2 year term deposits

A 2 year term deposit is a type of long term deposit that offers a great way to stash your funds and watch them grow. It's an ideal option if you're saving for something big, like a home deposit or a renovation project.

The key feature of a 2 year term deposit is its fixed interest rate. When you lock in your deposit, the interest rate is set for the entire 2 year period. This means that regardless of what happens to term deposit or cash rates, the interest rate on your deposit will remain the same for those 2 years.

How much can I deposit for 2 years?

The amount you can deposit varies between banks, but here are some general guidelines:

• Minimum deposits usually range from $1,000 to $5,000.

• Some providers cap the maximum initial deposit for certain rates.

• Larger deposits may be open to negotiation, but often at a lower interest rate.

What are 2 year term deposit interest rates like?

Two year term deposits are usually considered 'longer' term deposits, which means they generally offer higher interest rates compared to shorter terms, like six month deposits. 

However, due to the RBA keeping the cash rate steady for 2024 and inflation remaining somewhat sticky, shorter terms have been offering the highest rates in our database.

For up-to-date information on current term deposit rates, visit our Term Deposits main page.

When will I receive my interest payment?

Generally, term deposit interest is paid monthly, annually, or at maturity—although this can vary depending on the bank.

In most cases, receiving interest more frequently (like monthly) can be beneficial as it allows you to start earning compound interest on those payments. However, keep in mind that opting for more frequent payments might result in a slightly lower interest rate to offset the compounding effect.

Some banks also offer the option to have your interest payments deposited into a separate bank account, allowing you to use your interest right away as supplemental income.

Can I access my money before my 2 year term deposit matures?

While you can access your funds before the 2 year term is up, it's generally not recommended. Early withdrawals often come with costs, such as:

• Early withdrawal fees

• Reduced interest rates

• A notice period of 31 days.

If you think you might need to access your money during the 2 year period, it might be worth considering a high interest savings account instead. While these accounts have variable rates that can change when the provider sees fit, you’ll also have flexibility when it comes to withdrawals (although some account conditions may reduce your interest rate).

Am I able to deposit more money over the 2 years?

Term deposits are designed to accumulate interest on your initial balance, so you can't add more funds to your deposit once it's set up. Your initial deposit, plus any interest earnings, will usually be locked in until your term deposit reaches maturity.

What are the pros and cons of a 2 year term deposit?

Pros:

1. Fixed interest rates provide certainty about your returns.

2. Can lock in high rates before potential market decreases.

3. Discourages withdrawals, helping you save more effectively.

4. "Set and forget" nature makes saving easier.

Cons:

1. Less flexible than savings accounts if you need to access your money.

2. If interest rates rise, your locked-in rate might be lower than current market rates.

3. Early withdrawal typically incurs fees and requires notice.

4. Can't add more funds to take advantage of good rates.