Compare some of the the best term deposits online

Shopping around for the best term deposit may be easier than you think. Rather than spending hours reading through various websites about term deposits, RateCity has done the hard work for you and put the key information in one place. This puts you in the driver’s seat to decide what type of term deposit you want to invest in. 

Before you jump into comparing term deposits, there are three main things to consider:

1. The size of your deposit
2. The duration of your term
3. The frequency you want your interest paid

Knowing this information can help you better compare term deposits and find the best options to suit your needs.

Term deposits work similarly to savings accounts or investments, but with a few key differences. 

When you open a term deposit with an Australian financial institution, you will put money into a deposit account to earn interest over a fixed period of time. This means you can calculate in advance how much interest you can earn on your savings, regardless of changes in the market.

Once you’ve deposited the money with the bank, you won’t be able to easily access these funds until the end of the agreed-upon term. At the end of your term, you can withdraw your money, or choose to rollover your deposit for another term.

Term deposits provide savers with the opportunity to invest money - that otherwise might be just sitting in their savings or transaction accounts - in what is typically considered a low-risk option compared to other investments.

Here are some of the main features to consider when comparing term deposits in Australia:

Term deposit interest rates

The term deposit's fixed interest rate will determine how much interest you’ll earn on your deposit over the fixed term. Generally speaking, high interest rates typically mean a higher rate of return. It’s important to be confident that you are getting the best rate possible for your situation. Some financial institutions may offer a bonus interest rate on top of the standard interest rate if you rollover your full deposit amount at maturity.

Fixed term

The fixed term is the length of time that your funds will be locked away. Term deposits generally fit into two categories: short-term and long-term deposits. Short-term deposits can be as short as a few months, while long-term deposits can last years. In general, term deposits are available for a range of terms anywhere between a 12 month term and a 10 year term. Longer terms often offer higher interest rates than shorter terms, but it’s best to check with your financial institution. Also consider your personal savings goals when choosing between different term lengths.

Interest payment frequency

You may want to look at how frequently you’ll be paid interest. Term deposit providers may pay interest on the following terms:

• Annually
• Semi-annually
• Quarterly
• Monthly
• At maturity (the end of the term)

Minimum deposit

Providers may have minimum deposit requirements that you must meet before they'll allow you to open a term deposit account with them. They also typically offer tiered interest rates for different minimum deposit sizes. For example, a minimum investment of $5,000 may come with a lower interest rate than a minimum investment of $250,000.

Rollover terms

Rollover terms are the options available to you at the end of your term, when you’re able to reclaim your deposit and interest earnings. Some providers will require a certain number of days' notice if you're planning on withdrawing your funds and closing your term deposit account.

Some term deposits will allow you to immediately reinvest your savings into a new term deposit and earn even more interest. If you do decide to reinvest right away, it’s important that you reconsider what the current interest rate is as it may have changed since you first opened your account.

You may have the option to have this interest paid into a bank account of your choice, to supplement your household income, or even put towards your home loan or outstanding credit card debt.

Not all term deposits let you make additional deposits during the term, or withdraw money without penalty.

Most term deposits effectively lock up your money for the length of the term, so you can’t easily access your money until your deposit “reaches maturity” at the end of the term. After this, you can usually choose to roll your deposit over for another term and keep earning interest at the same rate, or switch to another term deposit that better suits your current situation. 

If you do need to withdraw money from a term deposit early, you may need to give advance notice (e.g. 31 days) except in cases of hardship. You may also need to pay a fee, and the interest rate on your remaining deposit may be adjusted down. And in some cases, you may not be able to withdraw any funds during the term unless you close your account. 

As early withdrawal of term deposit may affect the offered value, if you expect you may need to dip into your term deposit at some stage, the best option for you may be to look for a term deposit that offers penalty-free withdrawals. 

It’s not common practice to add extra money to a term deposit once you’ve opened an account. Usually, you open a term deposit with your initial cash contribution and that’s that.

Some banks now give you the option to make additional deposits within a specific timeframe, such as within a week of opening your term deposit, while others let you make deposits at any time.

If you do find a term deposit that allows extra deposits, you might want to find out whether there’s a limit on the number of deposits you can make.

For most term deposits, interest is calculated on the balance of your account at the end of each day, including the day of deposit but excluding the day of withdrawal.

Interest is calculated on your term deposit for a day by dividing the interest rate on the account by 365 (even in a leap year) and multiplying that sum by the account balance on that day.

Interest is calculated daily and can be paid in interim payments. If the term deposit you select is longer than 12 months, interest will be paid at least annually.

For many term deposits, you can choose when interest is paid. Some special term deposit offers only pay interest at maturity. Depending on the term, you could opt to have interest paid monthly, quarterly, half-yearly, annually and of course at maturity. 

The fixed interest rate you’re paid is often linked to the frequency of interest payments. In other words, the more frequently you want to be paid interest, the lower the rate you may receive.

With the sheer number of options available, finding the the best term deposit for you may seem overwhelming. To simplify the process, you might consider utilising RateCity's Real Time Ratings.

Real Time Ratings is a rating system that ranks term deposits based on your deposit amount and the fixed time period of your deposit. It gives each product a score out of five stars, formulated on interest earned and flexibility.

To save you time and energy when it comes to finding the right term deposit for your needs, Rate Time Ratings does the heavy lifting for you, providing up-to-date results that are calculated as you use the site.

For information about financial products that is specific to your unique financial situation, consider getting in touch with a financial advisor to discuss your personal objectives.