What is a 12 month term deposit?
A 12 month term deposit holds your money for one year at a rate fixed on the day you open it. The rate holds for the full year, so a later rate cut cannot touch it, and neither can a rise. It is one of the most widely offered terms in Australia, and a common choice for money that will not be needed for a year.
What a year earns
On a 12 month deposit with interest paid at maturity, the interest is the rate applied once to the amount deposited. For example, $25,000 at 5.00% p.a. earns $1,250 over the year. The table above estimates the interest for each deposit.
How interest is paid
Many 12 month deposits let you choose when interest is paid: at maturity, or monthly, quarterly or annually. Interest at maturity usually comes with the highest rate, while more frequent payments provide an income but often come with a slightly lower rate. Interest paid out to you does not earn interest itself unless you reinvest it.
12 months, 6 months or longer?
Banks price every term on where they expect rates to go, so twelve months does not always beat six. When rates are expected to fall, a 12 month term can pay less than a 6 month one, but it holds its rate for longer. Check the same bank at 6 month term deposits, and if the money can stay put for longer, long term deposits compares terms of more than a year.
Maturity and rollover
Without instructions, many banks reinvest the money for the same term at the rate on offer that day, which may be a standard rate rather than a special. Some move it to a holding account that pays less. A grace period after maturity, often around a week, is the window to withdraw or change the term without penalty, so it pays to note the date.
Breaking a 12 month deposit early
Most banks ask for 31 days' notice to withdraw early and reduce the interest they pay, by more the earlier you break. Breaking a term deposit early explains how the reduction is worked out. Banks can waive the notice in cases of hardship.
Your money is protected
Deposits with an Australian bank, building society or credit union are protected by the Financial Claims Scheme up to $250,000 per account holder, per authorised deposit-taking institution. The big four banks are covered on the same terms as smaller banks, and big 4 term deposits shows how their rates compare.
How 12 month term deposits compare
Compare the 12 month rate for the way you want interest paid, the minimum deposit and the rollover rules. The term deposits hub compares every term side by side.
This is general information, not financial advice. We are a comparison service, not a bank.