Is now the time to lock some money in a term deposit?
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The decision to put some money away in a term deposit should factor in the overall economic outlook. Right now, most predictions centre on inflation.
Recent monthly Consumer Price Index (CPI) figures indicate that inflation is gradually slowing, which increases the likelihood of interest rate cuts in the coming months. As a result, the high interest rates currently offered on savings accounts may soon decline.
If this happens, opening a term deposit could be one way to secure higher rates for a longer period. Although term deposit rates are currently slightly lower than those of savings accounts, locking in a rate now could ensure better returns in the future.
Why term deposits are great when interest rates fall
Term deposits can be somewhat risky when the Reserve Bank of Australia (RBA) is raising interest rates because you might lock in your funds at a rate that is lower than the prevailing market rate. However, when the official cash rate and therefore interest rates are expected to decline generally, a term deposit can be a good option. With the right one you can secure a higher interest rate before rate changes takes effect.
Where term deposit rates currently stand
Currently, many term deposit providers are offering rates around 5%. Although these rates are not as high as they once were, rate cuts will likely drive them down much lower.
Here are some of the current rate leaders on the Mozo database:
| Provider | Where it leads | Rate + Term |
| Judo Bank Term deposit | Tied as highest 2-5 year terms with Heartland Bank (minimum $1,000 deposit) | 1 Year - 5.00% p.a. 2 Years - 4.70% p.a. 3 Years - 4.60% p.a. 4 + 5 Years 4.45% p.a. |
| Heartland Bank Term deposit | Highest 1 year term. Tied as highest 2-5 year terms with Judo bank (minimum $25,000 deposit) | 1 year - 5.10% p.a. 2 Years term - 4.70% p.a. 3 Years - 4.60% p.a. 4 + 5 Years 4.45% p.a. |
| AMP Bank | Highest 10, 6, and 3 months term (minimum $5,000 deposit) | 3 months - 5.00% p.a. 6 months - 5.15% p.a. 9 months - 5.05% p.a. 10 months - 4.80% p.a. |
| Goldfields Money | Highest 2 months term (minimum $5,000 deposit) | 1 month - 3.90% p.a. 2 months - 4.30% p.a. 3 months - 4.85% p.a. 4 months - 4.80% p.a. |
How to compare term deposit rates
One way to compare term deposits is by evaluating rates against averages. At Mozo, we track and average the offerings from all term deposit providers in our database. Those numbers (as of 14 January 2025) currently look like this:
| Term Length | Average Rate |
| 1 year | 4.47% p.a. |
| 2 years | 3.92% p.a. |
| 3 years | 3.75% p.a. |
| 4 years | 3.61% p.a. |
| 5 years | 3.62% p.a. |
However, there are more to term deposits than just rates, you should also consider other aspects such as
- Interest payment frequency - Monthly interest payments can help with cash flow, while annual payments may offer slightly higher rates.
- Early withdrawal conditions - Check what penalties or fees apply if you need to access funds before maturity.
- Minimum deposit requirements - Higher balances often qualify for better rates, with some institutions offering rate bonuses for larger deposits.
- Rollover terms - Look into what rate you'll receive if you let your term deposit automatically renew. Bear in mind that the offered rollover rate may be lower than current offers by the time of maturity.
Looking to sign up with a provider? Visit our term deposit hub page to explore various options.
* Different interest rates apply to different amounts or different interest payment frequencies.
^See information about the Mozo Experts Choice Term Deposit Awards
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