Our Pick Of The Best Term Deposits In Australia

Forbes Advisor has picked a selection of the best term deposits available to Australian savers for 12-month, 24-month and five-year terms.

Interest rates are correct as of February 7,, 2024.

Note: The below list represents a selection of our top category picks, as chosen by Forbes Advisor Australia’s editors and journalists. The information provided is purely factual and is not intended to imply any recommendation, opinion, or advice about a financial product. Not every product or provider in the marketplace has been reviewed, and the list below is not intended to be exhaustive nor replace your own research or independent financial advice. For more information on how Forbes Advisor ranks and reviews products, including how we identified our top category picks, read the methodology selection below.

FEATURED PARTNER OFFER

Challenger

Interest rate

5.2%

Interest paid

On maturity

Investment

$25,000- $1m

Interest rate

5.2%

Interest paid

On maturity

Investment

$25,000- $1m

FEATURED PARTNER OFFER

G&C Mutual Bank

Interest Rate

$5.2%

Interest paid

annually

Investment

$1,000 minimum

Interest Rate

$5.2%

Interest paid

annually

Investment

$1,000 minimum

FEATURED PARTNER OFFER

ING

Interest rate

5%

Interest paid

On maturity

Investment

$10,000+

Interest rate

5%

Interest paid

On maturity

Investment

$10,000+

FEATURED PARTNER OFFER

Bank of Sydney

Interest rate

5%

Interest paid

On maturity

Investment

$1,000-$500,000

Interest rate

5%

Interest paid

On maturity

Investment

$1,000-$500,000

FEATURED PARTNER OFFER

Citi Bank

Interest rate

5%

Interest paid

On maturity

Investment

$10,000-$2 million

Interest rate

5%

Interest paid

On maturity

Investment

$10,000-$2 million

*Citi Bank is only accepting new applications from those with an existing Citi branded transaction account.

FEATURED PARTNER OFFER

MyState Bank

Interest rate

4.75%

Interest paid

On maturity

Investment

$5,000-$1 million

Interest rate

4.75%

Interest paid

On maturity

Investment

$5,000-$1 million

When considering a term deposit, Australians usually have an idea of how long they want to lock their money away for. Perhaps you’re putting money aside for a specific date in the future, such as a wedding or a holiday, and know this money needs to be tucked safely away for at least two years.

Other times, you may only want to put it away for one year while you work towards your goals, or you’re happy to enter into a five-year term to grow your savings out-of-sight. Because the term of a term deposit is so pivotal in the decision-making process, our methodology for choosing the best term deposits available to Australians largely centered around these common time-frames.

That’s why, as you can see above, we have split the best term deposits in Australia list into three sections: the best 12-month term deposits, the best 24-month term deposits, and the best five-year term deposits.

Along with the length of the term, Forbes Advisor then considered a range of other factors across different financial institutions to find some of the best choices for Australians. These factors included:

• whether there was a minimum investment requirement (or a maximum limit);
• how the interest was paid;
• any applicable fees;
• the ease of entering into the term deposit, including whether an online application was available;
• the customer service capabilities of the institution; and more.

From there, our favourite choices for the most common term lengths–12 months, 24 months and five years–were determined.

This list is by no means exhaustive, there are bound to be more offers on the market that may suit you better, but it gives you a guide as to what is considered a competitive interest rate in the respective term deposit time-frames.

The key factor for term deposits is a high interest rate–but it is not the only factor to consider. It’s also paramount you check the actual term length, as this can affect the interest rate that the provider is offering.

Plus, you need to consider whether putting your money away for that specified period of time is viable for you. For some Australians, 12 months may be the maximum, while others are happy to lock funds away for five years or more. It’s a personal decision, which is why there’s no one-size-fits-all for the “best choice”.

Other factors to consider include:

• Investment amounts: Research if there is a minimum investment or a maximum investment, which could change whether you choose to enter into a term deposit with a certain institution. If the minimum investment is larger than you are wanting to lock into a term deposit, then you are best looking elsewhere.
• Fees: Look into whether there are any fees associated with the term deposit, such as a set-up fee or an account management fee. It’s also worth noting whether there are any penalty fees that apply for early withdrawals, in case you need to access your money in the event of an emergency prior to the term ending. You will want to avoid this at all costs.
• Earnings: While the interest rate tells you how much interest you’ll earn over the course of your term, you need to consider how that figure will be affected if there are any account management fees. If the fees for a certain term deposit outweigh the potential interest you are investing, then you’ll need to consider other options.
• Interest at maturity or annually? Institutions list different interest rates depending on whether you opt for an annual pay-out or one interest lump sum at maturity.
• Other options: Of course, it’s also worth weighing up the alternatives to a term deposit and how these investments may reap better rewards. This could include a high-interest savings account instead, or other safe-haven investments. You may decide to put it into equities and invest over the long term—five years or more—which will allow you to ride out any swings in volatility and give you a better chance of a high return on your money.

Yes, term deposit rates can change–but the rate you entered at the start of the term is what it will remain at for the length of your term, much like a fixed-term home loan.

This means that if a financial institution changes its rate of interest, whether by increasing or decreasing the rate, yours will not be affected while your term is still ongoing. If you wanted to re-invest your money at the end of the term, you would then be subject to the new rate.

There’s clearly plenty of term deposits on the market for Australian savers, but is it the right way to save your money? As with any investment, the decision comes down to you. Luckily, term deposits are a safe way to store your money, as you don’t risk losing capital in the same way you may when investing in property or shares.  This risk-reward ratio comes at a price: you may not earn as much from entering a term deposit as you would in the share market (in a good year), but you have safety on your side. That’s why it’s considered a safe-haven investment.

You also need to make sure that the money you are locking away is not your emergency fund and you have plenty of reserves should a surprise expense arise.

Regardless, as with any financial decision, there are multiple factors you need to consider before investing your hard earned funds. This ranges from how long you’re able to store your money away for, how much you’re willing to invest, and what return you’re hoping to receive.