Historical Term Deposit Rates

Posted April 2nd, 2010 and last modified July 23rd, 2014

With high fixed interest rates and no need for maintenance, a term deposit could be a great option if you want to get the most out of your money.

The only way we can move forward is to learn from the past. Looking at historical term deposit rates can help you to make a more educated choice when sorting out what term deposit will be right for you. By comparing current term deposit rates with historical term deposit rates, you’ll have the ability to make a better informed judgment, ensuring you won’t make the same mistakes others have made in the past.

Historical term deposit rates

Here are some of the term deposit rates NAB had from 2011 through to 2014.

Date 6 months 12 months 2 years
6/6/11

6.11%p.a

6.18%p.a.

6.30%p.a.

2/1/12

5.75%.p.a.

5.24%p.a.

5.21%p.a.

4/6/12

4.97%p.a.

5.00%p.a.

5.10%p.a.

7/1/13

4.40%p.a.

4.25%p.a.

4.40%p.a.

3/6/13

3.98%p.a.

4.00%p.a.

4.20%p.a.

6/1/14

3.70%p.a.

3.75%p.a.

3.90%p.a.

Check out current term deposit rates below.

Term Deposit Accounts Comparison

3 Months p.a. 4 Months p.a. 6 Months p.a. 12 Months p.a. 24 Months p.a. 36 Months p.a. 60 Months p.a. Min Deposit
Bankwest Online Term Deposit
Bankwest Online Term Deposit
3.00% 3.55% 3.60% 3.60% 3.75% 3.90% 4.20% $1,000 OpenMore
St.George Term Deposit
St.George Term Deposit
2.75% 3.25% 3.25% 3.35% 3.60% 4.05% 4.35% $1,000 OpenMore
ING DIRECT Term Deposit
ING DIRECT Term Deposit
3.20% 3.20% 3.30% 3.60% 3.80% $10,000 OpenMore

Compare more term deposits

History of Term Deposits

Term deposits have changed quite significantly when compared to their counterparts from the past. There have been some major changes in the modern financial market. Some changes include:

  • Banks previously did not have competitive interest rates. Historically, banks relied on wholesale bond markets to secure their funds. This meant that there was not an emphasis on gaining and retaining funds from term deposits. Because the banks were not focused on term deposits, the market was nowhere near as competitive as it is today. Now, banks give extremely competitive interest rates, as much of their funds stem from customers investing their money in term deposit accounts.
  • The Global Financial Crisis changed interest rates. After the impact of the GFC on the Australian economy, the Australian government employed a ‘deposit guarantee’ of up to $1 million, in the event that an Australian bank could not meet its commitments. In return for this security, banks can now offer higher term deposit interest rates to their customers.
  • Investors did not always have security. This ‘deposit guarantee’ gave individuals throughout Australia a peace of mind that no one had before. Investors had complete security in terms of their accounts, and so more people began to take interest in opening their own term deposits.
  • Smaller lenders were not as competitive. Regional banks, building societies and credit unions got much of their funding through securitisation markets. This meant they did not offer competitive term deposit rates, as they did not rely on these accounts to maintain their funds.

How to find the best term deposit

Before deciding on a term deposit, there are many features you need to consider to make sure you secure the highest rate of return.

  • Interest rates. Generally, the interest rate is fixed for the length of the term. Since there are so many term deposit accounts on the market, interest rates will typically be very competitive. However, most banks will have the option of choosing how your interest will be paid. This could be fortnightly, monthly or annually. How your interest rate is paid will change what interest rate your lender will offer you. Looking at historical term deposit rates can help you to make a more informed decision when choosing a lender, and when choosing the terms of how the interest rate will be paid.
  • Length of term. Generally, the length of term deposits can range anywhere from a few months to a few years, depending on what the particular bank is offering. The length of the term will affect the interest rate, so don’t just choose the shortest term expecting to get the same interest rate as a long-term deposit account.
  • Minimum/maximum balance. Most banks will have a minimum or maximum amount of money you can deposit into the account. This will vary from lender to lender. Make sure the lender you choose can offer you a minimum deposit you will be able to leave untouched for an extended period of time, so that you don’t feel pressured to deposit an amount that you can’t afford.
  • Fees and charges. There are generally no ongoing fees or charges associated with term deposits. However, banks will charge hefty fees for early withdrawals. Make sure you deposit an amount you definitely won’t need to withdraw from, or you might lose money, which may cancel out any interest your deposit has earned.

Lessons to learn from historic deposit rates

Looking at historical term deposit rates can help you to assess whether the current economy is favourable for you to open an account. There are many lessons we can take on board from the past, such as:

  • Rates will constantly change. The financial market is constantly changing and interest rates do not remain the same. The economy works in a cycle, and with any bank account, interest rates will swing up or down depending where the economy is in that cycle. When choosing a term deposit, look at the current economic situation to determine whether the interest rates are rising or falling.
  • Lenders will offer different options. Features and options of term deposit accounts will vary from lender to lender. Some banks now allow you to increase the interest rate during the term if the interest rates of the lender have increased. Other lenders may also give you the opportunity to access your funds before the account reaches maturity. Make sure you check with your lender if any of these flexible options will incur any fees.
  • Interest rates should always be competitive. Since the GFC, interest rates should always be quite competitive, as most banks now get a substantial amount of funds from term deposits. If there are large differences in the interest rates you are comparing, make sure the interest rate is not just an introductory offer that may be lowered after a certain time period.

Pros and cons of term deposits

  • Pros

  • No maintenance. With high interest savings accounts, you generally have to keep depositing a certain amount of money every month to earn a higher level of interest. With term deposits, once you have deposited your balance you simply let the money sit and collect interest for the duration of the term, without having to deposit any more funds into it.
  • Fixed rate. Generally, the interest rate will be fixed for the life of the deposit. This means you will know exactly how much interest will be accrued once the term deposit has reached maturity. This is great for anyone who wants to meet a certain financial goal or who is sticking to a budget.
  • No/low ongoing fees and charges. Typically, term deposits do not charge account keeping fees or ongoing charges.
  • Cons

  • No access to funds. Unlike a savings account, term deposits do not allow you to access the funds until the deposit has matured.
  • Hefty penalties for early withdrawal. If you desperately need to access the funds in the term deposit, the lender will charge you a high penalty, which may be in the form of cancellation fees or an interest rate penalty. Make sure you only invest an amount of money you know you won’t need for the life of the deposit.

How to apply for a term deposit

Most banks allow you to apply for a term deposit online, and it usually only take five to ten minutes if you already have another account with the same bank. It’s still an easy process if you’re a new customer, you’ll just have to provide a few more details.

To set up most term deposits, you will need to be over 16 years of age, be an Australian resident and have an existing bank account.

The application will ask for your personal details, what bank account you would like to link the term deposit to, the amount of your deposit and the life of the term.

Ask a Question

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8 Responses to Historical Term Deposit Rates

  1. Default Gravatar
    ray | June 10, 2014

    Most banks make it difficult to transfer large sums. I am speaking of transfers between accounts of different banks in Australia – eg I want to transfer $50k into a newly opened account in say BankWest from my Combank account – I cant do as my max daily transfer is 10K – other banks even have smaller daily maximums.
    How can we best transfer large sums without hassle and costs?

    • Staff
      Shirley | June 10, 2014

      Hi Ray,

      Thanks for your question.

      Many banks let you change this limit. To do this, please contact the relevant customer service team.

      Cheers,
      Shirley

    • Default Gravatar
      ray | June 16, 2014

      They do, but you soon hit the limit, which is usually pretty low. I was thinking there may be a service that assists with interbank money transfers? Like you can Bpay up to 100K to a Bpay registered company, can you setup each of my bank accounts as a Bpay entity???

    • Staff
      Shirley | June 16, 2014

      Hi Ray,

      Thanks for your question.

      Banks can grant a maximum limit up to 100,000 but they may need a reason as a precaution against money laundering.

      Generally you can’t set up a BPAY account to another transaction account as BPAY is designed to pay off debts like bills and credit cards, but you might be able to ask your bank to create one for you.

      Cheers,
      Shirley

  2. Default Gravatar
    Jackie | March 5, 2014

    Can you tell me what the interest rates for a 12 month term deposit of $25000 was in June 2011, June 2012 and june 2013

    • Staff
      Marc | March 6, 2014

      Hi Jackie,
      thanks for the question.

      This will depend on the institution you’re referring to. You might want to contact the institution you’re referring to, and ask them what their rates were for these time periods.

      Cheers,
      Marc.

  3. Default Gravatar
    K | October 2, 2013

    Hi. Could you please tell me what has been the average interest rate on small savings over the past 10years in Australia?

    • Staff
      Marc | October 3, 2013

      Hi K,
      thanks for the question.

      Unfortunately we don’t have access to this information, but you may wish to check with the Reserve Bank of Australia as they publish a range of statistics.

      Cheers,
      Marc.




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