Despite the RBA deciding against increasing the cash rate in July, term deposit rates have continued to climb.

This morning, Bank of Sydney announced 20 basis point increases to its three and six month term deposit products, moving rates to 5.20% p.a and 5.50% p.a respectively.

Deposits need to be between $1,000 and $500,000, with interest paid at the term's conclusion.

There is a $30 fee that applies if you withdraw your money early, and you'll need to give at least eight days' notice before you do so.

It becomes the first bank to reach 5.5% for term deposits, eclipsing Judo, the previous market leader, which currently offers 5.45% p.a on both six month and one year terms.

With many analysts anticipating further cash rate increases in the coming months, Bank of Sydney could be the first of several providers that will hit this threshold.

Current highest six month term deposit rates in Australia

Deposit size Interest rate
Bank of Sydney $1,000-$500,000 5.50% p.a
Judo $1,000-$999,999 5.45% p.a
Firstmac $5,000-$5,000,000 5.40% p.a
Transport Mutual* $1,000-$99,999,999 5.00% p.a

*Special offer, available exclusively for new customers

How much can you earn?

A 5.50% p.a return means if you deposited the minimum $1,000, your balance after six months would be $1,027.50, which might seem slightly meagre.

However, depositing the maximum $500,000 means after six months elapsed your balance would be $513,750.

Once it matures, your funds are usually automatically reinvested unless you withdraw, so you could earn interest on top of what you have already accumulated, called compound interest.

Many providers also allow more regular interest payments at the expense of the headline rate, and this could also allow you to invest the interest in other avenues.

Below is a breakdown on how a 5.50% annual percentage rate looks in the flesh.

Deposit size Closing balance Total interest earned
$1,000 $1,027.5 $27.50
$10,000 $10,275 $275
$50,000 $51,375 $1,375
$100,000 $102,750 $2,750
$250,000 $256,875 $6,875
$500,000 $513,750 $13,750

The ATO considers savings interest as taxable income, so you will be taxed according to your income tax threshold.


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Provider

At Maturity, Annually$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]5000$product[$field["value"]]$product[$field["value"]]More details
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Term Deposit - 6 months

  • Guaranteed rate of return
  • Manage your term deposit online
  • Choose your own term - Options range from one month to five years
At Maturity, Monthly$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]2500031$product[$field["value"]]$product[$field["value"]]More details

Term Deposit - 6 months

    At Maturity$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]10008$product[$field["value"]]$product[$field["value"]]More details

    Online Term Deposit - 6 months

      At Maturity$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]100031$product[$field["value"]]$product[$field["value"]]More details

      SMSF TD - 6 months (at maturity)

        Annually, At Maturity$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]10000$product[$field["value"]]$product[$field["value"]]More details

        Term Deposit ($10k-$500k) - 6 months

          Important Information and Comparison Rate Warning

          All products with a link to a product provider’s website have a commercial marketing relationship between us and these providers. These products may appear prominently and first within the search tables regardless of their attributes and may include products marked as promoted, featured or sponsored. The link to a product provider’s website will allow you to get more information or apply for the product. By de-selecting “Show online partners only” additional non-commercialised products may be displayed and re-sorted at the top of the table. For more information on how we’ve selected these “Sponsored”, “Featured” and “Promoted” products, the products we compare, how we make money, and other important information about our service, please click here. Rates correct as of May 26, 2024. View disclaimer.

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