Most term deposit comparisons hand you a list of banks and let you assume that longer means better. The RBA’s own data says otherwise right now, and the shape of the curve is more useful than any single bank’s offer.
The curve, July 2026
View the data
| 1mo | 1.40% |
|---|---|
| 3mo | 3.30% |
| 6mo | 3.75% |
| 1yr | 5.00% |
| 3yr | 4.30% |
Source: RBA F4 Retail Deposit and Investment Rates, data to 31 July 2026, accessed .
Three things fall out of that shape.
One year is the peak. At 5.00% it pays more than three years at 4.30%. You are being offered less to commit for three times as long.
Short terms are poor. One month averaged 1.40% — below what a competitive at-call savings account pays. Short term deposits exist for cash-management reasons, not for savers.
The average across all terms was 3.60%, which tells you a lot of money is sitting in the weaker parts of this curve.
Why longer pays less
An inverted curve is a forecast with a price on it. Banks won’t lock in 5.00% for three years if they expect to be paying materially less than that for most of the period.
That’s a real signal, and it’s consistent with where the RBA is: the cash rate was raised three times through 2026 to 4.35%, and the Board held on 11 August while it assessed the effect of those increases. Markets are pricing the tightening as closer to its end than its beginning.
Two practical conclusions. Twelve months is the sweet spot on current averages. And stretching to three years for a lower rate only makes sense if you specifically want the certainty, not because longer is normally better.
Term deposit or savings account?
| Product | Rate | Access |
|---|---|---|
| Term deposit, 1 year | 5.00% | Locked |
| Bonus savings account | 4.80% | At call, conditions apply |
| Term deposit, 6 months | 3.75% | Locked |
| Online savings account | 3.10% | At call |
| Cash management account | 0.55% | At call |
The one-year term deposit currently edges out bonus savings — and it does so without monthly conditions. That’s the underrated part. A bonus savings account pays its headline only in months you meet the deposit and withdrawal rules; a term deposit pays its rate regardless of what your month looks like.
For someone who reliably meets bonus conditions, the two are close and the savings account keeps your access. For someone who doesn’t, the term deposit wins twice.
What to check before locking in
The early-access rules. Breaking a term deposit generally requires notice and costs you an interest rate reduction. The size is set by the bank and written into the terms — find that number first, because it’s what makes the product right or wrong for you.
The maturity default. Many term deposits roll automatically into a new term at whatever rate applies that day if you do nothing. Diarise the maturity date with a reminder a fortnight ahead. Automatic rollover is the bank’s default, not your decision.
Whether interest is paid at maturity or periodically. It affects when you can use the money and how it’s taxed.
The licence, not the brand. Financial Claims Scheme cover is A$250,000 per account holder per ADI, aggregated across brands under one banking licence.
Minimum deposit. Rates often step up at balance thresholds, so the advertised figure may need more than you planned to commit.
Don’t put the emergency fund here
Worth stating plainly: a term deposit is the wrong home for money you might need. The whole product sells access in exchange for rate, and emergencies don’t check maturity dates.
Keep the buffer at call, and use term deposits for money with a known date attached — a tax bill, a planned purchase, a deposit due next winter. Get that split wrong and you’ll be the one paying the bank’s early-exit penalty instead of the other way around. The rest of the comparison, against savings and bonus accounts, lives in the savings accounts guide.