Are smaller banks offering the best 1-year Term Deposits?

Getting the best interest rate for your cash often means shopping around for providers who are offering the best rates. While it can be tempting to lock in the longest rate possible with a term deposit, right now the shorter term is generally offering the highest rates. This is because many banks are anticipating rate cuts on the cards for later this year. 

So, let’s take a look at the 1-year term deposit and ask, are smaller banks really offering the best rates for 1-year terms?

How smaller term deposit providers perform

Diving into the current term deposit market, it's clear that banks such as Heartland bank (formerly known as Challenger), Great Southern Bank, and Judo are all outperforming their larger rivals with much higher rates. Family First, for instance, offers a 1-year rate of 5.30% p.a. for its special term deposit.

While the Big 4 banks are offering fairly good term deposit rates, none are currently the highest rate possible on our comparison database and are below 5%. 

Provider Name1 Year RateMinimum Deposit
Heartland bank - Term Deposit5. 35% p.a.25,000
Great Southern Bank - Term Deposit5. 20% p.a.5,000
Alex.Bank - Term Deposit (invitation only)5. 10% p.a.10,000
Judo Bank - Term Deposit5. 10% p.a.1,000

You can find out more about how the big four term deposits compare here.

The benefits of choosing smaller banks for term deposits

There are a couple of benefits to signing up for smaller providers, most stemming from the very smallness (and sometimes more customer-focused if the provider is a credit union or mutual bank). 

  • Competitive rates: As shown, smaller banks are presently offering some of the most competitive interest rates in the market. This is done to attract new customers as they don’t have the same trust that most consumers have in bigger banks. 
  • Customer-focused approach: Smaller banks are often customer-owned banks that prioritise customer satisfaction over shareholder profits. This can lead to more advantageous terms, personalised service, and a community-centric banking experience.
  • Usually safer than you think: The Australian banking sector is a well-regulated machine, so smaller banks aren’t as risky as they would be in other countries. Since most smaller banks in the Mozo database are Authorised-Deposit-taking institutions (ADIs), a deposit of up to $250,000 is guaranteed in case of collapse by the government. However, a banking collapse is very unlikely to happen.

You can check out more about term deposit providers beyond or below just 1-year on our main hub page. We track up to 81 term deposit providers on our database so you’ll have plenty to compare between. Alternatively, you can check out some providers in the tables below.

Term deposit comparisons on Mozo - last updated 27 May 2024

Search promoted term deposits below or do a full Mozo database search. Advertiser disclosure
  • Mozo Expert Choice Badge
    Term Deposit

    5.00% p.a.
    1 year

    $1,000

    Yes up to $250,000

    Enjoy a competitive fixed interest with the choice of 1 month to 5 year terms. Start with as little as $1,000. Interest paid monthly, quarterly, half yearly or yearly. Receive a 0.10% loyalty bonus when you automatically reinvest your Term Deposit before maturity. (Terms and Conditions apply)

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  • Online Term Deposit

    5.00% p.a.
    1 year

    $5,000

    Yes up to $250,000

    No set-up or account keeping fees. Deposits up to $250,000 per customer are guaranteed by the Australian Government. Mozo Experts Choice winner for Term Deposit 2022.

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  • SMSF Term Deposit

    5.25% p.a.
    1 year

    $1,000

    Yes up to $250,000

    Apply digitally in minutes and manage your SMSF Term Deposit. Flexible cash flow management with three interest payment frequencies that suit you: monthly, yearly, or at maturity. Choose from terms of 3 months up to 5 years. No application or monthly account fees but eligibility criteria and terms and conditions apply. Only accessible to SMSFs with two or up to four individual trustees or one corporate trustee.

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* Different interest rates apply to different amounts or different interest payment frequencies.

^See information about the Mozo Experts Choice Term Deposit Awards

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