It really is a wonder that there was a stock market crash here in the mid-1980s. If you look back at the term-deposit rates offered at the time, you have to ask yourself why people bothered with risky equities.
Back in 1985 when, ironically, Dire Straits’ Money For Nothing was riding high in the charts, the average six-month term deposit rate was 17.93%. Yes, average mortgage rates were eye-watering – the floating rate at the time was 17.5% – but now the only investment likely to offer such large, short-term returns involves taking a punt on Bitcoin.
→ Related article: How to Buy Bitcoin in New Zealand
By June 1995, term-deposit rates had fallen close to 10 percentage points, to 8.84%. And hand-in-hand with mortgage rates, they’ve continued their decline ever since.
|June||Six-month Term Deposit||Two-Year Fixed Mortgage Rate|
Currently, when you factor in the inflation rate of 3.3%, choosing a term deposit can cost you money in the long term. However, if you’ve a lump sum that you need to park safely, a term deposit is still a handy tool to have in your investment portfolio.
Canstar’s Term Deposit Comparison Tool compares over 470 term deposit rates from 14 providers, and is a great place to research the best rates in the market.
However, for a quick rundown, we’ve put together a couple of easy-to-scan tables featuring the highest rates (as of 03/09/2021) on our database for 12-month, and 24-month term deposits.
Term deposit best rates: 12-month term
The results based on an investment of $50,000 for 12 months. Interest paid at end of term, unless marked, showing shortest frequency.
|12-month term deposit rate|
*monthly | ** quarterly
Term deposit best rates: 24-month term
The results based on an investment of $50,000 for 24 months. Interest paid at end of term, unless marked, showing shortest frequency.
|24-month term deposit rate|
* monthly **quarterly
To view a wider range of term-deposit accounts, use Canstar’s Term Deposit Comparison Tool.
Term deposits: things to consider
While a high interest rate is important, it isn’t the only factor to consider when looking for a term deposit. Some other factors you might want to keep in mind include:
Fixed time period
Choose your time wisely, because term deposits can be inflexible. For example, if you need to access your money before the end of the term, your bank may charge you a penalty fee and ask you to give them a period of notice.
They tend to vary a lot, depending on the provider and the term. With movements in both directions possible, it pays to shop around.
Interest can be compounded at different frequencies, such as monthly, semi-annually and annually. The compounding frequency, the number of compounding periods and the interest rate will determine the amount of interest earned on a term deposit investment.
Often, you’ll receive less interest on accounts that pay interest more regularly, for example monthly, due to the added benefits of compound interest.
Check whether there is any minimum amount needed to open a term deposit, and if a higher interest rate is offered for a larger amounts. It may be worthwhile depositing more than you originally considered to achieve a better rate.
Fees and charges
Are there any penalties or fees charged for early withdrawals?
As rates are constantly moving, it’s important to be aware that if you roll over your account, you might be fixing at a lower (or higher) amount. Also be aware that sometime you can earn bonus interest if you agree to roll over your term deposit. So check with your provider to see what options you have, and what terms and conditions apply.
→ Related article: What is Compound Interest?
For the full rundown of all the up-to-date term deposit rates on Canstar’s database, just click on the button below.
About the author of this page
This report was written by Canstar’s Editor, Bruce Pitchers. Bruce began his career writing about pop culture, and spent a decade in sports journalism. More recently, he’s applied his editing and writing skills to the world of finance and property. Prior to Canstar, he worked as a freelancer, including for The Australian Financial Review, the NZ Financial Markets Authority, and for real estate companies on both sides of the Tasman.