Term deposits have arguably been the most hotly-contested area in personal finance, with each week bringing a new top-dog vying for deposit dollars.

This week, Macquarie Bank edged out the likes of AMP and Judo to re-take the crown in the one-year term deposit space.

Its top one-year rate is now 3.80% p.a. with interest paid at maturity and a $5,000 minimum deposit.

While this represents an increase of just 5 basis points, the tit-for-tat race means one-year rates are edging ever-closer to the 4.00% p.a. mark.

Only a few months ago, a 4.00% p.a. rate was considered 'good' in the five-year space, let alone the one-year space.

Savings account rates continue to trend upwards as well, with Bank of Queensland's 4.00% p.a. announcement last week proving popular.

Top term deposit rates

Term Bank Interest Rate Min Deposit
6 Months Judo 3.00% p.a. $1,000
1 Year Macquarie 3.80% p.a. $5,000
2 Years Judo 4.10% p.a. $1,000
3 Years Judo 4.25% p.a. $1,000
4 Years Judo 4.40% p.a. $1,000
5 Years Judo 4.50% p.a. $1,000
Source: InfoChoice Database, 28 September 2022 *Interest paid at maturity

Top savings account rates

Type Bank Interest Rate Notes
Unconditional ANZ Plus 3.00% p.a. Max deposit $250,000
Conditional Bank of Queensland 4.00% p.a. Ages 14-35, deposit $1,000 per month and make 5 debit card transactions in linked everyday account, max deposit $50,000
Honeymoon/Intro Macquarie 3.70% p.a. 4 month intro rate then reverts to 2.75% p.a., max deposit $250,000
InfoChoice Database, 28 September 2022

To compound or not to compound?

An important consideration is that term deposits have simple interest, not compounding; compounding basically means your interest earns interest.

For example, if you had an unconditional 3.80% p.a. savings account rate with interest paid and compounded monthly, and paid nothing extra into it, you would earn $387 in interest in the year with a $10,000 balance.

Compare that to an equivalent one-year term deposit rate with interest paid at maturity, and you'd earn $380.

While a difference of only $7 - enough for a Big Mac - the results get more pronounced if you have a bigger deposit, save more, and save for longer.

Of course, with a term deposit the interest rate is locked-in, meaning it won't change like with a savings account rate.

That peace of mind might be worth $7 to you.