Term deposit rates January 2026

What is a term deposit?

A term deposit is a type of savings account that offers a fixed interest rate in exchange for locking your money away for a set period of time.

Some banks let you choose how often to receive your interest payments, usually monthly, quarterly, yearly or when the term ends. Once the term reaches maturity you can pull your initial deposit out plus the interest you've earned.

Term deposits are a safe, low-risk investment as they offer a guaranteed return through a fixed interest rate.

Term deposit versus savings account

The money in a savings account can be accessed whenever you need it, and there's no cost for withdrawing or depositing money (although you may need to restrict withdrawals for the sake of earning bonus interest with some accounts).

Term deposits are locked and will charge you if you need to withdraw your money early. So if you want easy access to your money, then a term deposit might not be right for you. But if you want somewhere safe to park your cash where you're not going to be tempted to spend it, a term deposit could suit.

Savings accounts also have variable interest rates meaning they can change at any time, while term deposits have fixed interest rates meaning the rate will not change until the term matures.

Best term deposits

This term deposit was the winner in the 2026 Finder Awards.

Judo Bank Term Deposit

Go to site Read our review

Judo Bank offers 4.55% for 12 months, 4.3% for 6 months and 4.4% for 24 months.

It was the best term deposit in the 2025 Finder Awards as it consistently had one of the best rates in the market throughout the judging period.

• Why we like it. It offers some of the highest term deposit rates on the market right now, plus there's an extra 0.05% p.a. loyalty bonus for repeat terms.

• What to look out for. You'll need to deposit at least $1,000.

• Methodology for best term deposit

  Money stuff is usually hard. But term deposits are pretty easy to figure out.

  For the Finder Awards, we looked at all term deposit providers in the market. The term deposit must be available for a 1 year term for all adults across Australia, for a $35,000 balance to be included. To calculate the product's score, 90% weighting was applied to the 12-month interest rate across the judging period and 10% weighting was applied to other features and fees.

How to compare term deposits

Consider the following features when choosing a term deposit.

• The term length. You can choose a term deposit from 3 months to 5 years. If you're saving for a holiday later in the year, a 12-month term is too long. If you're saving for a house, 3 months is likely too short.
• The interest rate. The higher the rate, the more you earn. Most banks offer the highest rates on 6 to 12 month terms.
• Early withdrawal rules. In an emergency you may need to access your money fast. Some term deposits charge a fee for this, while others require a month's notice first. The amount of interest you get drops when you break the term deposit too.
• Interest payments. Some term deposits pay interest on a monthly basis, annually or at maturity (when the term ends). Getting interest paid at maturity usually means a slightly higher interest rate.
• Deposit amounts. Check how much (or how little) the bank requires you to deposit. Some banks won't let you open a term deposit unless you have $25,000. Others start as low as $1,000.

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4 tips to get the best term deposit interest rate

1. Consider smaller lenders, credit unions and digital banks. Don't just look at the Big Four.
2. Compare term lengths: 6-month rates are often better than 3-month rates, and 24-month rates are often better again.
3. Look for providers that offer extra interest as a loyalty bonus.
4. Negotiate your rate with the bank to see if you can get a better deal.

"I was helping a family member compare savings options recently. They started looking at high interest savings accounts, then term deposits from the Big Four banks and some smaller banks with slightly higher rates. In the end they chose a term deposit from a big bank. The rate was slightly lower than the best in market, but they liked the convenience of the bank's app (they were already a customer). They had considered a high interest savings account too, but the bonus rate had a few conditions they weren't confident they'd meet each month."

Richard Whitten

Senior Money Editor

Is a term deposit right for me?

Term deposits are a really easy way to earn interest on your savings. But many bank customers prefer a high interest savings account because they can often earn a bit more interest and add to their savings each month.

A term deposit is better suited to people who already have some money saved and are able to put it away and not touch it for a while.

Pros and cons of term deposits

Term deposit interest

Term deposits usually pay simple interest. This is different to compound interest, which adds the interest you've earned to the account's total balance. You earn slightly more interest each month as the previous month's interest is compounded, or added to the account.

A term deposit only earns interest on the initial amount deposited.

Use a term deposit calculator to see how much you'll earn.

Finder survey: What term deposit features do Australians value most?

Why you can trust our banking experts

Obsessed with great rates - We nerd out over RBA decisions and monitor the market daily to make sure you get the best interest rates from banks big, small and digital (and the odd credit union).

Cash in your own time frame - over 160 term deposit options tracked against 8 time frames from 3 months to 5 years. Dig into the data, or get the quick and easy editorial "best" if you're in a hurry.

No BS - We don't have a call centre, we're not owned by a bank. Heck, you don't even need to give us your email. Our job is to get your money to work harder and let that sweet interest grow.

Frequently asked questions about term deposits

• Is 2026 a good time to open a term deposit?

  We saw rates go down in 2025 as the RBA cut the cash rate 3 times, but many economists are predicting we might see some rate rises in 2026. If this happens, then it could be a good year to open a term deposit after rates go up.

• Can I have more than 1 term deposit?

  Yes, you can have more than 1 term deposit. There are a few reasons why you might want to do this. If you have a large deposit over $250,000, splitting your deposit up between more than 1 bank will ensure all your money is covered under the bank guarantee scheme. You might also choose to open a few different length term deposits for different short or long-term goals.

• Are there any fees for term deposits?

  Term deposits typically do no charge any set-up fees or account keeping fees. You may be required to pay a fee if you want to break your term deposit early, however instead of a fee this usually results in a reduction of interest.

• Do I need to pay tax on my term deposit?

  Yes. If you've invested money in a term deposit, you will need to pay tax on the interest you earn (the same goes for savings accounts). Interest is classified as another form of income, so the amount of tax you'll need to pay on your term deposit interest will depend on your overall taxable income.

• What happens if my bank changes the interest rate?

  Once you open a term deposit the interest rate is fixed for the life of the term. Your bank cannot change the interest rate before the end of the term.

• Can I get a good term deposit rate for $100,000?

  If you've got a large balance of $100,000 or more, make sure you look for a term deposit that can be opened for larger balances. Some term deposits are only for smaller deposits of $10,000, $25,000 or $50,000 max.

  Here are a few of the best 12-month term deposit rates for balances over $100,000:

  • 4.55% p.a. with Judo Bank.
  • 4.4% p.a. with ING.
  • 4.4% p.a. with Bank of Sydney.

• How do I close my term deposit?

  If your term deposit has reached maturity, then you withdraw all the funds like with a regular bank account. However, if your term deposit is still maturing, then your bank will charge a penalty for withdrawing your funds early. To do this, you'll need to get in touch with your bank directly.

• I'm not an Australian resident. Can I open a term deposit?

  Most banks will require an Australian residential address to open a term deposit.

• What does it mean when your term deposit matures?

  When your term deposit matures or reaches maturity means the term length has come to an end. You can then choose to reinvest the money into a new term at the current term deposit rate offered by the bank or switch to a term deposit with a different bank. You can also withdraw the money and add it into a savings account, invest it or spend it - the choice is yours.

• How does the RBA cash rate affect my term deposit?

  The Reserve Bank of Australia's (RBA) cash rate is one of the factors that bank's consider when setting their interest rates for deposit products. Given that the RBA aims to keep inflation between 2 - 3%, an interest rate of 2.5% or lower on your term deposit could mean that your investment isn't keeping up with inflation. Term deposits, like other investments, are great when the RBA cash rate is high. But when the cash rate is low, you may want to seek alternatives, such as shares.

• Are term deposits safe?

  Yes, term deposits are one of the safest places you can put your money. They offer a fixed rate for a guaranteed return, plus your deposit up to $250,000 is protected under the government's Financial Claims Scheme.

• Do term deposits have compound interest?

  No, term deposits do not pay compound interest. Instead, term deposits offer simple interest. This means you'll only earn interest on your initial deposit, and not on any interest payments you receive.

• What is the Finder Score?

  We look at 150+ term deposit products across 90+ providers and we compare them against each other to get our simple score out of 10. We consider interest rates across 3,6,12 and 24 month terms, along with other key features, to determine an average score per product. Products with individual terms are scored against their applicable terms only. We assign the majority of the weights to the interest rate as usually that is what customers are seeking in a term deposit.

  The Finder Score methodology is designed by our Insights team. Commercial partners carry no weight and all products are reviewed objectively.

  Digging deeper into the Finder term deposits score

  • 9+ Excellent - These products offer competitive rates for consumers across applicable terms.
  • 7+ Great - These products tend to offer slightly lower rates but are still competitive.
  • 5+ Satisfactory - Typically offering above average rates.
  • Less than 5 – Basic - The least competitive interest rates.

Looking for something else?

• Business term deposits provide fixed interest rates and the security of guaranteed returns.
• Long term deposits lock in rates from anywhere from 12 months to five years.
• Kids term deposits are suited specifically to children.
• SMSF term deposits are designed to help build your savings for retirement.
• Savings accounts and term deposits allow you to earn interest on your money.

To make sure you get accurate and helpful information, this guide has been edited by Richard Whitten and reviewed by Serina Bird, a member of Finder's Editorial Review Board.

Written by

Alison Banney

Editorial Manager, Money

Alison is an editor at Finder and a personal finance journalist with over 10 years of experience, having contributed to major financial institutions and publications such as Westpac, Money Magazine, and Yahoo Finance. She is frequently quoted in media outlets like SmartCompany and SBS, offering expert insights on superannuation and money management. Alison holds a Bachelor of Communications in Public Relations and Journalism from the University of Newcastle, and has earned three ASIC RG146 certifications in superannuation, securities and managed investments and general financial advice, ensuring her expertise is fully aligned with ASIC standards. See full bio

Alison's expertise

Alison has written 656 Finder guides across topics including:

• Superannuation
• Savings accounts, bank accounts and term deposits
• Budgeting and money-saving hacks
• Managing the cost of living