Analysis of the InfoChoice product database shows a whopping 35 banks changed term deposit rates in the month of May to the time of writing. 

By and large, terms of three to nine months increased again, with three-month terms seeing the most appreciable increases of 16 basis points on average.

Longer terms are hot once again after months of declines, with four-year terms going up by an average of 22 basis points.

Five-year terms increased by 12 basis points on average, to an average rate of 4.87% p.a.

Renewed inflation concerns may well have pushed the boat out on expectations of an RBA rate decrease to at least 2025, thereby stoking flames in the TD space again.

ING re-enters the 5% space

Term (Interest Paid) New Rate % p.a. (Change) Deposit Sizes
180 Days (End of Term) 5.05% (+0.20) $10,000 to $5 million
12 Months (End of Term) 5.00% (+0.10) $10,000 to $5 million
24 Months (End of Term) 4.60% (+0.10) $10,000 to $5 million

One of Australia's largest banks moved rates slightly upwards on popular terms; to notch above the 5% mark these days is quite noteworthy.

Also noteworthy is that on two-year products, savers can opt for an annual interest payment with no reduction in the interest rate.

The minimum deposit however is $10,000, which is higher than many other institutions' demands. However the maximum is a hearty $5 million.

Five per cent on $5 million over a year is $250,000 - certainly not too shabby and ostensibly enough to live off, but remember that term deposit interest is subject to income tax.

Also keep in mind the government's $250,000 deposit guarantee.

Teachers Mutual offers competitive rates for members

Term (Interest Paid) New Rate % p.a. (Change) Deposit Sizes
Edvest - 3-5 Months (End of Term) 5.00% (+0.20) $1,000 to $500,000
Regular - 3-5 Months (End of Term) 4.95% (+0.20) $1,000 to $500,000

This week one of Australia's largest customer-owned banks changed rates on short-term deposits to be quite competitive.

However, the most competitive rates go to 'Edvest' products, which come with a $30 annual (pro-rated) member fee.

You'll have to consider if the extra 5 basis points is worth it. Over five months the fee would be $12.50.

The difference between 4.95% and 5.00% p.a. on a $50,000 deposit over five months is $25, which is then subject to income tax.

Slight reductions in the interest rate apply if you want more frequent interest payments, for example fortnightly or monthly.

These changes also apply to Teachers subsidiaries Firefighters Mutual, Health Professionals, and UniBank.

Gateway Bank makes a case for itself

Term (Interest Paid) New Rate % p.a. (Change) Deposit Sizes
6 Months (End of Term) 5.25% (+0.05) $1,000 to $500,000

Gateway Bank made a modest improvement to its six-month product, which has been pushed to be only 5 basis points off the tippy top rates, as seen in the leaderboard below.

Term Deposit Leaderboard - End of May 2024

  • 3 Months: 5.00% p.a. - Bank of Sydney, Judo Bank
  • 6 Months: 5.30% p.a. - Heartland Bank
  • 9 Months: 5.25% p.a. - Heartland Bank
  • 1 Year: 5.35% p.a. - Heartland Bank
  • 2 Years: 5.20% p.a. - Judo Bank
  • 3 Years: 5.00% p.a. - Judo Bank
  • 4 Years: 5.10% p.a. - Judo Bank
  • 5 Years: 5.20% p.a. - Judo Bank

Rabobank's hot new savings account rate

Last week, Rabobank quietly made big changes to its ongoing savings account rate.

It was boosted by 45 basis points to now sit at a maximum 5.45% p.a.

Savers only need to increase their balance by $200 a month (this is different to merely depositing $200 a month).

The maximum balance is $250,000, and keep in mind if you don't increase the balance by $200 a month, the rate that applies that month is 1.50% p.a.

This is one of the most competitive ongoing rates in the market, behind only ING's Savings Maximiser, and ME Bank's HomeME products, though the criteria on these products is more onerous.

Rabobank also maintains its market-leading 5.75% p.a. variable intro rate for four months.

One thing to keep in mind however is that Rabobank is not part of the New Payments Platform or Osko, meaning near-instant money transfers may not be possible.

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