HISA vs Term Deposit: Which Is Better for Australian Savers?

Two of the most common ways Australians earn interest on their savings are high interest savings accounts (HISAs) and term deposits. Both can offer competitive returns — but they work very differently, and the right choice depends on your situation.

What's the Actual Difference?

A high interest savings account is a standard bank account that pays a higher-than-usual interest rate, usually in exchange for meeting certain monthly conditions. Your money stays liquid — you can deposit or withdraw at any time. The rate is variable, meaning the bank can change it whenever it likes.

A term deposit is a fixed-term investment. You lock your money away for a set period — typically 3 to 24 months — and the bank pays you a guaranteed rate for the full term. You generally can't access the money early without paying a penalty. The rate doesn't change once you've locked in.

Current Rates: How Do They Compare?

As of April 2026, the best high interest savings accounts in Australia are paying around 5.0–5.5% per year — but that top rate typically requires you to meet monthly conditions, such as making a minimum deposit each month, growing your balance, or making a minimum number of card transactions.

The best 12-month term deposits are currently sitting at 5.35–5.55%, available from challenger banks like Heartland Bank, Judo Bank, MOVE Bank, and RACQ Bank. The Big 4 banks lag behind on both products — their HISA and term deposit rates are consistently lower than what smaller institutions offer.

On headline numbers, term deposits have a slight edge at the moment. But the comparison isn't quite that simple.

The Case for a High Interest Savings Account

Your money stays accessible

The most obvious advantage of a HISA is flexibility. If your car needs replacing, a medical bill arrives, or a property opportunity comes up, you can access your savings without any penalty. For an emergency fund or money you might need within the next few months, a savings account is the right tool.

You benefit if rates rise

If the RBA increases the cash rate after you've opened a HISA, your rate will likely rise with it. Term deposit holders who locked in before a rate rise miss out on the upside for the duration of their term.

No commitment required

Life changes. A HISA lets you adjust — move money around, top up, or withdraw — without paperwork or penalties.

The Case for a Term Deposit

The rate is guaranteed

This is the key advantage. A bank can cut your HISA rate at any time and for any reason — sometimes with just a few weeks' notice. A term deposit locks in your rate for the full term. If you invest at 5.55% for 12 months, that's what you earn, regardless of what the RBA does or what the bank decides to do with its savings rates.

In a rate-cutting environment — which is where Australia is in early 2026, with the RBA having cut twice since February 2025 — a term deposit protects you from further rate reductions.

No conditions to meet

High interest savings accounts often advertise a maximum rate that requires meeting monthly conditions: deposit $2,000 per month, grow your balance, make five or more purchases on a linked debit card. If you miss the conditions in any given month, you typically earn only the base rate — which can be as low as 0.5–1.0%. Term deposits have no such requirements. The rate you're offered is the rate you earn.

Better for a specific savings goal

If you're saving for something with a defined timeline — a house deposit you'll need in 12 months, a holiday you're taking next year — a term deposit aligns well. You set the term to match when you'll need the money, lock in the rate, and don't have to think about it again.

When a HISA Makes More Sense

• You might need the money before 12 months is up
• You're building an emergency fund
• You expect interest rates to rise and want to benefit from that movement
• You're still accumulating savings and adding to the account regularly

When a Term Deposit Makes More Sense

• You have a lump sum you won't need for 6–24 months
• You want a guaranteed return without monitoring conditions each month
• You expect interest rates to fall and want to lock in today's rate
• You're in retirement or drawing down savings and want income certainty

Can You Use Both?

Yes — and many Australians do. A common approach is to keep a HISA for your emergency fund and short-term savings, while laddering term deposits for money you know you won't need. A deposit ladder means splitting your funds across several term deposits with different maturity dates (e.g. 3 months, 6 months, 12 months) so that part of your money becomes accessible every few months without ever fully locking everything away.

The Bottom Line

Neither product is universally better. Term deposits win on rate certainty and simplicity; HISAs win on flexibility. The right answer depends on whether you need access to the money and whether you think rates are more likely to rise or fall from here.

Compare current savings account rates at AUSavingsPulse and term deposit rates at RatePulse to see what's available before making a decision.

This is general information only, not financial advice. Interest rates change regularly. Verify current rates directly with each institution before investing.