Term Deposit Comparison Australia 2025
IntuitiveCalc Team
Financial Content Specialist
Term deposits offer a safe, guaranteed return on your savings with rates often beating standard savings accounts. With interest rates still elevated in 2025, now is a good time to lock in competitive term deposit rates for your savings.
Key Takeaways
- Best term deposit rates currently range from 4.50%-5.25% p.a.
- Deposits up to $250,000 per ADI are protected by Government Guarantee
- Early withdrawal usually means losing all or most interest earned
- Smaller banks often offer higher rates than the Big 4
- Consider laddering multiple term deposits for flexibility
What is a Term Deposit?
A term deposit is a savings account where you lock your money away for a fixed period (the "term") in exchange for a guaranteed interest rate. Key features include:
Advantages
- Guaranteed return: Rate locked in at start
- Government protected: Up to $250k per ADI
- No market risk: Value doesn't fluctuate
- Simple & predictable: Know exact maturity value
- Often higher rates: Than standard savings accounts
Disadvantages
- No access to funds: Until maturity
- Early withdrawal penalties: Lose interest
- Rate locked: Miss out if rates rise
- Inflation risk: Returns may not beat inflation
- Minimum deposits: Often $1,000-$5,000
Best Term Deposit Rates January 2025
Here are the top term deposit rates across different terms (rates as of January 2025, subject to change):
3-Month Term Deposits
| Bank | Rate (p.a.) | Min Deposit | Interest Paid |
|---|---|---|---|
| Judo Bank | 5.00% | $1,000 | At maturity |
| Rabobank | 4.90% | $10,000 | At maturity |
| ING | 4.70% | $5,000 | At maturity |
| ME Bank | 4.60% | $1,000 | At maturity |
6-Month Term Deposits
| Bank | Rate (p.a.) | Min Deposit | Interest Paid |
|---|---|---|---|
| Judo Bank | 5.15% | $1,000 | At maturity |
| Rabobank | 5.05% | $10,000 | At maturity |
| Macquarie | 4.85% | $1,000 | At maturity |
| ING | 4.75% | $5,000 | At maturity |
12-Month Term Deposits
| Bank | Rate (p.a.) | Min Deposit | Interest Paid |
|---|---|---|---|
| Judo Bank | 5.25% | $1,000 | Annual |
| Rabobank | 5.10% | $10,000 | Annual |
| Bank of Queensland | 4.90% | $5,000 | Annual |
| ING | 4.80% | $5,000 | Annual |
Big 4 Bank Rates Comparison
| Bank | 3 Month | 6 Month | 12 Month | 24 Month |
|---|---|---|---|---|
| Commonwealth Bank | 4.20% | 4.40% | 4.40% | 4.00% |
| Westpac | 4.25% | 4.50% | 4.45% | 4.05% |
| NAB | 4.30% | 4.55% | 4.50% | 4.10% |
| ANZ | 4.15% | 4.35% | 4.35% | 3.95% |
Rates as of January 2025. Check bank websites for current rates.
Rate Tip
The Big 4 banks typically offer 0.50-0.80% lower rates than smaller banks and credit unions. If safety is your concern, all ADI deposits up to $250,000 are equally protected by the Government Guarantee, regardless of bank size.
How to Calculate Term Deposit Returns
Simple Interest Calculation
Formula: Interest = Principal × Rate × Time
Example: $50,000 at 5.00% for 12 months
Interest Earned by Deposit Size
| Deposit Amount | 6 Months @ 5.00% | 12 Months @ 5.00% | 24 Months @ 4.50% |
|---|---|---|---|
| $10,000 | $250 | $500 | $900 |
| $25,000 | $625 | $1,250 | $2,250 |
| $50,000 | $1,250 | $2,500 | $4,500 |
| $100,000 | $2,500 | $5,000 | $9,000 |
| $250,000 | $6,250 | $12,500 | $22,500 |
Interest calculated as simple interest. Actual returns may vary based on interest payment frequency.
Government Guarantee Scheme (FCS)
The Financial Claims Scheme protects your term deposits:
Your Money is Protected
- Up to $250,000 per person per ADI (Authorised Deposit-taking Institution)
- Covers term deposits, savings accounts, and transaction accounts
- Applies to all Australian banks, building societies, and credit unions
- Protection is automatic - no application required
- Joint accounts: Each account holder protected up to $250k for their share
Maximizing Government Protection
If you have more than $250,000 to deposit:
- Spread across multiple ADIs: $250k at Bank A, $250k at Bank B
- Use different account types: Individual, joint, company, trust
- Different ownership structures: Each entity gets separate $250k protection
Important: Same ADI Brands
Some banks share the same ADI license. For example, Westpac, St George, BankSA, and Bank of Melbourne are all one ADI. Deposits across these brands count toward the same $250k limit. Check APRA's register for ADI groupings.
Term Deposit Strategies
Laddering Strategy
Laddering involves spreading your money across multiple term deposits with different maturity dates:
Laddering Example: $50,000 Total
Benefits: Regular access to funds (every 3 months), average higher rates, flexibility to reinvest at new rates.
When to Lock in Longer Terms
Lock Longer When:
- Interest rates are expected to fall
- You don't need the money for a known period
- Longer terms offer significantly higher rates
- You want certainty of returns
Stay Short When:
- Interest rates are rising
- You may need emergency access
- Short-term rates are similar to long-term
- Economic outlook is uncertain
Early Withdrawal Penalties
Breaking a term deposit early typically results in reduced or no interest:
| Bank | Early Withdrawal Policy |
|---|---|
| Commonwealth Bank | Reduced rate applied (usually savings account rate) |
| Westpac | 31 days notice; interest adjustment applies |
| NAB | 31 days notice or forfeit all interest |
| ANZ | Fee applies; reduced interest rate |
| ING | No early withdrawal allowed (some exceptions) |
Before You Deposit
Always read the terms and conditions regarding early withdrawal before opening a term deposit. If there's any chance you'll need the money, consider a shorter term or high-interest savings account instead.
Term Deposit vs Alternatives
| Feature | Term Deposit | High-Interest Savings | Offset Account |
|---|---|---|---|
| Typical Rate | 4.50-5.25% | 4.00-5.50%* | 5.50-6.50%** |
| Access | Locked until maturity | Anytime | Anytime |
| Rate Guarantee | Locked at start | Can change | Matches loan rate |
| Tax | Interest taxable | Interest taxable | Tax-free benefit |
| Best For | Known savings goals | Emergency fund | Mortgage holders |
*Bonus savings rates may have conditions. **Offset benefit equals home loan interest rate.
Tax on Term Deposit Interest
Interest earned on term deposits is taxable income:
- Interest reported to ATO: Banks report interest via TFN/ABN
- Included in tax return: Declare under "Interest income"
- Taxed at marginal rate: 0% to 45% depending on your income
- No TFN provided? Bank withholds 47% of interest
Tax Tip: Timing Interest
Interest is taxable in the year it's received or credited. If you're near a tax bracket threshold, consider when interest will be paid. Some term deposits offer monthly, quarterly, or at-maturity interest options - choose strategically.
How to Open a Term Deposit
- 1 Compare Rates
Use comparison sites or check bank websites directly. Look at rates for your preferred term and deposit amount.
- 2 Check Terms & Conditions
Read early withdrawal policies, minimum deposits, and interest payment frequency.
- 3 Apply Online or In-Branch
Most banks offer online applications. Provide ID and TFN. Existing customers often have faster approval.
- 4 Transfer Funds
Transfer your deposit amount. Term usually starts from when funds are received.
- 5 Choose Maturity Instructions
Decide what happens at maturity: reinvest, transfer to savings, or receive payout.
Frequently Asked Questions
What happens when my term deposit matures?
You'll typically have a grace period (usually 7-14 days) to decide what to do. Options include: withdraw funds + interest, roll over to a new term at current rates, or let it auto-renew (check default instructions). If you do nothing, most banks will auto-renew at their current rate.
Are term deposits safe?
Yes, very safe. Term deposits with Australian ADIs are protected by the Government's Financial Claims Scheme up to $250,000 per person per institution. Even if the bank fails, your deposit is protected. Unlike shares or property, there's no market risk.
Should I negotiate term deposit rates?
Yes, especially for larger deposits ($100,000+). Banks may offer "special rates" not advertised publicly. Call the bank, mention competitor rates, and ask about loyalty discounts or bonus rates for new customers. Many banks have flexibility on rates for significant deposits.
Is it better to lock in now or wait for rates to rise?
No one can predict rates perfectly. If current rates meet your needs, locking in provides certainty. If you're unsure, use a laddering strategy - put some in short terms (flexibility) and some in longer terms (higher rates). This hedges against rate movements either way.
Related Resources
Disclaimer: Interest rates shown are indicative and subject to change. Always verify current rates directly with the financial institution before opening a term deposit. This guide provides general information only and is not personal financial advice. Consider your personal circumstances before making savings decisions.