A term deposit does one job: turn a lump sum into predictable income for a defined period, with the principal back at the end. Australians hold hundreds of billions in them, and every dollar earns interest, which rules them out for practising Muslims, a conclusion the are-term-deposits-haram piece reaches carefully rather than assumes. This guide is about what replaces the job. Australia offers no halal term deposit, Islamic Money's planned Wakala deposits remain licence-dependent plans, but three live structures cover the income-with-a-timeline role. Details verified August 5, 2026.
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What you are actually replacing
Be precise about the term deposit's three features, because no alternative replicates all three. Feature one: predictable income, a rate known in advance. Feature two: capital certainty, guaranteed principal plus FCS protection to $250,000. Feature three: enforced discipline, the money locked away from impulse. The halal alternatives each deliver income and discipline in different mixes; none delivers guaranteed capital, because a guaranteed return on guaranteed capital is precisely the riba structure being avoided. Naming that upfront beats discovering it later: what follows are investments doing a term deposit's job, not term deposits wearing hijab.
Alternative one: the MCCA Income Fund (the closest fit)
For the income-on-schedule role, the MCCA Income Fund is the market's nearest thing: a registered Shariah-certified retail mortgage fund (est. 2009) holding registered first mortgages from MCCA's Islamic home finance book, paying monthly distributions since inception, returning 4.28% in FY2025 against the AusBond Bank Bill benchmark's 4.30%, after beating the benchmark each of the four prior years. Minimum $1,000, no entry or exit fees, Big-4 audited every six months, dedicated published fatwa. Where it departs from a term deposit: no fixed term (it is open-ended, which for many savers improves on lock-up), withdrawals on the fund's processing timetable rather than at-call, and no capital guarantee or FCS protection, the fund's assets, mortgage-secured and historically stable, are the protection. The full guide covers mechanics and risks.
Alternative two: ICFAL memberships (the community version)
ICFAL's share-based memberships pay quarterly dividends from the co-operative's actual results: the published table (crawled August 5, 2026) shows 6.5% p.a. over five and ten years on General and Children memberships, 3.8% over the past year, and 4.4% p.a. on the Hajj fund, net of fees and tax. Entry from $600 all-in. The term-deposit comparison: higher long-run published returns than the MCCA fund, genuinely variable year to year (the 6.5-to-3.8 swing is the risk-sharing working), co-op-paced liquidity, thinner disclosure than ASIC-registered funds, and the intangible that your capital funds Musharakah home finance and Qard Hasan hardship loans inside your own community. Discipline is structural: co-op shares do not tempt like an app balance. The membership guide goes deeper.
Alternative three: sukuk exposure (the market-priced version)
Sukuk are the capital markets' answer to bonds, structured over real assets, and Australia's retail access point is the Hejaz Sukuk Active ETF (ASX: SKUK): AAOIFI-screened sovereign and corporate paper, Saudi Arabia 2033s, Indonesia 2027s, First Abu Dhabi Bank 2028s, at 1.33% p.a. in PDS fees, accessible from $100 via the Halal Money app or any broker. Its recent record is the honest advertisement: -3.91% over the year to 31 May 2026, 2.63% p.a. since its November 2023 listing, duration and currency risk printing in public. As a term-deposit replacement it is the loosest fit, daily-priced, genuinely volatile, and it earns its slot as the liquid, scalable rung whose long-run role in a portfolio the sukuk explainer sets out.
The comparison table
| Feature | Term deposit (haram) | MCCA Income Fund | ICFAL membership | SKUK ETF |
|---|---|---|---|---|
| Income schedule | At maturity or monthly | Monthly, since 2009 | Quarterly | Distributions; price varies daily |
| Published return | Contracted rate | 4.28% FY2025 | 6.5% p.a. 5yr; 3.8% 1yr | -3.91% 1yr; 2.63% p.a. since listing |
| Capital certainty | Guaranteed + FCS | Not guaranteed; mortgage-secured assets | At risk; co-op results | Market-priced daily |
| Liquidity | Locked to term | Fund timetable | Co-op timetable | ASX trading day |
| Minimum | Varies | $1,000 | $600 all-in | $100 via app |
| Shariah documentation | None | Dedicated fatwa; Big-4 audits | Usmani-chaired board; Meezan audit 2023 | ANIC certified; semi-annual audits |
Laddering without term deposits
Term-deposit ladders, staggered maturities giving regular access, translate directly. A halal ladder: the emergency slice in protected zero-interest cash (instant), the income core split between the MCCA fund (monthly cash flow, fund-timetable access) and ICFAL (quarterly, patient), and a measured SKUK sleeve as the liquid rung that can be sold any trading day. Rebalance annually. What the ladder gives up against its conventional cousin is the guarantee; what it gains is that every rung's return comes from rent, real financing and real assets rather than a promise the Quran prohibits, and the diversification across three unrelated structures is genuine risk management, not decoration. The full savings options guide places the ladder in the wider plan.
Sizing the rungs: a worked allocation
Numbers make the ladder concrete. Take a household holding $60,000 that a conventional adviser would have split across term deposits: a halal version might hold $15,000 in the protected zero-interest account (the slice with deadlines inside two years), $25,000 in the MCCA Income Fund electing distribution reinvestment (the patient income core), $15,000 in ICFAL General shares built up over several quarters (the community tier, sized to co-op liquidity tolerance), and $5,000 in SKUK as the liquid market rung. On the latest published figures the blended income tier earned roughly 4-5% from permissible sources while the protected slice earned nothing and lost nothing. The proportions are illustrative, not advice; the method, deadline-first, guarantee where needed, published records over promises, is the whole point, and it survives contact with any household's actual numbers.
For the saver who cannot accept any capital risk
Some money genuinely cannot risk loss: next semester's fees, a settlement three months out, the deposit already promised. For that money the honest halal answer is the one nobody markets: a zero-interest account at a licensed bank, protected to $250,000, earning nothing. Zero return is a real cost, inflation collects it, but it is a known cost, and paying it knowingly for certainty is a rational, fully halal trade. What is not available at any price in Australia today is certainty plus return without riba; anything claiming to offer that combination deserves the five-question audit before it deserves your money.
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The bottom line
The term deposit's job splits cleanly across the halal shelf: MCCA for the monthly income core, ICFAL for patient community-owned yield, SKUK for the liquid market rung, protected cash for the money that cannot lose. No single product replaces the guarantee, and that is not a market failure, it is the theology working as intended. Build the ladder, size the rungs to your deadlines, and let the conventional term deposit keep its interest and its lock-up both.