Looking for 5% interest? Term deposits offer top returns for savers

Bank of Sydney has reported a surge in interest among investors for term deposits, “driven by the allure of security and substantial returns in the current economic landscape.”

The bank is reporting a significant shift, with term deposit interest rates now climbing towards the 5% level generally, which is luring more investors.

Chief banking officer at Bank of Sydney, Fawaz Sankari says, “This striking transformation underscores the substantial benefits that rising interest rates can offer savers. The shift in interest rates is resonating positively with individuals. 

“Australians, who have navigated a prolonged period of low interest rates, especially impacting those dependent on interest income, are now witnessing a tide of enhanced returns from their savings."

Bank of Sydney began offering 5.25% on its 12-month term deposit as of 28 September, 2023. On a $100,000 deposit with this product, there’s potential to generate $5,250 in interest, the bank says.

The question for most savers, however, is to consider whether they’d rather park their money in a high interest savings account, from which they more easily can withdraw their money without penalty, or indeed lock it away in a term deposit for a fixed period. 

For example, some savings accounts offer fairly good rates at present, including Ubank’s High interest Save Account at 5%, Macquarie’s Savings Account at 5.40% and Rabobank’s High Interest Savings Account at 5.60%. These rates are not fixed though and can change with fluctuations in the official cash rate set by the Reserve Bank.

By comparison, Bankwest offers 4.90% on a 9-month term deposit, ING has a 12 month term deposit at 5%, while Judo offers 5.20% on a 2-year term.

Bank of Sydney's 12-month term (at 5.25%) clearly stacks up well against these.

All up, understanding your short and long term money goals can help you decide which type of product would be more suitable. Our savings calculator can be a good first step in working that out.

But if you're ready to stash your money and earn a good rate of interest now, why not check out some of the ‘best’ term deposits below. You can also compare some ‘award-winning’ term deposits as selected by our Mozo experts.