Best High Interest Term Deposits

Find out how to compare term deposits with Savvy so you can find the best high interest term deposit available in Australia.

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, updated on September 11th, 2023       

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Term deposits are a trusted way to stash your spare cash and earn the highest rate of interest.  However, not all term deposits offer the best interest rates, so it’s important to compare your various options on the market to find one that offers the best deal for your savings. 

Savvy can help you compare a range of offers from institutions around the country so you can find the best high interest term deposit available and stash your savings with confidence. 

How do I compare high interest term deposits?

Term deposits are a way of locking away your savings for a set period in return for earning high interest.  The longer you agree to lock away your savings, the higher the interest rate you can expect to earn.  The best high interest term deposit rates are offered for deposits spanning multiple years. 

The most important way to compare term deposits is in terms of their interest rate.  This will determine how much of a return you’ll receive on your savings over the term of your deposit, so it’s crucial to compare to find the best rate.  Even relatively small differences in the interest rate can make a big difference to your earnings.  The table below demonstrates this for a $25,000, three-year term deposit with interest paid monthly:  

Deposit Term Interest rate Interest earned Total saving
Three years
1.00% p.a.
Three years
1.75% p.a.
Three years
2.50% p.a.

*Interest isn’t necessarily reflective of current market rates. 

Some of the other key ways to compare term deposits include: 

  • the terms available (the minimum term available is one month up to a maximum of around five years, with almost all institutions offering a wide variety of terms) 
  • what options there are to have your interest paid (monthly, quarterly, annually or at maturity) 
  • penalty fees and loss of interest if you break your term 
  • notice required to withdraw your funds (some can have your funds available at call, while others require 31 days’ notice) 

You can compare term deposits across all the most important areas to you right here with Savvy.  Take advantage of the information at your fingertips. 

What factors affect the interest rate offered on the best high interest term deposits?

The interest offered on term deposits is influenced by the official RBA cash rate, as are almost all interest rates in Australia.  The higher the cash rate, the higher the fixed rate is likely to be.  The interest rate offered on term deposits will also increase the longer you agree to lock up your funds.  This is because your financial institution will receive a better rate of interest on the international money market for a longer period of certainty (having your funds available to use for other purposes). 

Choosing to have your interest paid annually or at maturity will also earn you a slightly higher interest rate to compensate for the lack of compounding in your account.  By paying interest monthly, your account will grow more quickly due to the effect of compounding, so you may earn more interest overall. This is why banks pay a slightly higher rate to receive your interest annually or at the end of your deposit period.  The below table demonstrates the difference in interest on a $10,000 deposit for two years when adjusting its interest frequency. 

Amount and interest rate Interest paid frequency Total interest earned
$10,000 at 3.65% p.a.
$10,000 at 3.65% p.a.
$10,000 at 3.65% p.a.
$10,000 at 3.65% p.a.
$10,000 at 3.70% p.a.

The table above shows how you’ll earn slightly more interest overall if your interest is paid back into your account monthly.  This also demonstrates that if you want to find the best deal for your money, it’s necessary to compare not only those accounts which offer the highest interest rates in Australia but also to look at other factors such as interest payment frequency, to ensure you get the very best deal. 

Other factors to consider 

Bonus interest 

Some financial institutions offer a bonus interest rate if you roll your funds into another term deposit, so these special offers are worth comparing too.  For example, you may be offered a 0.2% p.a. increase in interest rate if you roll your funds over for a second term.  

Penalties for early withdrawal 

It’s important to look at the penalties charged if you have to terminate a term deposit early and how much interest you’ll lose if you do this.  Set penalty fees range from $30 to more than $50.  In addition to charging the penalty fee, some institutions also dock the interest earned if you want to withdraw your funds early.  The amount of interest reduction can depend on how early you withdraw your funds; for example, a 50% early withdrawal can result in a 50% reduction in interest paid.

Will I get a better interest rate on a savings account than a term deposit?

No – you’ll generally be offered a higher rate on a term deposit than you would with a savings account.  However, this does depend on you comparing the interest rate on both types of accounts to make sure you get the best rate available.  There are many similarities between high interest savings accounts and term deposits, but there are major differences too.  Both offer a very safe and risk-free way to deposit your savings and earn high interest on them. 

With a high-interest savings account, you’re free to deposit and withdraw money as you wish, but with a term deposit, you’re locked into depositing a set sum of money, and can’t add to that sum once the initial deposit has been made.  A savings account also allows you access to your funds at all times, which most term deposits don’t (without giving your bank 31 days' notice, or in exceptional circumstances such as financial hardship.) 

Savings accounts also typically have a variable interest rate, meaning the rate can change at any time, whereas term deposits come with a fixed rate.  

Who currently offers the best high interest term deposits?

The best high interest term deposits in Australia are generally offered by smaller and online banks.  This is because they have fewer overheads than the major banks, which have to maintain branches all over Australia and pass on a portion of their profits to shareholders.  As of June 2022, the best high interest term deposit accounts are offered by AMP Bank, Judo Bank, MyLife Finance and Macquarie Bank.

Current maximum term deposit interest rates for a $5,000 deposit

Institution Six-month term deposit One-year term deposit Two-year term deposit Three-year term deposit Five-year term deposit
AMP Bank
1.85% p.a.
2.85% p.a.
3.60% p.a.
3.85% p.a.
4.10% p.a.
Judo Bank
1.85% p.a.
2.70% p.a.
3.40% p.a.
3.45% p.a.
4.00% p.a.
MyLife Finance*
1.95% p.a.
2.75% p.a.
3.00% p.a.
3.35% p.a.
3.75% p.a.
Macquarie Bank
1.90% p.a.
2.75% p.a.
3.30% p.a.
3.35% p.a.
3.50% p.a.

*Soon to be known as Challenger. 

As interest rates are on the increase in Australia in 2022, it’s important to compare interest rates with Savvy to make sure you find the best possible deal.  By comparing a range of options, you can select the one with the highest rate with more confidence.

Why compare term deposits with Savvy?

More of your high interest term deposit questions

How is interest calculated and paid on term deposits?

Interest on term deposits is calculated on a compounding interest basis.  This means the interest you earn can be added back into your account to earn interest itself.  This results in your savings growing faster the longer they’re left alone to earn interest.  You can work out how much interest you'll earn using Savvy's term deposit calculator.  

You can choose to have your interest paid monthly, quarterly, annually or ‘at maturity’, which is at the end of your term deposit.  You can also choose whether you have your interest paid into another bank account, or have it paid into your term deposit account.  Paying it back into your term deposit will have the effect of increasing the amount of money you earn interest on.  The interest you earn will have to be declared as income in your annual tax return. 

Can I withdraw my funds from a term deposit in an emergency?

If you do suffer an emergency, you can apply to the financial institution to access your funds under ‘exceptional circumstances’ clauses.  It would be up to the bank to decide if your circumstances warrant releasing funds to you, but you will probably have to pay a penalty fee for early withdrawal and may lose a portion of the interest you would have earned if you’d left your funds in place. 

Is there a minimum deposit amount for a term deposit?

Yes – most financial institutions have a minimum term deposit, but this varies between banks. The smallest deposit is usually around $1,000, although some institutions have a minimum of $5,000 or more. 

Can I have a joint term deposit?

Yes – term deposits are available either for individuals or jointly with another.  There are also term deposits especially for businesses and for self-managed super funds (SMSFs) which can be opened in the name of several directors. 

Can children open a high interest term deposit account?

This will depend on the financial institution you choose.  Many banks require a customer to be at least 18 years of age to open a term deposit, whilst a few others do allow kids to open a term deposit as young as 12 or 13 years old.  Children’s term deposits have the same interest rates as their adult equivalents.

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