Maximise your savings: top terms deposits for May 2023

The Reserve Bank of Australia (RBA) returned to raising the cash rate to 3.85% in May, after taking a break in April to review Australia’s inflation situation. There are a number of competitive term deposit rates available if you’re looking to stockpile some savings. 

It’s been difficult for leading economists, let alone the general public, to predict when the RBA’s tightening cycle may peak. The big four bank forecasts suggest that we’re at, or very near to, the end of this year-long rate hike cycle.

If you’re considering putting away a portion of your savings for an extended period, now may be an opportune time to compare a range of term deposit accounts and the different options that are available.

For example, you might be interested in short term deposits. These types of accounts can be an attractive option for investors wishing to deposit and grow their money for up to 12 months.

Although not all banks have increased their term deposit products in line with each interest rate rise, a number of banks are offering rates above 4.50% per cent, while one bank is offering 5% over a five-year term.

RateCity research shows that the big four banks’ highest term deposit rates were only between 0.2 - 0.3 per cent before the RBA hikes began in May 2022. Now, the highest rates offered by the big four banks are at least 3.85%.

Tax implications for term deposits

The tax you pay on any profits generated by a term deposit is not capital gains tax. Interest earned on a term deposit is considered income and must be declared as part of your annual tax return.

Generally, the ATO will have a record of your financial products when you advise them of your banking details, including savings accounts and term deposits. When you go to fill in your annual tax return, the interest you earned on your savings products is typically auto-generated.

The amount you pay will depend on the length of the term, and when your interest is paid (monthly, at maturity etc.)

There is no single best term deposit account as everyone’s needs are different. To get a better idea of which accounts may provide the most value for your money, you could consider comparing their Real Time Ratings™, to evaluate interest and flexibility scores.

High interest 1-year term deposits

A year could be the time it takes to grow your wealth using a term deposit. Compare interest rates, returns, fees and more, and find a term deposit ideal for your financial situation.

High interest 3-year term deposits

Three year term deposits can be an excellent choice if you’re seeking a secure and stable place to park your cash. You may also enjoy a higher overall yield than a traditional savings account.

High interest 5-year term deposits

Five year term deposits are a smart option for those willing to commit their funds for a longer period, as they typically offer higher interest rates and can provide a reliable source of passive income.

Compare term deposits