Highest term deposit rates 2021

author-avatar By on July 01, 2021
Highest term deposit rates 2021

Term deposit rates are pretty low at the moment, but that doesn’t mean you can’t snap up a better rate for yourself.

Term deposit comparison

Savings has collated some of the highest term deposit rates available this month for both long and short term deposits. Specifically, we’ll cover: 

High short term deposit rates – six months 

Note that the advertised interest rate is per annum – once a year. So for a six month deposit, you’d actually earn half of that.

High one-year term deposit rates

Read this article on how the frequency of interest on term deposits can affect your final amount.

High two-year term deposit rates

High three-year term deposit rates

There’s plenty of competition among three-year deposits, but you can currently get similar interest rates for two-year terms.

High five-year term deposit rates

Compare ANZ, CBA, NAB and Westpac term deposit rates 

You can see in the table below the term deposit rates from ANZ, Commonwealth Bank, NAB and Westpac don’t fare as well as some of the rates above.

In fact, the Reserve Bank’s monthly Retail Deposit Rates data showed the average big four (plus Macquarie) term deposit interest rate across all terms has dropped to below 0.50%. This is much lower than many of the interest rates shown here and is actually below the rate of inflation.

Extra guides & resources:

Term deposit rates in Australia

Term deposits are by definition a simple product: you deposit a stash of money in an account for a fixed period of time and earn a fixed rate of interest. They’re offered by Authorised Deposit-Taking Institutions (ADIs) which means up to $250,000 of your money will be guaranteed in the rare event the institution goes bust. At the end of the fixed period, you could either reinvest the money in the same or a different deposit, or you could cash out and, say, splash out your interest earnings on a beach holiday or something.  

That beach holiday would need to be pretty cheap though, as term deposit rates aren’t exactly mind-blowing at the moment. Thanks to Australia’s historically low-cash rate that’s more stagnant than a muddy mozzie-infested pond, term deposit rates are also at all-time lows. You’d be forgiven for forgetting that term deposit rates used to be around 17% in the late 80s. 

That doesn’t mean you shouldn’t look around though. If you don’t, you run the risk of being stuck with a bludge of an interest rate, and unlike savings accounts, you often can’t get your money out without copping an early withdrawal penalty and/or serving a 31-day notice period. 

What affects a term deposit’s interest rate? 

Each provider has several if not dozens of term deposit products with varying rates. This leads to a huge variety of interest rates. For example, you could get a one-year term deposit rate higher than 1.00% but also as low a 0.50% or less. That’s a big difference. On a $10,000 term deposit invested for one year, that difference in interest rates could result in a difference of over $50 in interest. 

There are a multitude of different factors that impact a term deposit’s interest rate, which we explain in greater detail here. To give a quick summary, there are as many as seven factors influencing the day-to-day interest rates of term deposits:

But remember when you take out a term deposit, your interest rate is fixed, which means locked in. Hypothetically, the bank could drop its interest rates to 0.01% and you’d still have the same interest rate you did at the beginning until your term has expired. 

Have rates always been this low? 

Not at all. Just back in 2009, the average big four term deposit rate was 5.25%, when the RBA cash rate was 7.2%. In fact, a few decades ago you could get your hands on a term deposit with an interest rate of 17%. Today’s deposit rates really pale in comparison with interest rates of the past. 

Of all the factors that influence a term deposit’s interest rate, the cash rate is arguably the most crucial. Some banks will choose to not pass on cash rate changes to customers, but most do, so when the cash rate moves, so do term deposits rates. 

Pros and cons of term deposits

a. Benefits of term deposits

  • They’re generally considered to be a safe and stable investment
  • Virtually no risk – you have a government guarantee of up to $250,000
  • Fixed rates so you know exactly what your returns will be ahead of time
  • Your money is locked away, so there’s no temptation to spend it
  • Very few have upfront or ongoing fees
  • No effort to maintain – set and forget!

b. Disadvantages of term deposits

  • Interest rates are low at the moment 
  • Fixed rates so your rate won’t rise if the cash rate rises
  • They’re not a flexible option and have very few features
  • Not being able to withdraw your money easily isn’t ideal at times when money is short
  • There are hefty interest rate reductions for early withdrawals
  • Generally no ability to top up term deposits with extra cash

How to open a term deposit

Opening a term deposit can be a straightforward process. You’ll typically need to provide:

  • Your personal details (e.g., name, address, phone number)
  • Proof of ID (e.g., driver’s license, medicare card)
  • Tax file number
  • A nominated bank account for your funds to be deposited into at maturity

You will need to nominate with your bank what term you want to invest for, and the corresponding interest rate. Be aware that some term deposits require a minimum investment too.

How to compare term deposits

Term deposits are a pretty simple product, so there are really two major things to consider: 

  • The interest rate
  • The term 

There are some other things to be aware of, such as whether or not your term deposit has an automatic rollover, but really, you need to make sure the term on your term deposit matches your requirements – you don’t want to have your money stuck in a five-year term deposit when you need to access it after one. This is how you get slugged with early exit penalties

So make sure you get a good combination of a decent interest rate and suitable term length. Use a term deposit calculator beforehand to work out how much interest you’ll earn, and think about seeking the help of a licensed financial adviser.

Government guarantee on deposits

The Australian Government guarantees deposits up to $250,000 with ADIs. This means if your bank (an ADI) were to collapse, you can recover up to $250,000 of your deposited money (e.g. money in term deposits, savings accounts, home loan offset accounts etc.) with that bank from the government. This applies per person and per ADI, so you can have multiple guarantees with different ADIs, but only one with the same ADI.

Between October 2008 and February 2012, the guarantee covered deposits up to $1,000,000 as a temporary measure to help guide Australia’s banking sector through the Global Financial Crisis.

Frequently asked questions

1. How does a term deposit work?

Term deposits are a very simple product: you deposit a lump sum of money into a financial institution in exchange for a fixed rate of return over a specified period.

2. What is a 'term'?

The ‘term’ in term deposit is the fixed amount of time your money is deposited with that financial institution.

3. What terms are available?

Each ADI (authorised deposit-taking institution) that offers term deposits will have different terms on offer. Some will offer only a few, while others will provide a huge variety of options, from one month to five years.

4. How is interest on term deposit calculated?

Term deposit interest is calculated based on a few things, but mainly: the size of your deposit, how long your term is, the interest payment frequency and compounding.

5. Do term deposits charge fees?

The majority of term deposit products are fee-free, though you’ll find that most term deposits do charge a fee or a penalty for early withdrawals.

6. What features do term deposits offer?

Term deposits are very basic investment products, so you aren’t likely to find one stuffed with advanced features. The main things to look at is the interest rate and the term you want to invest for.

7. Why do people invest in term deposits?

One of the main reasons people invest in term deposits over other investment assets is for safety. Since the Banking Act 1945, deposits with authorised deposit-taking institutions (ADIs) have benefited from high levels of regulatory protection that minimise the risk of losses. This protection was greatly strengthened with the introduction of the government deposit guarantee in 2008, which made term deposits virtually risk-free.

8. Why do banks offer term deposits?

Deposits make up a significant portion of funding for banks, which they use for various things. If you've ever wondered where your home loan lender got the money for your house from, there's a good chance some of it came from term deposits.

9. What is a special term deposit rate?

A special term deposit rate doesn’t technically have a set definition, but you might call it one that sits outside a bank’s usual range of interest rates for term deposits. A special term deposit rate is usually a fair bit higher than most other term deposit rates, and usually can only be earned by those that meet a set of requirements.

10. What is a term deposit loyalty bonus?

A term deposit loyalty bonus is a bonus little bit of interest you can get on top of the advertised term deposit rate, and they usually apply if you choose to roll over your term deposit or take out a new one with the same institution.

11. Does term deposit interest get taxed?

You generally have to declare investment income in your tax return, which includes interest earned on savings accounts and term deposits. This interest is taxed at your marginal rate.

12. What happens when my term deposit matures?

If you want to keep your money in a term deposit after it matures, you might appreciate the convenience of an automatic rollover. If that’s the case, and you’re happy with the new interest rate and term you’re rolling over into, you can sit back and let the bank do all the work.

13. What is a term deposit automatic rollover?

Automatic rollover is a term deposit feature where your provider will automatically start the term deposit again for the same fixed period at maturity unless you advise them otherwise.

14. Are there penalties for early withdrawal?

This will vary between providers, just as the terms and interest rates on term deposits do. Some banks might not charge break costs, but most do apply interest rate reductions.

15. What to do if I need to access my money?

If you do need to make a withdrawal, then you will first need to contact your bank to let them know of your intentions. Cancelling a term deposit isn’t always as easy as simply hitting a button online. You might have to call them or physically visit a branch and speak to a customer care specialist. There should be details on how your specific provider handles early terminations, but you should make an effort to find out before you take out a term deposit.

Savings.com.au’s two cents  

If you’re a keen term deposit investor, make sure you check this page before opening a new one or when your current term deposit is about to expire. Term deposit rates are always changing, so make sure you keep coming back to our term deposit rates and term deposit news pages, which collate all our latest term deposit market updates.

Photo by Samuel Zeller on Unsplash. Originally published by William Jolly. Updated by Alex Brewster 7/1/2021.

Latest Articles

Alex joined Savings.com.au in 2019. He is passionate about providing Australians with the information and tools needed to make them financially stable for their futures.

Be Savings smart.
Subscribe for free money newsletters.

By subscribing you agree to the Savings Privacy Policy

Loading data please wait...



Current Rate

{{returnData.currentRate | percentage:2}}

Comparison Rate*

{{returnData.comparisonRate | percentage:2}}

Rate Type


Advertised Rate


Comparison Rate*


Monthly Repayment


Interest Type


Total Interest Rate

{{returnData.totalInterestRate | percentage:2}}

Base Interest Rate

{{returnData.baseInterestRate | percentage:2}}

Bonus Interest Rate

{{returnData.bonusInterestRate | percentage:2}}

Total Interest Rate

{{returnData.totalInterestRate | percentage:2}}

Introductory Rate

{{returnData.introductoryRate | percentage:2}}

Introductory Term


Base Interest Rate

{{returnData.baseInterestRate | percentage:2}}



Advertised Interest Rate

{{returnData.advertisedInterestRate | percentage:2}}

Interest Frequency


Fees and Features

Ongoing Annualised Fee


Upfront Fee


Offset Account


Principal & Interest

Interest Only


Max loan to value ratio (LVR)

{{returnData.maxLVR | percentage:0}}

Lump sum repayments


Additional repayments

Maximum Loan Term


Upfront Fee


Ongoing Monthly Fee


Early Repayment Fee Applies


Vehicle Types


Maximum Vehicle Age


Pre Approval Available


Online Application


Account Keeping Fee


Minimum Monthly Deposit


Linked Account Required


Interest Calculated


Interest Paid


Online Application






Account Keeping Fee


Minimum Monthly Deposit


Linked Account Required


Interest Calculated


Interest Paid


Online Application






Minimum Deposit

{{returnData.minDeposit | currency : '$' : 0}}

Upfront Fees

{{returnData.upfrontFee | currency : '$' : 0}}

Annual Fees

{{returnData.annualFee | currency : '$' : 0}}

Notice Period to Withdraw


Online Application


Automatic Rollover


Maturity Alert