Best term deposit interest rates in Australia

About best term deposit interest rates in Australia

If you have some money put aside and are looking for a relatively low-risk investment that could earn you a fixed rate of interest, then a term deposit could be an option worth considering.

The Reserve Bank of Australia (RBA) has cut the cash rate for the second time in 2025, meaning banks and lenders will typically follow suit with their own interest rates. If you’re keen to lock in a good term deposit rate, it might pay to keep an eye on the RBA’s movements and compare your options.

Term deposit rates vary depending on how much you wish to invest and for how long. At the time of writing, the best term deposit rate is 4.75% for a 12-month term deposit of $10,000, as listed on Canstar’s database.

Compare the highest term deposit rates – July 2025

Here are the top term deposit rates on Canstar’s database at the time of writing, based on six-month, 12-month, two-year 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 as shown by the comparison table above, so the current highest rates in these tables below may be different.

Highest 6-month term deposit rates

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Source: www.canstar.com.au – 01/07/2025. 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 alphabetically by provider.

Highest 12-month term deposit rates

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Source: www.canstar.com.au – 01/07/2025. 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 alphabetically by provider.

Highest 2-year term deposit rates

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Source: www.canstar.com.au – 01/07/2025. 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 alphabetically by provider.

Highest 5-year term deposit rates

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Source: www.canstar.com.au – 01/07/2025. 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 alphabetically by provider.

Before deciding on a term deposit, it could be a good idea to research your options and compare rates, features and terms and conditions (which can be found in the Product Disclosure Statement). It may also be worth seeking the advice of a suitably qualified professional.

What do I look for in a term deposit?

While a high interest rate is important when it comes to earning interest on your savings, it’s not the only factor to take into account when choosing the best term deposit for you. Some other factors to consider when comparing include:

• When interest is paid: Interest is usually paid monthly, annually or at maturity, which means when the deposit’s term comes to an end. 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).
• Set up and usage: Many financial institutions have online applications for opening new term deposits. How easy they are to use and navigate may be something worth considering, as well as what features are offered to help you keep track of your term deposit. This may also include what happens to your term deposit when it reaches maturity, such as if it automatically rolls over into a new term deposit, or if you’ll receive alerts when your term deposit is close to maturity.
• Projected investment earning: Work out how much you are likely to earn on your term investment over time and if this meets your expectations. Consider the fees and other charges that may apply. You can use Canstar’s term deposit calculator to work this out.

You might want to compare the investment outcome against other forms of earning options, such as taking advantage of an offset account on your home loan, or different types of investments. You may also be interested in Canstar’s Term Deposits Awards which recognises the financial institutions that offer quality term deposit products across rates, terms and product features.

How to find the best term deposit rates?

When searching for term deposit rates, you may be tempted to look towards the big four 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 higher rates.

It can be time-consuming to visit each provider’s site individually in order to compare rates, so Canstar’s term deposit comparison table offers an efficient way to view and compare interest rates from different providers across Australia on our database. This can be viewed above, on the Canstar website or via the Canstar app.

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 are the pros and cons of term deposits?

While term deposits are considered a low-risk and certain investment return, they do still come with potential advantages and disadvantages. Below are some factors to consider when weighing up if a term deposit is right 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 authorised deposit-taking institution (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 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 financial 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 economic 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 the term deposit and its 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.

Term deposits v savings accounts

Term deposits and savings accounts are both secure investment options to consider, as long as they’re held by an ADI and are worth less than $250,000. That being said, they function in different ways.

With a term deposit, the interest rate is fixed for the set term of the investment, so the outcome is typically highly predictable. There may, however, be penalties for early withdrawal, such as fees or a lowering of the interest rate earned. Term deposits are generally seen as being more suitable for longer-term savings goals, due to their consistent interest rates and lack of access to funds. You can compare term deposit rates with Canstar.

If you want flexible access to your cash, on the other hand, you might want to consider a high-interest savings account. But unlike term deposits, you may need to meet certain criteria, such as monthly deposit amounts and withdrawal limits, to receive a particular interest rate. The interest rates on savings accounts are generally variable as well, which means they could change at any time based on economic conditions. This means the investment return over time is harder to predict. Savings accounts can often be useful for short-term savings goals, due to the readily available access to funds. You can compare savings accounts with Canstar.

What happens when a term deposit matures?

When a term deposit reaches its end, you can choose to withdraw some or all of your money, or you can roll the funds over into a new term deposit. It’s important to be aware, though, 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.

With all investments, you should carefully read the terms and conditions, Product Disclosure Statement (PDS) and Target Market Determination (TMD) as well as any other relevant documentation for any products you’re considering before making a decision.