Term Deposit Rates in Australia (2026)

Updated March 2026 · 7 min read

A term deposit is a deposit held at a financial institution for a fixed period at a fixed interest rate. The rate is locked in when you open the deposit, providing certainty about your return. In the current environment, term deposit rates for 6 to 12 month terms generally range from 4.0% to 5.0% p.a., depending on the institution and the term.

How Term Deposits Work

You deposit a lump sum for a set period (the "term"), which can range from one month to five years. During this period, the interest rate does not change regardless of what happens to the RBA cash rate or market conditions. At maturity, you receive your principal plus the accumulated interest.

If you do not provide instructions before maturity, most institutions will automatically roll over your deposit into a new term of the same length at the prevailing rate, which may be higher or lower than your original rate.

Choosing a Term

Short Terms (1 to 3 Months)

Short-term deposits provide the most flexibility but typically offer lower rates. They are suited to funds you may need relatively soon, or as a parking spot while you decide on a longer-term strategy.

Medium Terms (6 to 12 Months)

This is often the practical middle ground for term deposits. Rates tend to be competitive, and the lock-up period is manageable for most people. If you expect interest rates to fall, locking in a 12-month term captures the current rate for a full year.

Long Terms (2 to 5 Years)

Longer terms lock in your rate for an extended period. This is beneficial if rates are falling, but carries the risk that rates rise and you are locked in at a lower rate. Longer terms may also offer interest paid at regular intervals (monthly, quarterly, or annually) rather than only at maturity.

Laddering Strategy

Instead of placing all your funds into a single term deposit, you can spread them across multiple deposits with staggered maturity dates. For example, divide $50,000 into five $10,000 deposits maturing at 3, 6, 9, 12, and 15 months.

This approach provides regular access to portions of your money as each deposit matures, while still earning term deposit rates. When each deposit matures, you can reinvest it at the longest term in your ladder or withdraw if needed.

Early Withdrawal

Withdrawing before maturity typically results in a penalty. The most common penalty is a reduced interest rate for the period held, often the base savings rate or the original rate minus a deduction. Some institutions may not allow early withdrawal at all for certain products. Always check the early withdrawal terms before committing.

Term Deposits vs Savings Accounts

Savings accounts offer full flexibility but the rate can change at any time. A savings account bonus rate of 5.0% today could become 3.5% if the institution or the RBA cuts rates. A term deposit at 4.8% locks in that rate for the entire term.

The trade-off is liquidity. If you might need the funds, a savings account is more practical. If you can commit to a fixed period, a term deposit removes rate risk. See our savings account guide for a detailed comparison.