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A term deposit locks a fixed sum away for a fixed period at a fixed interest rate. Because the rate is guaranteed for the term, a term deposit is one of the few savings products where you know your exact return up front — the trade-off is that your money is not freely accessible until maturity.
How much you earn depends heavily on when interest is paid. On terms of a year or less, interest is usually paid once at maturity, so it behaves like simple interest. On longer terms you can often choose to have interest paid monthly, quarterly or annually — and if you let it compound (reinvest rather than pay out), you earn interest on your interest, lifting the effective return above the headline rate.
Deposit $50,000 for 12 months at 5% paid at maturity and you earn $2,500. Take the same $50,000 over 3 years at 5% compounding annually and it grows to about $57,881 — roughly $7,881 of interest, noticeably more than three simple years ($7,500) would give, purely from compounding.
Access your money before maturity and you'll generally face a reduced interest rate plus, often, a 30- or 31-day notice period. That penalty can wipe out much of your return, so a term deposit only makes sense for money you're confident you won't need. Splitting a lump sum across several shorter terms (a "ladder") is a common way to keep some money coming free periodically.
Is my money safe? Deposits with an Australian authorised deposit-taking institution are protected up to $250,000 per account-holder, per institution, under the government's Financial Claims Scheme.
Is term deposit interest taxed? Yes — interest is assessable income in the year it's paid or credited, and the bank reports it to the ATO against your TFN.
What happens at maturity? Unless you give instructions, many banks automatically roll the deposit into a new term at the current rate, so it pays to diarise the maturity date and compare rates.
This calculator uses current published rates from Australian government and regulator sources. The result is an estimate for general guidance — it does not constitute personal financial advice. For decisions about your circumstances, consult a registered financial adviser, tax agent, or other professional. See editorial standards for how DecisionLab sources and updates its calculator data.