Six and twelve months are two of the most commonly searched term deposit lengths — long enough to earn a meaningfully better rate than a savings account, short enough that most savers are comfortable locking the funds away. But the two terms suit different situations. Here’s how to decide.

Rate Differences Between 6 and 12 Months

In our research across major Australian banks, 12-month rates were consistently the most competitive point on the curve — it’s the term banks compete hardest for, since it’s the one most consumers compare. Six-month rates were sometimes noticeably lower, and in a few cases 9-month or 11-month “special” terms actually paid more than either 6 or 12 months. This isn’t universal, though — check the actual current numbers on our bank-by-bank pages or comparison table, since the gap between terms varies by bank and shifts over time.

When a 6-Month Term Makes Sense

  • You expect to need the funds within the next year — for a planned purchase, tax bill, or upcoming expense.
  • You think rates might rise — a shorter term lets you reinvest sooner at a potentially better rate, rather than being locked into today’s rate for a full year.
  • You’re testing a new bank — a shorter commitment is a lower-risk way to try a provider before committing larger sums to a longer term.
  • You’re building a rate ladder — see our laddering guide for how mixing term lengths, including 6-month deposits, can smooth out reinvestment risk.

When a 12-Month Term Makes Sense

  • You want the (typically) higher headline rate — 12-month rates are often the most competitively priced across the market.
  • You don’t need the funds for at least a year — avoiding the temptation, and penalty, of an early withdrawal.
  • You expect rates to hold steady or fall — locking in today’s rate for longer protects you if the market softens.
  • You want fewer reinvestment decisions — a single 12-month term means one decision now instead of two reinvestment decisions across the same period.

Reinvestment Risk: The Real Trade-Off

The core trade-off isn’t really “which rate is higher today” — it’s reinvestment risk. A 6-month term forces a decision (and potentially a rate change, up or down) twice as often as a 12-month term over the same period. If rates are stable or falling, that extra reinvestment point is a liability. If rates are rising, it’s an opportunity to capture the improvement sooner. Since predicting the direction of the Reserve Bank’s cash rate with confidence isn’t realistic for most savers, see our explainer on the RBA cash rate’s impact on term deposits for the factors to watch, and consider laddering to hedge the uncertainty rather than betting on one direction.

A Middle Path: Split Your Funds

Rather than choosing exclusively between 6 and 12 months, many savers split their deposit — for example, half in a 6-month term and half in a 12-month term. This gives you a reinvestment decision point at 6 months (with the option to react to any rate changes) while still capturing the typically stronger 12-month rate on the other half.

Bottom Line

Twelve-month terms typically offer the more competitive headline rate, but six months offers flexibility and an earlier reinvestment opportunity. Use our calculator to compare the actual dollar difference between your options at current rates, and consider whether the higher-rate term or the flexibility is worth more to your specific situation.