Term deposits are one of Australia’s most straightforward investment options — deposit a fixed amount for a set period, earn a guaranteed interest rate, and receive your money back at maturity. This hub covers everything Australians need to know about term deposits in 2026.
What Is a Term Deposit?
A term deposit is a fixed-term, fixed-rate savings product offered by banks, credit unions, and building societies. You agree to lock your money away for a set period — from one month to five years — in exchange for a guaranteed interest rate higher than a standard savings account.
Term deposits are covered by the Australian Government’s Financial Claims Scheme (FCS) up to $250,000 per depositor per authorised deposit-taking institution (ADI) — making them one of Australia’s safest investment options for amounts up to that threshold.
How Term Deposits Work
- Choose a bank or financial institution
- Select a deposit amount (typically minimum $1,000–$5,000)
- Choose a term (1 month to 5 years)
- Accept the quoted interest rate (fixed for the term)
- Your money is locked away until maturity
- At maturity: receive principal + interest; roll over or withdraw
Interest may be paid monthly, quarterly, annually, or at maturity — depending on the product and institution.
Current Term Deposit Rate Environment (2026)
Term deposit rates in Australia follow the RBA cash rate closely. As of 2026, following the RBA rate cycle, competitive term deposit rates from mid-tier banks (ING, Macquarie, Judo Bank) have ranged from approximately 4.5–5.5% for terms of 6–12 months — significantly higher than the 0.10% cash rates of 2021.
Always compare current live rates before locking in — rates change frequently. For current comparison, use financial comparison sites or approach institutions directly.
Who Are Term Deposits For?
Term deposits suit investors who:
- Prioritise capital security over growth
- Have a known future expense (holiday, home deposit, car) within a set timeframe
- Want predictable income in retirement
- Hold excess cash beyond their emergency fund
- Are close to retirement and reducing portfolio risk
Term deposits are generally not appropriate as a primary long-term wealth-building strategy — their returns historically lag the inflation-adjusted returns of shares and property over 10+ year periods.
In This Section
| Article | What it covers |
|---|---|
| What Are Term Deposits Australia | Full explanation of how term deposits work, types, and mechanics |
| Best Term Deposit Rates Australia | How to find and compare current rates; which banks typically lead |
| Term Deposits vs Savings Accounts | When to use each; rate comparison; liquidity trade-off |
| Short-Term vs Long-Term Term Deposits | Choosing the right term; how the yield curve affects this decision |
| Term Deposit Ladder Strategy | Spreading maturity dates to manage liquidity and rate risk |
| Term Deposits in Super and SMSF | Using term deposits inside superannuation and self-managed super funds |
| Breaking a Term Deposit Early | What happens, penalties, process, and when it makes sense |
| Term Deposits vs Bonds vs ETFs | How each compares for different investor needs |
| Tax on Term Deposits Australia | How interest income is taxed; timing strategies; super advantage |
| How to Choose a Term Deposit | Step-by-step selection guide; what to compare beyond the rate |
Related Sections
This article provides general financial information only. For advice tailored to your situation, speak with a licensed financial adviser through the ASIC financial advisers register or MoneySmart.