Interest rates on term deposits 1+ years ramp up

By Roisin Kelly-Goldsmith ·

Term deposit products 12 months and older have higher interest rates than deposits with shorter time-frames, new data has revealed.

  • 33 out of 45 financial providers compared by Mozo hiked term deposit interest rates in August (with terms from 1 to 5 years)
  • For terms under 1 year, 91% of rate changes made were cuts
  • We reveal term deposits with the highest rates

Market analysis by Mozo found that in August, 91% of rate changes applied to term deposits under one year were rate reductions. But when it came to term deposits one year or more, interest rate hikes outweighed any cuts.

It’s been nearly one month since the RBA met and subsequently decided to reduce the cash rate by 25 basis points to a landmark low of 1.5%. While the big four passed on partial rate cuts to home loan customers, they did provide a sweetener when it came to term deposit rates.

“In a surprise move, interest rates for term deposits of one year and over have largely moved up in August, despite the rate cut. Perhaps even more surprisingly, the big four banks have made some of the most generous rate increases and are now offering some of the most competitive interest rates on the market for one and two year term deposits,” said Mozo Director, Kirsty Lamont.

“Finally, savers have been given a great reason to lock some extra cash into a term deposit of one year or longer.”

Best term deposit rates*:

Provider/sRate
Less than a year

1 year

2 years
Arab Bank (3 months)

Gateway Credit Union

ANZ, People’s Choice Credit Union
3.10%

3.11%

3.20%

*Rates in table based on a $25k deposit.

Before committing to a term deposit, remember to...

1. Choose your term wisely. Even though picking a two year deposit may deliver a nice return, you’ll feel the sting if you draw from the funds early. Choose a term that reflects your financial situation.  

2. Keep it separate from your emergency fund. It can be helpful to keep an emergency fund in a different account, like a high interest savings account for example.

3. Look at the maturity rate. You may even want to mark it down in your calendar, to avoid your term deposit rolling over before you have a chance to move it into a different account with a better rate.

Tempted by the opportunity to grow your savings into something even more? Lock that cash into a term deposit now at Mozo’s comparison hub.