Term deposits can be a safe place to keep your cash and earn a fixed rate of interest. You will earn interest for an agreed term (usually between one month and five years), even if your bank changes the rates for new customers during that time.
However, term deposits can also be inflexible. For example, if you need to access your money before the end of the term, your bank may charge you a penalty fee and ask you to give them a period of notice.
The interest rates on term deposits also tend to vary a lot, depending on the provider and the term. With movements in both directions possible, it can pay to consider shopping around.
Highest term deposit rates – October 2021
The following table displays a snapshot of term deposits, with interest paid as specified. This is based on an investment of $50,000 in a personal term deposit, with a term range between 6-24 months and is sorted by the highest advertised rate for a 24-month term, then by shortest payment frequency and finally alphabetically by provider name. Canstar may earn a fee from the providers displayed in the table. For more information and to confirm whether a particular product will be suitable for you, check upfront with your provider and read the Product Disclosure Statement before making a decision.
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| Company | Term: 6 mths |
Term: 12 mths |
Term: 24 mths |
Interest Payment Frequency and Features |
|---|---|---|---|---|
| Judo Bank | 0.69% | 0.75% | 1.20% | Personal term deposit, paid end of term |
| Judo Bank | 0.69% | 0.75% | 1.15% | Personal term deposit, paid annually |
| Judo Bank | 0.59% | 0.65% | 1.10% | Personal term deposit, paid monthly |
| MyLife MyFinance | 0.70% | 0.85% | 1.00% | Term deposit, Paid end of term |
| abal banking | – | – | 1.00% | Term deposit, paid annually |
| MyLife MyFinance | – | 0.80% | 0.95% | Term deposit, paid monthly |
| Bank of us | 0.35% | 0.70% | 0.80% | Term investment, paid end of term |
| AMP Bank | – | – | 0.80% | Term deposit, paid annually |
| Bank of us | – | – | 0.80% | Regular income investment, paid annually |
| Bank of us | – | – | 0.80% | Term investment, paid annually |
Source: Canstar, as at 6 October 2021.
What is compound interest?
Compound interest is interest earned on an initial amount of money invested as well as on the accumulated interest. Interest can be compounded at different frequencies such as monthly, semi-annually, annually and so on. The compounding frequency, the number of compounding periods and the interest rate will determine the amount of interest earned on a term deposit investment.
How can I choose a term deposit?
While important, a high interest rate isn’t the only factor to consider when looking for a term deposit. Some other factors you might want to keep in mind include:
- The terms available (length of the term deposit) and the interest rates available for various terms
- When interest is paid (this might be monthly, annually or at maturity, for example)
- Whether there is any minimum amount needed to open a term deposit, and whether a higher interest rate is offered for a larger amount
- Whether there are any penalties or fees for early withdrawals
It’s also important to be aware that your interest rate may drop if you decide to ‘roll over’ your money to a new term, once your existing term has matured. On the other hand, there are selected providers who offer bonus interest if you roll over your term deposit. Check with your provider to see what options you have and what terms and conditions may apply.
You can compare term deposits based on your own financial requirements from a range of different institutions using Canstar’s comparison tables.
Compare Savings Accounts with Canstar
The table below shows some of the savings accounts on Canstar’s database for a regular saver in NSW. The results shown are based on an investment of $10,000 in a personal savings account and are sorted by Star Rating (highest to lowest), then provider name (alphabetically). For more information and to confirm whether a particular product will be suitable for you, check upfront with your provider and read the Product Disclosure Statement or other terms and conditions before making a decision. Use Canstar’s savings accounts comparison selector to view a wider range of savings accounts. Canstar may earn a fee for referrals.
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This content was reviewed by Sub Editor Tom Letts as part of our fact-checking process.
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