Term deposits: What does your commitment earn you?

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Interest rates haven’t been all that rosey for savers in 2020. Whether you store your cash in a term deposit or savings account, economic uncertainty has led to consistent cuts across the board. 

The traditional approach to this kind of instability would be to bet on a term deposit. This option provides a fixed rate for as long as you set the term, helping you avoid rate reductions (and increases, on the negative flipside).

The catch is you’ve got to get while the gettin's good. Right now, what you’ll get for an average one-year term deposit is 0.79% interest rate, according to Mozo’s database. Compared to 2014’s one-year term average of 3.41%, that interest rate doesn’t feel quite so good.

Unfortunately, things really don’t pick up if you’re willing to stick it out for a longer term. As you can see in the graph below, savers were once upon a time incentivised with a higher rate to keep their cash locked up for longer periods.

This is known as the ‘yield curve’ and while it isn’t completely flat, it’s certainly no longer a mountain peak at the end of the x-axis. The average in Mozo’s database for a five-year term is now 0.84%, which is only five basis points up from the one-year rate.

Security in uncertain times

So, what should your game plan be if you didn’t organise a top term deposit rate years ago? As always, we implore you to shop around. 

While the averages aren’t great, you can still get a solid fixed rate of up to 1.23% for one year or 1.35% for a five-year term (both with a Judo Bank Term Deposit). If you’re looking for a shorter time frame to meet a savings goal, Bank Vic is offering rates of 1.15% between one and eight-month terms and a bump up to 1.25% on its nine-month option.

While these rates aren’t as high as some of the leading savings rates right now, they do have the benefit of being fixed. 

If the Reserve Bank of Australia (RBA) cuts the cash rate in November (as many analysts are forecasting) and banks follow with corresponding rate reductions for deposit accounts, your nest egg will keep on growing at the same rate.

If you’re dipping your toes into term deposits for the first time, start research using our term deposit comparison tool or check out the options below.

Compare one-year term deposits - last updated 28 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

    $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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  • Online Term Deposit

    5.00% 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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  • SMSF Term Deposit

    5.25% p.a.
    1 year

    $1,000

    Yes up to $250,000

    Apply digitally in minutes and manage your SMSF Term Deposit. Flexible cash flow management with three interest payment frequencies that suit you: monthly, yearly, or at maturity. Choose from terms of 3 months up to 5 years. No application or monthly account fees but eligibility criteria and terms and conditions apply. Only accessible to SMSFs with two or up to four individual trustees or one corporate trustee.

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* 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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