Some of the top-rated term deposits in December 2024

Despite inflation easing throughout 2024, the Reserve Bank of Australia (RBA) may keep the cash rate on hold for an extended period. In response, several major banks have pushed back their forecast for the next cash rate cut from February 2025 to May 2025, citing factors such as persistent monthly trimmed mean inflation.

What does this mean for savers?

While the cash rate may stay high for now, many banks and other financial institutions have already started reducing term deposit interest rates, particularly for longer terms, in preparation for future cuts.

Since 1 November 2024, term deposit rate changes have mostly been dominated by reductions rather than increases. According to RateCity’s data, there has been a notable downward trend in rates. Approximately 15 lenders have increased their term deposit rates, while around 20 lenders have reduced theirs.

For savers, this means that longer-term deposits may now come with less attractive interest rates compared to what was available a year ago. Banks and Authorised Deposit-taking Institutions (ADIs) are lowering rates on these deposits to align their fixed-rate products with the expected market environment.

However, there are still opportunities for short-term savers, with competitive rates in the 5% range available for deposits under 12 months. This could be an appealing option for those who want to take advantage of higher rates before they potentially decrease further as we inch closer to a forecasted rate cut in 2025.

If your term deposit is nearing maturity or you’re considering opening one, it’s important to carefully compare your options. Look beyond just the interest rate – consider the term length, fees, and early withdrawal penalties. Acting sooner rather than later could help you secure a better return before rates decline further.

Highest deposit rates on a $25,000 deposit:

1-year term deposits

2-year term deposits