March snapshot: Are term deposits worth it in a low interest rate world?

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This time last year the average interest rate for a 12 month term deposit was 1.43%. Now it's less than half that at 0.56%.*

There’s no two ways about it, interest rates have taken a tumble over the past few years and term deposits have been hit particularly hard. The question is, is there still a point to having a term deposit in 2021? It might be time to go back to the drawing board and think about what a term deposit actually has to offer.

A low risk investment

Lately there’s been a lot of buzz around share trading. With interest rates so low, a lot of Aussies are looking to other more creative ways to make money. The thing about this type of money making is that it does come with a higher level of risk. Term deposits on the other hand are protected by the Australian government’s financial claims scheme. With this scheme, up to $250,000 of your money will be guaranteed should your bank or credit union fail. For this reason, the ASIC Money Smart website describes term deposits as a ‘low-risk way to invest your money and earn a fixed rate of interest.’

Interest rates fixed

As mentioned, interest rates for term deposits are fixed. This is important to note because even though interest rates for terms have fallen, so have interest rates for savings accounts. The difference is that rates for the latter are variable, meaning they can change at any time. In contrast, once you put your money in a term deposit the interest rate is essentially fixed and will remain unchanged for the length of the term. Despite the fact that term deposit rates have dropped it is still possible to lock one in above 1%.

Rates above 1%

If you’re looking for a more competitive term deposit rate, you won’t find it with the big four. In fact following cuts in February, you would be lucky to find a rate above 0.30% with any of the four major banks.

The good news is that if you look a bit further afield it is still possible to find rates above 1%. Currently some of the most competitive interest rates for term deposits in the Mozo database are:

  • 1-year TD BankVic - 1.05% p.a.
  • 2-year TD Judo Bank - 1.20% p.a.
  • 3-year TD Judo Bank - 1.15% p.a.
  • 4-year TD Judo Bank - 1.10% p.a.
  • 5-year TD Judo Bank - 1.20% p.a.

So even though interest rates are relatively low, term deposits might still be worth a look if you need a place to lock your savings away and earn a bit of extra cash.

Head to Mozo’s compare term deposits page to take a look at more products, or check out the options on offer below.

Compare term deposits - last updated 26 May 2024

Search promoted term deposits below or do a full Mozo database search. Advertiser disclosure
  • Mozo Expert Choice Badge
    Term Deposit

    5.00% p.a.
    1 year


    Yes up to $250,000

    Enjoy a competitive fixed interest with the choice of 1 month to 5 year terms. Start with as little as $1,000. Interest paid monthly, quarterly, half yearly or yearly. Receive a 0.10% loyalty bonus when you automatically reinvest your Term Deposit before maturity. (Terms and Conditions apply)

  • Online Term Deposit

    5.00% p.a.
    1 year


    Yes up to $250,000

    No set-up or account keeping fees. Deposits up to $250,000 per customer are guaranteed by the Australian Government. Mozo Experts Choice winner for Term Deposit 2022.

  • Term Deposit

    4.90% p.a.
    6 months


    Yes up to $250,000

    Competitive fixed rates across investment terms ranging from 1 month to 5 years. No set up or establishment fees. $1000 minimum investment.


*Averages calculated using information available in the Mozo database, correct as of 1 March 2021.

* 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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