Best term deposit interest rates in Australia

A term deposit could be worth considering if you are looking for a lower-risk investment where you will earn a fixed rate of interest.

With many experts predicting that we are done with cash rate increases for now, it might be a good idea for savers to keep an eye on the Reserve Bank of Australia’s movements as discussions of interest rate cuts are predicted to occur in the latter part of the year.

Term deposit rates vary depending on how much you wish to invest and for how long. At the time of writing, the best interest rate listed on Canstar’s database for a term deposit of $10,000 is 5.25% for a seven-month term* from Credit Union SA.

*The 5.25% term deposit rate from Credit Union SA is only available as a seven-month term, and therefore not listed in any of the tables below.

Compare the highest term deposit rates – April 2024

Here are the top term deposit rates on Canstar’s database at the time of writing, based on six-month, 12-month, 24-month and five-year terms. Tables are based on an investment of $10,000 in a personal term deposit with interest paid as specified.

Products are sorted by highest advertised rate, then alphabetically by provider name. Canstar may earn a fee from the providers displayed in the table.

These are the rates listed on Canstar’s database at the time of writing. Canstar’s database is updated daily, so the current highest rates may be different to the figures below.

Highest 6-month term deposit rates

Provider	Rate
Challenger	5.15%
	5.10%
Bank of Sydney	5.10%

Source: Canstar, 04/04/2024. Based on personal non-compounding term deposits on Canstar’s database, with rates based on a deposit of $10,000. Includes all payment frequencies. Only considers the highest rate available from each provider. Table sorted in descending order by rate, then alphabetically by provider. Canstar may earn a fee for referrals. Consider the Product Disclosure Statement (PDS) and Target Market Determination (TMD), before making a purchase decision. Contact the product issuer directly for a copy of the PDS and TMD.

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Highest 12-month term deposit rates

Provider	Rate
Challenger	5.15%
	5.10%
G&C Mutual Bank	5.05%
Australian Unity	5.00%
Great Southern Bank	5.00%
HSBC	5.00%
Qudos Bank	5.00%

Source: Canstar, 04/04/2024. Based on personal non-compounding term deposits on Canstar’s database, with rates based on a deposit of $10,000. Includes all payment frequencies. Only considers the highest rate available from each provider. Table sorted in descending order by rate, then alphabetically by provider. Canstar may earn a fee for referrals. Consider the Product Disclosure Statement (PDS) and Target Market Determination (TMD), before making a purchase decision. Contact the product issuer directly for a copy of the PDS and TMD.

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Highest 24-month term deposit rates

Provider	Rate
G&C Mutual Bank	4.85%
	4.85%
Community First Bank	4.75%
Challenger	4.70%
MOVE Bank	4.70%
Qudos Bank	4.70%

Source: Canstar, 04/04/2024. Based on personal non-compounding term deposits on Canstar’s database, with rates based on a deposit of $10,000. Includes all payment frequencies. Only considers the highest rate available from each provider. Table sorted in descending order by rate, then alphabetically by provider. Canstar may earn a fee for referrals. Consider the Product Disclosure Statement (PDS) and Target Market Determination (TMD), before making a purchase decision. Contact the product issuer directly for a copy of the PDS and TMD.

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Highest 5-year term deposit rates

Provider	Rate
Rabobank Australia	4.90%
	4.85%
BankVic	4.50%
G&C Mutual Bank	4.25%
Macquarie Bank	4.25%

Source: Canstar, 04/04/2024. Based on personal non-compounding term deposits on Canstar’s database, with rates based on a deposit of $10,000. Includes all payment frequencies. Only considers the highest rate available from each provider. Table sorted in descending order by rate, followed by alphabetically by provider. Canstar may earn a fee for referrals. Consider the Product Disclosure Statement (PDS) and Target Market Determination (TMD), before making a purchase decision. Contact the product issuer directly for a copy of the PDS and TMD

These are the rates listed on Canstar’s database at the time of writing. Canstar’s database is updated daily, so the current highest rates may be different to those above. You can use Canstar’s comparison tool to see today’s rates for term deposits:

Compare rates for different terms

Before deciding on a term deposit, it could be a good idea to research your options and compare rates, features and terms and conditions. It may also be worth seeking the advice of a suitably qualified professional.

How to find the best term deposit rates?

When searching for term deposit rates, you may be tempted to look towards the big banks such as ANZ, CommBank, NAB or Westpac. But when it comes to term deposits, smaller providers tend to offer many of the same benefits as the big four, and often with better and higher rates.

But it can be tedious to individually go to each provider’s site to compare rates, that is why Canstar’s term deposit comparison table is an easy way to view and compare interest rates from different providers across Australia on our database.

Our comparison table also displays the best term rates for different term periods for each provider. This is because not all providers follow the rule that longer term periods mean higher interest rates.

What do I look for in a term deposit?

While a high interest rate is important, it’s not the only factor to take into account when choosing a term deposit. Some other factors to consider include:

• When interest is paid: Interest is usually paid monthly, annually or at maturity. Compound interest is interest earned on an initial amount of money invested as well as on the accumulated interest. The compounding frequency, the number of compounding periods and the interest rate will determine the amount earned on a term deposit investment.
• Term: Check how the interest rate differs by term, which is the amount of time your money would be locked into the investment. When choosing an investment term, consider whether you would need to access the money in the near-future or if you could lock it away for a longer period of time and potentially earn a higher interest rate. Penalties could apply for withdrawing funds before the end of the specified term.
• Investment amount: Also check how the interest rate differs by how much you have to invest and what the minimum and maximum amounts are. This could help you to decide how much to invest for how long and in how many different term deposit accounts.
• Fees: See what penalty fee applies for early withdrawal and if any other fees are charged (such as set-up or account-keeping fees).
• Projected investment earning: Work out how much you are likely to earn on your term investment over time and if this meets your expectations. Take into account fees and other charges. You can use a term deposit calculator to work this out.

You might want to compare the investment outcome against other forms of money moves, such as taking advantage of an offset account on your home loan, or different types of investments.

→ Explore: How do term deposits work?

What are the pros and cons of term deposits?

While term deposits are considered a low-risk and certain investment return, it does come with potential advantages and disadvantages. Below are some factors to consider when weighing up if a term deposit is for you.

Potential advantages

• Secure investment: Term deposits are considered a safer investment when compared to other alternative investment strategies such as share trading. Your term deposit (up to a total of $250,000 of all funds kept with an ADI and its subsidiaries) is also protected under the Financial Claims Scheme, as long as it’s opened with an ADI in Australia.
• Guaranteed return: As long as you do not withdraw your money early, you are guaranteed to earn interest and receive a return on your term deposit.
• Budgeting: Since all parameters are known, term deposits can also be helpful for budgeting future expenses. For example, if you’re planning to buy a new car, you can open a term deposit for one year to fund the purchase and know exactly how much funds you will have at the end of the year term.

Potential disadvantages

• Lack of flexibility: Term deposits typically have early withdrawal penalties which can be a fee, a reduction in the interest rate, or a combination of both. You generally also have to provide the institution with a 31 day notice that you want to withdraw your funds. These steps make it harder for you to access your deposit money during the term, particularly if you require it in cases of emergency.
• Market Changes: Since your term deposit rate is locked at the interest rate agreed at the beginning of the term, it will not be affected by any market changes (such as the cash rate) during the term period. This can be good or bad, depending on where interest rates go. For example, if interest rates go up, your term deposit rate will not increase and may be lower than the term deposit rates on offer at that time.
• Inflation: If you decide on a longer term deposit, such as a five year term, high inflation rates could potentially erode the value of term deposit and earnings over time. This means the money withdrawn at the end of your term may not be worth as much as when you deposited it.

What happens when a term deposit matures?

At the end of the term, you can choose to withdraw some or all of your money, or you can roll over your money into a new term deposit. But be aware that you may be offered a different interest rate on the new term, which could be lower.

If you decide to withdraw your money before the end of the term, you may be charged a penalty fee or earn a lower rate of interest.

If you want flexible access to your cash, you might want to consider a high-interest savings account instead. But unlike term deposits, you might need to meet certain conditions and the rate could change at any time, based on market conditions. This means the investment return over time is harder to predict.

With a term deposit, the rate is fixed for the set term of the investment, and so the investment outcome is typically highly predictable.

With all investments, you should read carefully the terms and conditions, as well as the target market determination (TMD) and other documentation for any products you’re considering before making a decision.

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