While rates on savings accounts have been falling, some term deposit rates are climbing as banks look to encourage customers to lock their savings away for pre-determined periods. Canstar data shows that in June 2018, 13 institutions increased interest rates on their one-year term deposits at an average of 0.21%, while only one lowered rates.
Term deposits can be a safe and reliable way to grow wealth over a pre-determined period of time, as you are virtually guaranteed to earn interest on your deposit. With a term deposit, the interest rate you receive is locked in at the time you make your deposit, which gives greater certainty of returns in a deposit landscape where interest rates are declining.
On the other hand, they can be inflexible, as term deposits don’t always allow you to add extra funds and may require you to provide a period of notice if you wish to make a withdrawal, which can also attract an early withdrawal fee.
Term deposit interest rates tend to vary a lot between providers and are subject to frequent changes. While a number of providers have boosted term deposit rates recently, Canstar’s data shows a few companies have lowered their term deposit interest rates by as much as 0.7% in 2018 so far. With movements in both directions, it can pay to shop around, but where do you start?
Luckily for would-be term deposit enthusiasts, Canstar collects information on term deposit rates from over 70 different institutions.
The following tables display term deposit products on Canstar’s database, available to consumers looking to invest $50,000, with interest paid annually. The tables are sorted by advertised interest rate (highest to lowest), and then by provider name (alphabetically).
Highest term deposit rates – one year term
Highest term deposit rates – two year term
Highest term deposit rates – three year term
Highest term deposit rates – four year term
Highest term deposit rates – five year term
What else makes a good term deposit?
While important, a high interest rate isn’t the only thing to consider when looking for a term deposit. In researching our 2018 Term Deposit Award, Canstar evaluates term deposits based on the following elements:
- The ‘terms’ (length of the term deposit) available
- Any minimum deposit requirements that exist
- How easy it is to open and withdraw from
- Whether early withdrawals come with penalties or fees
You can compare term deposits based on your own financial requirements from 71 different institutions using Canstar’s comparison page. You should also be sure to read the product discourse statement (PDS) for your chosen term deposit before making a decision.