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Compare Term Deposits

Compare term deposits with Savvy to help you find the best interest rates in Australia.

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, updated on September 11th, 2023       

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You may be saving up for a home deposit or a big overseas trip; whatever your savings goal, term deposits offer a means to safely lock away your savings where they can earn the highest possible interest, which is why it’s important to compare to find the best.

Savvy can help you compare a range of term deposits so you can find the top interest rate available in Australia today. Consider your term deposit options with us to maximise your chances of getting the best deal.

How do term deposits work?

Term deposits are a way to tuck your savings away in a place where they’ll be safe and earn the highest interest rate possible.  You decide how long you want to deposit your savings for and in return you’re given a set fixed rate of interest.  You can choose between a short-term deposit of as little as one month or a long-term deposit of up to five years.

During the agreed period, you aren’t able to access your money easily and if you do, you’ll lose interest and possibly be charged a penalty for early withdrawal in most cases.  At the end of the term, you can decide whether to lock up your funds again for another term or roll them over into a savings or transaction account.

Almost all banks, credit unions and building societies in Australia offer term deposits, but the interest rate you’ll be offered varies dramatically between the various institutions, which is why it’s important to compare with Savvy to find the best interest rate for your savings.

Why should I compare term deposit interest rates?

Comparing different offers to find the best rate will help you increase the total interest you earn.  Most lenders will have different advertised rates depending on the length of the term, typically ranging from one month to five years.  In this way, it’s possible to make a direct ‘apples with apples’ comparison between lenders on specific products for a set number of months.

For example, on a $5,000 deposit with interest paid at maturity, Bank A may offer an interest rate of 0.3% p.a. for a six-month term deposit. If you deposited $5,000 with them, you’d earn $8 in interest in that period. However, Bank B may offer a 1.95% p.a. interest rate over the same term.  Bank B would deliver you $49 interest for the same period.

This example illustrates how the interest rates offered will affect how much interest you’ll earn even over a short period substantially, even with a relatively small nest-egg.  The larger the amount you have to deposit and the longer the period you’re prepared to lock up your savings, the more interest you’ll earn.

Because all lenders vary in their customer focus, the interest rate one lender charges for one particular product may be far more competitive than for others they offer.  For example, an institution may offer a great term deposit rate for a three-month deposit, but its 12-month interest rate is lower than those of its competitors.  For this reason, it’s very important to compare term deposits with Savvy to find one that offers the very best deal for the deposit period you’re looking for.

What other features of term deposits should I compare?

Other features that you should compare with term deposits include:

  • the interest payment schedule – you can choose to have your interest paid monthly, quarterly, half-yearly, annually or at term. Because interest is calculated daily, it’s better to have your interest paid more frequently, but institutions generally offer a lower interest rate if interest is paid more often.  The highest rates tend to be available for long-term deposits with interest paid annually.
  • fees, charges and penalties for early withdrawal – financial institutions don’t typically charge a fee for opening a term deposit. There aren’t usually any account-keeping fees either, but if you decide you need to withdraw your money earlier than previously agreed, there will be a penalty imposed.  This can either be a set fee (ranging from $30 to $80) or a penalty interest rate of up to 80% to 90% of the total interest you were set to earn.  These interest reductions are based on the amount of time left to run on your term deposit. For example, if you have a 12-month term deposit and you ask to withdraw your funds after just six months, you may lose 50% of the interest you would have earned (because you’ve broken your deposit agreement halfway through your original term), plus be charged a $30 break fee.
  • withdrawal notice period – some financial institutions won’t release your funds unless you give advanced notice of your intent to withdraw your money.  The withdrawal notice period is usually either 30 or 31 days, but for longer deposits over two years you may have to give up to 90 days' notice.  Others may not require any notice at all.

How is term deposit interest calculated?

The interest on a term deposit is calculated daily based on the per annum (p.a.) interest rate quoted.  There are two ways to figure out how much interest you’ll earn on your term deposit.  Which method you use will depend on whether you choose to have your interest regularly paid back into your term deposit account or paid in one lump sum at the end of your deposit period.  One method will involve calculating simple interest, the other will take into account compounding interest.

  1. If you do have your interest paid monthly, half-yearly or annually and pay it back into your term deposit, the balance of your deposit will increase incrementally. In this case, your initial deposit will compound, meaning you’ll start earning interest on both your original deposit and the interest paid back in.
  2. On the other hand, you may choose to have your interest paid at the end of the deposit period, which is called the maturity of the term, or into a separate account. If you choose one of these options, you won’t have the benefit of compounding, in which case your interest calculation is simple:

Interest = principal sum x interest rate x term (such as number of years)

The compound interest rate calculation is far more complex, because it involves calculating how much interest is earned each month, adding this amount onto the principal sum and recalculating the interest earned each month, based on this higher and increasing amount. 

The mathematics gets quite involved – so unless you’re a maths genius, save yourself the brain drain and use Savvy’s term deposit calculator to find out exactly how much interest you’ll earn!  You can also use this calculator to compare different term deposit offers so you can simply work out which one will be best for your spare funds.

How do term deposits compare to savings accounts?

Term deposits and savings accounts have plenty in common, but also have marked differences between them.  Both offer a safe place to store your nest-egg whilst earning interest.  However, while term deposits lock your money away, most savings accounts give you ready access to your savings, unless you choose a type of savings account known as a ‘locked’ account, which has penalties if you withdraw funds in any given month such as forfeiting bonus interest.

Term deposits offer a fixed interest rate for a set period, whereas most savings accounts come with variable rates.  This means the interest your money earns in a savings account can vary depending on how your lender changes its rates based on the underlying cash rate.

Savings accounts are open-ended, which means you can deposit whatever amount you wish, grow your savings (or withdraw them) and leave your account open indefinitely.  Term deposits, on the other hand, are an agreement to deposit a set sum of money for a set period and when that set period is over, you’ll have to decide what to do with your funds.  Your choices include transferring them to another account or rolling them over into another term deposit.

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Top tips for maximising your term deposit interest

Increase the size of your deposit

The greater the amount you stash away, the higher the interest rate you’re likely to receive.  Many financial institutions have a tiered interest rate, with rates increasing in relation to the deposit size. You'll also boost the amount of interest you’ll earn with a larger deposit, as a $20,000 deposit will naturally earn more interest than a $15,000 deposit. 

Opt for a longer term length

The longer you’re prepared to lock your money away for, the higher the interest rate you’ll be offered.  Term deposits come with terms ranging from one month to five years, so it’s important to compare institutions to make sure they can offer what you need. Longer terms also give your deposit more time to build interest overall. 

Have your interest paid less frequently

If you choose to have your interest paid at maturity, you’ll often receive a higher rate than if you choose to have your interest paid monthly or quarterly.  However, it’s worth comparing to find out if you’d earn more on a deposit with a lower rate but higher interest frequency, such as monthly. 

Keep a lookout for special offers

Banks and financial institutions are always looking for new customers, so they come up with tempting offers to attract new business.  These special offers range from offering a free cash bonus, a higher interest rate or a waiver on fees charged on other linked accounts.  They can help boost your savings, so keep a lookout for these occasional deals.

Take advantage of rollover offers

Once a financial institution has you as their customer, they won’t want to lose you, which is why many offer a bonus interest rate if you roll your funds over into a second term deposit.  The additional interest offered can be as high as 0.5% p.a., so it’s well worth checking for any special rollover offers available.

Compare interest rates with Savvy

Doing the research and looking for the best rate before deciding where to place your deposit will hold you in good stead, as interest differs widely and enticing deals are common.  You can compare your options thoroughly with Savvy to help you find the best deposit to maximise your interest.

More of your questions about comparing term deposits

Can I access my savings in an emergency?

You can access your funds if you experience a serious emergency, provided it qualifies under what financial institutions call exceptional circumstances.  However, you’ll have to fill in a form to explain the exceptional circumstances and meet the bank’s criteria for releasing money early in such circumstances. Expect to pay a penalty fee and also lose interest if you do access your money early.

Are term deposits as safe as savings accounts?

Yes – term deposits and savings accounts are covered by the same Australian Government’s Financial Claims Scheme, which guarantees deposits up to $250,000 per person per ADI.  Be aware that many common banks and online institutions are linked and operate under the same ADI licence.  You may think you’re spreading your risk by investing your savings with two different institutions, but they may operate under the same ADI licence, so you’ll only be covered by the guarantee of up to $250,000 rather than multiples of this amount if there’s only one ADI licence involved.  However, the chance of a major collapse in the Australian financial system is extremely low.

How do I open a term deposit?

Most financial institutions will allow you to open a term deposit either in person or online.  However, this does vary from institution to institution, so it’s worth checking with the bank or building society you choose to find out their requirements for opening a term deposit.  Most of the eligibility and documentation requirements for term deposits are the same as savings accounts, although you’ll need a minimum of at least $500 up to as much as $10,000 to open the account.

Can children have a term deposit?

Most financial institutions require you to be at least 18 years old to open a term deposit.  However, this does vary between banks and other institutions, with some allowing term deposits for kids, so it’s worth enquiring with different banks, building societies or credit unions to find out what their specific policy is.

How can I increase the interest rate on my term deposit?

Term deposit interest rates increase according to the amount you deposit and the length of time over which you agree to deposit your funds, with bigger deposits and longer terms generally equalling higher rates.  Therefore, if you want to find the highest possible interest rate, try to increase the amount of money you deposit and choose a longer deposit term.  For example, if you deposit $5,000 for three months, you may be offered an interest rate of 0.65% p.a., but if you increase this to $6,000 and agree to lock it up for six months, your interest rate could rise to 0.85% p.a.

Are there term deposits especially for businesses?

Yes – some banks and financial institutions offer business term deposits, although many of the online banks specialise in personal banking and don’t offer a specific business term deposit product.  The interest rates on offer for business term deposits are often similar to those offered to personal banking customers and SMSF term deposits, so it’s important to compare as many options as you can if you want to lock your business’ funds away to generate more interest.

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Quantum Savvy Pty Ltd (ABN 78 660 493 194) trades as Savvy and operates as an Authorised Credit Representative 541339 of Australian Credit Licence 414426 (AFAS Group Pty Ltd, ABN 12 134 138 686). We are one of Australia’s leading financial comparison sites and have been helping Australians make savvy decisions when it comes to their money for over a decade.

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Sign up to our newsletter

Disclaimer and important things you should know

Quantum Savvy Pty Ltd (ABN 78 660 493 194) trades as Savvy and operates as an Authorised Credit Representative 541339 of Australian Credit Licence 414426 (AFAS Group Pty Ltd, ABN 12 134 138 686). We are one of Australia’s leading financial comparison sites and have been helping Australians make savvy decisions when it comes to their money for over a decade.

We’re partnered with lenders, insurers and other financial institutions who compensate us for business initiated through our website. We earn a commission each time a customer chooses or buys a product advertised on our site, which you can find out more about here, as well as in our credit guide for asset finance. It’s also crucial to read the terms and conditions, Product Disclosure Statement (PDS) or credit guide of our partners before signing up for your chosen product. However, the compensation we receive doesn’t impact the content written and published on our website, as our writing team exercises full editorial independence.

For more information about us and how we conduct our business, you can read our privacy policy and terms of use.

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