Scan to download the Finder app on iOS or Android
We’re reader-supported and may be paid when you visit links to partner sites. We don’t compare all products in the market, but we’re working on it!
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.
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
You might also like the Finder app, where you can earn up to 6.01% p.a.* on your capital and manage your money in one place.
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.
It's true that interest rates on term deposits and savings accounts are quite low at the moment, but they're on the way up. They've been low for a few years because the official RBA cash rate was at an all time low of 0.10%. However, the RBA has lifted the cash rate twice already this year, and we've seen term deposit rates go up as a result.
As well as increasing rates, with increased volatility in the share market (and more to come throughout the rest of 2022), 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.
Here are a few ways to make sure you're getting a good rate:
You'll usually get a better term deposit rate by looking outside of the big banks. For example, take a look at some of the current best 6-month term deposit rates below:
In comparison, take a look at the 6-month term deposit rates offered by the Big Four: ANZ, CBA, NAB and Westpac.
Use our term deposit calculator to find out how much interest you could earn over 12 months.
Consider the following when you're choosing a term deposit:
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.
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. Given that the RBA aims to keep inflation between 2% and 3%, an interest rate of 2.5% or lower on your term deposit could mean that your investment isn't keeping up with inflation. Term deposits, like other investments, are great when the RBA cash rate is high. But when the cash rate is low, you may want to seek alternatives, such as shares.
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.
Generally, a good time to invest in a term deposit is when the RBA cash rate is high as this normally results in higher interest rates for savings products.
The downside of a term deposit is that you can't access your money while it is in the account. If you do need to make a withdrawal you'll need to give at least 31 days' notice and you'll be charged a fee for accessing your money before the term has been completed. You could also be charged an interest rate penalty, which could defeat the purpose of the investment in the first place. In cases of extreme financial hardship, this rule can be waived.
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.
Most banks will require an Australian residential address to open a term deposit.
Alison Banney is the banking and superannuation editor at Finder. She has written about finance for over 8 years, with her work featured on sites including Yahoo Finance, Money Magazine and Dynamic Business. She has previously worked at Westpac, and has written for several other major banks including Greater Bank, bcu and Gateway Credit Union. Alison has a Bachelor of Communications from Newcastle University, with a double major in Journalism and Public Relations. She has ASIC RG146 compliance certificates for Financial Advice, Securities and Managed Investments and Superannuation. Outside of Finder, you’ll likely find her somewhere near the ocean.
Our goal is to create the best possible product, and your thoughts, ideas and suggestions play a major role in helping us identify opportunities to improve.
finder.com.au is one of Australia's leading comparison websites. We compare from a wide set of banks, insurers and product issuers. We value our editorial independence and follow editorial guidelines.
finder.com.au has access to track details from the product issuers listed on our sites. Although we provide information on the products offered by a wide range of issuers, we don't cover every available product or service.
Please note that the information published on our site should not be construed as personal advice and does not consider your personal needs and circumstances. While our site will provide you with factual information and general advice to help you make better decisions, it isn't a substitute for professional advice. You should consider whether the products or services featured on our site are appropriate for your needs. If you're unsure about anything, seek professional advice before you apply for any product or commit to any plan.
Products marked as 'Promoted' or 'Advertisement' are prominently displayed either as a result of a commercial advertising arrangement or to highlight a particular product, provider or feature. Finder may receive remuneration from the Provider if you click on the related link, purchase or enquire about the product. Finder's decision to show a 'promoted' product is neither a recommendation that the product is appropriate for you nor an indication that the product is the best in its category. We encourage you to use the tools and information we provide to compare your options.
Where our site links to particular products or displays 'Go to site' buttons, we may receive a commission, referral fee or payment when you click on those buttons or apply for a product. You can learn more about how we make money here.
When products are grouped in a table or list, the order in which they are initially sorted may be influenced by a range of factors including price, fees and discounts; commercial partnerships; product features; and brand popularity. We provide tools so you can sort and filter these lists to highlight features that matter to you.
We try to take an open and transparent approach and provide a broad-based comparison service. However, you should be aware that while we are an independently owned service, our comparison service does not include all providers or all products available in the market.
Some product issuers may provide products or offer services through multiple brands, associated companies or different labelling arrangements. This can make it difficult for consumers to compare alternatives or identify the companies behind the products. However, we aim to provide information to enable consumers to understand these issues.
Providing or obtaining an estimated insurance quote through us does not guarantee you can get the insurance. Acceptance by insurance companies is based on things like occupation, health and lifestyle. By providing you with the ability to apply for a credit card or loan, we are not guaranteeing that your application will be approved. Your application for credit products is subject to the Provider's terms and conditions as well as their application and lending criteria.
Please read our website terms of use and privacy policy for more information about our services and our approach to privacy.
