Shop before you lock: Term deposit choice could cost you $500

Australians looking for a safe place to stash their savings could be forgiven for glancing at term deposit rates with a weary eye, especially given the fact that, according to Mozo data, there have been 65 cuts from providers already this month.  

In fact, term deposit rates have been down across the board since November 2016, with the largest drop occurring in the 2 year term category - the average rate falling from 2.75% to 2.57% in just a year.

And with the Reserve Bank likely to keep interest rates at record low levels, at least in the short-term, Mozo’s Product Data Manager Peter Marshall has urged savers do their research before locking in a rate.

“Given the low rates, it’s even more crucial for Australians to shop around and compare term deposit rates in order to grab the best possible return for their money,” he said.

“Just by putting in a little extra legwork, savers could potentially be pocketing hundreds of dollars in additional interest over the life of a term deposit.”

Despite the general downward trend, savers are still able to find value in some of the longer term offers on the market, with the best term deposit rates currently in the Mozo database for three, four and five year terms all above 3.00%.

With a current interest rate of 3.25%, online bank RaboDirect’s five year term deposit is 0.50% above the average rate for the same term in the Mozo database, and while that might not seem huge, the additional interest can really add up over five years.

According to the Mozo term deposit calculator, a balance of $20,000 invested in the RaboDirect term deposit would end up making an extra $500 in interest compared to the same amount invested with the Mozo database average of 2.75% for the same term.

Interested in comparing term deposits for yourself? Check out the Mozo term deposit hub which compares offers from over 60 different banks.

Term deposits - last updated 3 March 2024

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

    4.75% p.a.
    1 year

    $1,000

    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)

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    Details
  • Online Term Deposit

    4.75% p.a.
    1 year

    $5,000

    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.

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    Details
  • Term Deposit

    4.75% p.a.
    6 months

    $1,000

    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)

    Compare
    Details

What do you need to know before opening a term deposit?

No fees: One of the major benefits of keeping your money stashed in a term deposit is the fact that you’ll be able to do so without getting whacked by any startup or annual fees.

Locked-in: Love certainty? With a term deposit you'll know exactly how long your money is locked away for, the interest rate you’ll earn and the amount you’ll receive at the end of the term. If that doesn’t sound like your cup of tea, then a more flexible high-interest savings account could be the better option.

Early withdrawals: If you decide that you really need access to the money you've put away in a term deposit you may be hit with an early withdrawal penalty - so make sure you set a realistic term in the first place.

Balances: Depending on the provider you choose, there may be a minimum or maximum balance you can invest. Don’t worry though, because these generally start from just $1,000 and can go into the millions.

* Different interest rates apply to different amounts or different interest payment frequencies.

^See information about the Mozo Experts Choice Term Deposit Awards

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.