term deposit | 0.15% p.a. for 6 months | $5,000 |
It's true that interest rates on term deposits and savings accounts are quite low at the moment. This is because the official RBA cash rate is at an all-time low. Home loans rates are at historic lows too.
However, that doesn't mean that term deposits are a bad idea right now. In fact, with increased volatility in the share market and a recession officially declared for Australia, a term deposit is one of the safest places for your cash.
A term deposit is a type of savings account opened for a certain period of time. During this period your money is locked, so you won't be able to access it (penalties apply if you do). In exchange, your money earns interest according to the interest rate offered by the financial institution when opening the account. This interest rate is fixed and won't change throughout the life of the term. After the period has ended, you can choose to reinvest a portion or all of the funds at the interest rate stated by your bank, or you can withdraw the funds.
Term deposits are widely considered to be a safe, low-risk investment as, unlike savings accounts, they offer a guaranteed return through a fixed interest rate. Because your money is locked away, banks often offer a higher interest rate on some term deposits than they do on regular savings accounts.
If you have a chunk of money you know you won't need for a while, a term deposit could be a good option. It removes the temptation to spend the money as you'll need to pay a fee if you wish to withdraw before the term is finished.
Use our term deposit calculator to find out how much interest you could earn over 12 months.
The main difference between a savings account and a term deposit is the ability to access your money. The money in a savings account can be accessed whenever you need it and there are no costs for withdrawing or depositing money. Term deposits are locked and will charge you if you need to withdraw your money early. So if you want easy access to your money, then a term deposit might not be right for you.
Another key difference is the interest rate. Savings accounts have variable interest rates meaning they can change, while term deposits have fixed interest rates so the rate will not change until the term matures. Because they can change at any time, savings accounts often have higher rates than term deposits. So if you're looking for a higher interest rate on your money, a savings account might be a better option for you.
Like most financial products, there is no best term deposit account. The account that best suits your needs and circumstances is the one you should choose. But what is best for you might not be best for someone else. You should look for:
Yes. If you've invested money in a term deposit, you will need to pay tax on the interest income you earn. The amount of tax you'll need to pay on your term deposit interest will depend on your overall taxable income. It will also depend on when you receive your interest payments.
As an Australian resident you must pay tax on any income you earn each financial year, and this includes the interest you earn from savings accounts and term deposits. Read our guide to find out how this works.
Read this guide to find out how your term deposit will be taxed
Earn a fixed interest rate on a wide choice of terms with a Gateway Bank personal term deposit.
Earn a competitive fixed interest rate on a 3 or 6 month Citibank term deposit when you invest $10,000 or more.
Earn a competitive interest rate plus bonus interest when you roll over your deposit into a new term deposit. Terms from 3 months to 5 years. No fees.
Earn a competitive interest rate on terms between 1 month and 2 years with a MyLife MyFinance term deposit.
This account offers fixed interest rates for terms ranging from one month to five years, so you can enjoy secure, guaranteed returns on your business funds.
Choose a term from one month to five years and earn a competitive, fixed interest rate on your deposit. This account is for Queenslanders only.
If you struggle to save, you could benefit from a savings account that won’t allow you to withdraw funds.
Find out all about the tax treatment of term deposit interest payments.
Earn a competitive interest rate on deposits over $100,000 and enjoy flexible term lengths with the AMP Bank term deposit.
With high interest rates offered in a variety of different terms, the AMP term deposit could be ideal for both short and long term saving goals.
