Average term deposit rates in Australia

The single most useful thing about term deposit rates is their shape across terms. When banks pay more for six months than for three years, they are pricing in rate cuts: they do not want to be locked into today’s rate for long. When longer terms pay more, the market expects rates to hold or rise. The live tiles above show that curve as it stands today.

This matters because the intuitive move, locking away money for as long as possible to get the best rate, is often the wrong one. In an inverted market the best rate on the board can sit at six or twelve months, and committing to three years means accepting a lower rate for far longer. Check the curve before you check the headline.

The trade-off you are making is access. A term deposit fixes your rate, which is genuine protection if rates fall, but breaking one early is deliberately unattractive. Most banks require 31 days’ notice and apply an interest penalty that scales with how early you break, commonly reducing the interest earned by 90% in the first fifth of the term and by 20% near maturity. Money you might need should not be in a long term.

The quiet cost is rollover. When a term matures and you give no instructions, most banks roll the balance into a new term automatically, and the rate on that new term is often well below what you could get by shopping. A calendar reminder a week before maturity is worth more than a few basis points at the outset.

All of this sits under the Financial Claims Scheme, which guarantees deposits up to $250,000 per account holder per licensed institution. The trap is that many bank brands share one licence, so spreading money across two brands of the same group does not double your cover.