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

By Cameron Thomson · · 1 min read
Fact Checked

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 Alex.Bank - Term Deposit (invitation only)

5. 10% p.a. 10,000 Judo Bank - Term Deposit 5. 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.