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80+ term deposit providers in RateCity’s database

120+ term deposit products in RateCity’s database

Mark Bristow

Updated on

15 Nov, 2024

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Searching for a secure term deposit provider to store your savings with? You may be considering using a bank over credit unions, mutual banks or online-based providers. Here is everything you need to know about bank term deposits.

What is a term deposit?

A term deposit is a type of cash investment that is held in a bank account for an agreed time period (term). Once you deposit your money, you typically aren’t able to withdraw it until the end of the term without being charged a fee.

Term deposits are a popular savings option because they allow you to lock in an interest rate before you make the deposit. This means you know how much you will earn in interest during the term, and you can have peace of mind that your money won’t lose value.

You can find term deposits from most financial institutions in Australia, including the big four banks (CBA, Westpac, NAB and ANZ) as well as competitor banks, credit unions, mutual banks, online banks and neobanks.

What are the benefits of choosing a bank for my term deposit?

When choosing the best term deposit for your financial situation, one question you may face is what type of provider should I use?

As mentioned above, there are a range of financial institutions that offer term deposits. However, many Aussies make the choice to deposit their savings with a bank for stability, safety and reliability.

Here are some benefits of bank term deposits:

Safer investment. Larger financial institutions carry less risk of going under than newer banks, such as neobanks. While all Australian Deposit Institutions (ADIs) are backed by the Australian government financial claims scheme, you're typically afforded greater security when banking with a well-established big bank.
Everything in one place. Another perk of using a bank for your term deposit is that the bank will more likely offer a greater range of other financial products. This can be useful for the Aussies who prefer the convenience of all their finances, such as home loans and savings accounts, with the same bank.
Pay interest on larger deposits. Most term deposit rates are set on a tiered basis, meaning that depending on the minimum deposit you can make, you may be offered a different interest rate for a bigger or smaller deposit. Banks - especially the big four - will be more likely to be able to afford interest on larger deposit amounts, and may even offer more competitive interest rates for these deposit sizes. This is because traditional banks will simply have more funds to afford bigger payouts to customers than newer neobanks, for example.

What are the disadvantages of choosing a bank for my term deposit?

It's also worth considering some of the potential disadvantages of choosing a bank, including:

Lower rate of return. Online lenders and some competitor banks may be able to offer a higher rate of return through interest payments. This is because compared to traditional brick-and-mortar banks, these providers have fewer overheads and can pass these savings onto the customers in the form of high interest rates.
Higher fees. Similarly to the point above, non-bank term deposit providers can typically afford to charge customers fewer fees. This also helps to set themselves out as more competitive in the market in an effort to attract new customers.
Access to fintech. If you choose to bank with a newer credit union, online lender or neobank, you may be more likely to gain access to innovative fintech and savings tools. While term deposits are relatively simple deposit accounts, savers may miss out on other perks and tricks to boost their savings that may be offered by these competitor lenders.

Keep in mind that there may be differences between the big four banks and other banks when comparing deposit products. Smaller, competitor banks may be able to offer a greater rate of return and fewer fees on your term deposit due to the very reasons listed above.

Features to consider when choosing a bank term deposit

When selecting a term deposit, it’s important to read the product disclosure statement, so you know all the terms and conditions that come with the deposit. Some of the key features to look out for include:

Term length

There are two main types of term deposits – short-term and long-term. Their appropriateness depends on your personal objectives for your savings. Short-term deposits are usually for a period of less than a year and as little as a month. If you have a short-term goal such as saving for a holiday, this type of term deposit could be a good option.

Long-term deposits are typically for saving over more than a year and up to five years (or even seven years in some cases). This type of term deposit could be suitable if you have a more significant savings goal or want to take advantage of a higher interest rate.

Interest rate

The interest rate you agree on at the start of the term will determine how much of a profit you make off your deposit, so it pays to do some research and look at all your options.

Keep in mind that the longer you keep your money in the bank and the more money you can deposit, the higher the interest rate will tend to be.

Fees

Term deposits are a competitive financial product amongst savers due to their having fewer fees than most savings accounts or even bank accounts. The biggest fee you may face is a break fee if you try to make an early withdrawal and leave the term deposit fixed term early. Keep this in mind if you plan on withdrawing your funds before the agreed upon period of time.

Automatic rollover

Many term deposit accounts offer automatic rollovers. Unless you notify the provider within a set period of time (often 30 days notice before the end of the term deposit period), your funds may rollover into a new term deposit fixed period. For example, if you locked away your funds for 12 months, your provider would roll your money and interest earned into a new 12-month term deposit.

This feature can have its advantages though, as some providers offer bonus interest for account holders who allow their funds to rollover into a new term. Ensure you measure the appropriateness of this by comparing interest rates from other providers before locking your funds away again.

Pros and cons of term deposits

If you’re thinking about using a term deposit to grow your money, here are some of the pros and cons worth considering:

Pros

Rate of return. Your money earns interest at a fixed interest rate, so it isn’t exposed to variable rate downturns in the market.
Low maintenance. Once you make the deposit, you can leave it untouched until the term ends.
Enforced savings. As you can’t access your money for the duration of the term without paying a fee, you may be less tempted to spend your savings than if you used a savings account or transaction account.

Cons

Your money is locked away. You can’t withdraw your money during the lifetime of the term (unless you are willing to pay a penalty), which means it’s off-limits even if another investment opportunity arises.
Low returns. Although the interest rate is fixed, the earnings may be lower than other types of investments.
No bonus interest. Unlike some high-interest savings accounts, there’s no way to earn bonus interest on savings in a bank term deposit.

Alex Ritchie

Personal Finance Editor

Alex Ritchie was a Personal Finance Writer and Editor at RateCity, and has been writing about Australian finance for over six years. Her expertise and passion covers loans, credit, superannuation, and closing the gender pay gap, and she aims to help young Aussies to overcome their financial apathy. Alongside RateCity, Alex has been published in numerous publications, including Australia's Money Magazine, Business Insider, Lifehacker Australia, and in health via NPS MedicineWise.

This article was reviewed by Personal Finance Editor Mark Bristow before it was published as part of RateCity's Fact Check process.

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^Words such as "top", "best", "cheapest" or "lowest" are not a recommendation or rating of products. This page compares a range of products from selected providers and not all products or providers are included in the comparison. There is no such thing as a 'one- size-fits-all' financial product. The best loan, credit card, superannuation account or bank account for you might not be the best choice for someone else. Before selecting any financial product you should read the fine print carefully, including the product disclosure statement, target market determination fact sheet or terms and conditions document and obtain professional financial advice on whether a product is right for you and your finances.

What is a term deposit?

What are the benefits of choosing a bank for my term deposit?

When choosing the best term deposit for your financial situation, one question you may face is what type of provider should I use?

Here are some benefits of bank term deposits:

Safer investment. Larger financial institutions carry less risk of going under than newer banks, such as neobanks. While all Australian Deposit Institutions (ADIs) are backed by the Australian government financial claims scheme, you're typically afforded greater security when banking with a well-established big bank.
Everything in one place. Another perk of using a bank for your term deposit is that the bank will more likely offer a greater range of other financial products. This can be useful for the Aussies who prefer the convenience of all their finances, such as home loans and savings accounts, with the same bank.
Pay interest on larger deposits. Most term deposit rates are set on a tiered basis, meaning that depending on the minimum deposit you can make, you may be offered a different interest rate for a bigger or smaller deposit. Banks - especially the big four - will be more likely to be able to afford interest on larger deposit amounts, and may even offer more competitive interest rates for these deposit sizes. This is because traditional banks will simply have more funds to afford bigger payouts to customers than newer neobanks, for example.

What are the disadvantages of choosing a bank for my term deposit?

It's also worth considering some of the potential disadvantages of choosing a bank, including:

Lower rate of return. Online lenders and some competitor banks may be able to offer a higher rate of return through interest payments. This is because compared to traditional brick-and-mortar banks, these providers have fewer overheads and can pass these savings onto the customers in the form of high interest rates.
Higher fees. Similarly to the point above, non-bank term deposit providers can typically afford to charge customers fewer fees. This also helps to set themselves out as more competitive in the market in an effort to attract new customers.
Access to fintech. If you choose to bank with a newer credit union, online lender or neobank, you may be more likely to gain access to innovative fintech and savings tools. While term deposits are relatively simple deposit accounts, savers may miss out on other perks and tricks to boost their savings that may be offered by these competitor lenders.

Compare bank term deposits

Providers we compare

On this page

What is a term deposit?

What are the benefits of choosing a bank for my term deposit?

What are the disadvantages of choosing a bank for my term deposit?