The NSW-based credit union's one year term deposit special offer is now 4.50% p.a., level with rates on offer at the likes of Heartland Bank and Unity Bank.
According to the Savings.com.au database, only Australian Military Bank currently offers a higher one year return, at 4.55% p.a.
It's the latest in a series of big new TD returns, with near-term cash rate cuts looking increasingly unlikely and hikes potentially back on the table.
How much could you earn if realising 4.50% p.a. returns?
The Illawarra Credit Union product is available for new term deposits only - meaning funds that weren't kept with Community First, ICU, or Easy Street Financial Services in the fortnight before the date of enquiry.
The top rate is available for deposits of $10,000 or more, while rates on sums of over $1 million are subject to enquiry.
Here's how much you could earn in a years' time for various-sized deposits (noting that TD returns are subject to income tax):
| Deposit size | Earnings after one year |
|---|---|
| $10,000 | $450 |
| $100,000 | $4,500 |
| $1,000,000 | $45,000 |
Will TD rates keep climbing?
Term deposit returns began falling midway through 2024, when it started to look like the RBA's rate hiking cycle was over.
In July '24, the average one year term deposit rate was 4.50% p.a. per RBA data, falling to below 4% p.a. by April '25.
In October, the average one year rate was just 3.60%, but over the last couple of months, as inflation went back above target and RBA rhetoric took a hawkish tilt, that's risen back to 3.75%.
History suggests term deposit rates could continue to surge amid renewed speculation the RBA might need to hike the cash rate in 2026 to ensure prices are controlled.
In April '23, when the cash rate was last at the current 3.60%, the average one year rate was 4.05%.
That increased significantly as the cash rate was later hiked.
While it looks unlikely there will be a repeat three successive rate hikes, Commonwealth Bank and NAB economists are officially predicting the cash rate will return to 3.85% in February.
If RBA Governor Michele Bullock and the rest of the RBA board decide another hike is necessary, it could once again boost term deposit rates and, while a return to the mid-2023 peak of 5.50% is unlikely, it's not inconceivable there could once again be rates in Australia starting with a '5'.
Advertisement
Want to earn a fixed interest rate on your cash? The table below features term deposits with some of the highest interest rates on the market for a six-month term.
| Bank | Term Deposit | Interest Rate | Interest Frequency | Term | Automatic Rollover | Maturity Alert | Early Withdrawal Available | Minimum Deposit | Maximum Deposit | Notice Period to Withdraw | Account Keeping Fee | Online Application | Joint Application | Tags | Features | Link | Compare | Promoted Product | Disclosure |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
5.35% p.a. | At Maturity | 6 months | $5,000 | $19,999 | – | – | |||||||||||||
5.20% p.a. | At Maturity | 6 months | $10,000 | $5,000,000 | – | – | |||||||||||||
5.15% p.a. | At Maturity | 6 months | $1,000 | $1,000,000 | – | – |
