Term Deposit Rates

As well as locking your investment away where you can’t spend it, a term deposit also helps you save by paying you interest on that investment. However, not all term deposit providers offer the same interest rates for the same terms and a six month term deposit may earn you 6.00% with one bank and only 4.00% with another. Plus the differences in term deposits according to the term you choose can be great, so following is some advice on understanding term deposit rates, and getting the best returns on your investment.

Featured Term Deposit Account

With a ME Bank Super Members Term Deposit Account you have a low minimum deposit of $1,000, no account keeping fees to pay and a bonus interest of up to 0.25% p.a. for members of eligible industry super funds and unions

• 1 Month: 4.00% p.a.
• 3 Months: 5.70% p.a.
• 4 Months: 5.50% p.a.
• 6 Months: 5.90% p.a.
• 12 Months: 5.55% p.a.
• 24 Months: 5.40% p.a.
• Minimum Deposit Amount: $1,000

Read the ME Bank Super Members Term Deposit Account terms and conditions

Featured Term Deposit Rates

Term Deposit	1 Month	3 Month	4 Month	6 Month	12 Month	24 Month	36 Month	60 Month	Min Deposit
St.George Term Deposit	2.55%	3.25%	5.45%	5.20%	5.30%	5.40%	5.70%	6.05%	$5000

The Choices You Can Make Which Affect Your Term Deposit Rates

Term deposits are not the inflexible investment that they first appear to be. In fact you can choose and vary just about every option of your term deposit account, but the important thing to keep in mind is that these variations will affect the interest rate you can earn.

Term deposit choices:

• The amount of investment. Of course the more you invest in a term deposit, the more money there is to earn interest and so the more interest you will earn. However, if you are able to invest a higher amount in a term deposit you may be able to negotiate a higher interest rate, for example even term deposits over $5,000 can negotiate a better rate, while if you have $10,000, $25,000 or even $100,000 most banks would be happy to offer you a higher term deposit rate.
• The term of the investment. There are different interest rates offered on different terms as the banks want you to invest for the longest possible time, and so will make it worth your while in interest. Therefore, to secure the highest term deposit rates you want to look at investing in the longest possible term, usually five years as this will have the highest interest rate. Also keep in mind that all interest rates listed are per annum rates, so if you are investing in a term deposit for six months and the interest rate is listed as 5.00%, you will actually only be earning 2.50% on your investment because you have only invested for half the year.
• When your returns are paid. For term deposits over 12 months, you can choose when you have your interest returns paid. Often you can choose to be paid returns quarterly, six monthly, yearly or at the end of the entire term. Where the banks try and encourage you to invest for the longest possible time, they also want to encourage you to wait the longest possible time for your returns too, so there are often reduced interest rates offered on term deposit accounts on which returns are paid before the end of the term.
• Pulling out your investment early. This is not a choice you want to make if you can avoid it because you will forfeit a lot of your interest earned and may even be charged cancellation fees for accessing your term deposit investment before the end of the term.

Why You Should Open a Term Deposit Account

With all these factors affecting your term deposit rate, why would you want to open a term deposit account? Because now you know about all the ways your term deposit rates can be affected, you can avoid them and earn the highest returns on your investment.

Why you need a term deposit:

• You can make the right choices. You now know all the variables you can choose when opening a term deposit account, and you know the choices which will adversely affect your interest rate and your returns. Therefore, you need to open a term deposit to make the most of this knowledge, and to make the most of a lump sum you have been looking to invest.
• Your investment will be locked away and won’t be spent. If you are saving your investment for a purchase or expense in the longer term then you want to make sure that it is somewhere earning high interest and somewhere you won’t be tempted to spend it. Investing in a term deposit with the best rates means you won’t have access to your funds, but you can be sure they are growing.
• Term deposit rates are guaranteed. Once you have chosen all of your variables to ensure the highest term deposit rate, that rate will be fixed for the life of the term. No matter what else happens in the financial markets you can be sure your investment will continue to earn you a high rate of interest.

The interest rate you can get on a term deposit in Australia depends on the bank you choose, as well as the variables you decide on to make a comfortable investment for your circumstances. Term deposit interest rates from Australian banks are determined by the official interest rates. Each term deposit provider also offers their own specials and promotes different terms and choices so you need to know what you are looking at when you compare term deposit interest rates in Australia.

How to Compare Term Deposit Interest Rates in Australia

In order to find the best term deposit interest rate in Australia, you need to make sure you are making comparisons based on your needs, and comparing term deposit accounts which can cater to those needs as interest rates can differ depending on the choices you make with regards to your investment amount and terms.

The term deposit interest rate in Australia is affected by:

The length of the term you choose to invest. In general Australian banks will offer you a higher interest rate on a longer term deposit because they want to encourage you to leave your money with them for as long as possible, this allows the bank to use your investment for their own investments for longer, giving them the opportunity to make better returns, and so the bank will reward you for this. However, it is also important to remember that high interest rates are often offered on shorter terms to attract new customers or promote a new product for the bank, and this can be your chance to earn the same interest rate on a six month deposit as you would on a five year investment.
The amount you invest in your term deposit. In the same way Australian banks want to invest your investment for as long as possible, they also want to invest as much as possible. However, before you pool all of your savings to invest everything you have in a term deposit account to secure a high rate, remember that if you need access to those funds during your investment you will be penalised, often with a cancellation fee and always with a reduced interest rate.
How often you choose to receive your interest. If you opt to receive interest income from your term deposit during your term you may be eligible for a lower interest rate. Therefore, if interest income from your term deposit is an important feature, make sure you compare the rates offered on payments of your frequency as these differ between Australia banks just as much as the standard rates.
Know a little about the bank before you invest. Compare not only the term deposit account but also the provider as you are locking in an investment to a fixed account for an extended period of time and you need to be sure your investment will be safe. Therefore, find out who is offering the account and which if any Australian bank they are affiliated with or owned by, make sure the provider is secure and has a good credit rating as they may only be offering high interest rates to attract customers to get them out of financial trouble.

How Term Deposit Interest Rates from Australian Banks Compare to Other Investments

As well as comparing term deposit interest rates in Australia to find the product with the best returns, learn more about how a term deposit interest rate compares to the returns of other investment options:

The interest rate on Australian term deposits is guaranteed. From the moment your application for a term deposit account is received your interest rate is locked in and guaranteed. This means that your investment will earn the same interest rate every day of your term regardless of whether the bank has to drop their rates, yours is locked in.
Your returns are higher because the term deposit is secure. If you were to invest your money in a high interest savings account, the interest offered on the savings account may appear higher because the rate is higher initially. However, the rate on a savings account is variable and can be changed at any time, so while it may start out higher, overall the rate is likely to go down, making the secure interest rate of a term deposit a more secure investment too.
Term deposit interest is calculated daily. On Australian term deposit accounts the interest is calculated daily on the current balance meaning your investment earns compounding interest from the beginning. This gives your term deposit better growth over the term because you are earning interest on your interest.

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