The term deposit war has just started. Is now the time to pick up a good interest rate?

hands checking out dome graphs

Since the first RBA rate hike in May, we’ve seen financial institutions increase term deposit rates. In fact, in June alone we saw a total of 615 increases in our database.

But according to Mozo’s in-house banking expert Peter Marshall, “The term deposit wars have just started.” He says it’s likely we’ll see the space heating up in the next 12 months.

Before the May RBA hike, many banks, especially big banks, were offering “embarrassing rates” where customers were offered almost nothing for any term, says Marshall. 

That’s not the case anymore.

Below, you can see that the overall average of term deposits has increased throughout in the last year, slowly returning to rates from 2018. At a glance, the numbers may seem a bit low, but still, banks like AMP and Judo offer rates above a ‘3’, with several of the longer term deposits sitting above a ‘4’

Term Deposit Interest Rate Average

July 2022July 2021July 2020July 2019July 2018
1-year term1.88%0.50%1.11%2.07%2.50%
2-year term2.28%0.53%1.07%2.06%2.61%
3-year term2.42%0.54%1.06%2.02%2.67%
4-year term2.36%0.53%1.04%1.99%2.71%
5-year term2.41%0.56%1.07%2.02%2.78%

In 2018, the average for a 1-year term sat at 2.50% p.a. which is higher than the current 5-year term average. Several 5-year terms in our database currently start with a ‘3’. So it might assume that if rate hikes continue and we reach the same 1.50% cash rate of 2018, we could be seeing more 1-year terms starting with a ‘3’.

In fact, after June’s cash rate increase, several banks also announced increases to shorter term deposits. The big four now offer 11 to 15 month terms with a 2.50% p.a. rate, helping push the average closer to what it used to be in 2018.

If you have a large sum of money sitting in your savings account that you don’t need anytime soon, it might be worth looking into shorter term deposits.

Is it time to get a term deposit?

people measuring their options

Westpac economists predict that the RBA isn’t done hiking the cash rate and will continue to make increases to the end of the year. 

So term deposit rates might continue to move up.

“It’s worth waiting another couple of months. Either that or put some money on a six-to-twelve month deposit now and take advantage of better rates when it matures,” says Marshall.

“I’m not sure how much further they’ll go up or whether the jumps will be as big as we’ve seen, but my feeling is it’s better to wait just a little bit longer right now. The competition has only just started to heat up.”

Term deposits to keep an eye on

While big banks have begun to offer higher rates on term deposits, they aren’t the ones offering the highest. 

At the time of publication, our database's current term deposit leaders are Judo Bank, AMP Bank and Challenger Bank. However, the competition is picking up, so we might be adding another bank to the list soon.

Judo Bank

Term LengthInterest Rate  (p.a.)
1-year term3.25%
2-year term3.75%
3-year term4.10%
4-year term4.25%
5-year term4.35%

AMP Bank

Term LengthInterest Rate (p.a.)
1-year term2.90%
2-year term3.65%
3-year term3.90%
4-year term4.05%
5-year term4.15%

Challenger Bank

Term LengthInterest Rate (p.a.)
1-year term3.05%
2-year term3.35%
3-year term3.80%
4-year term4.00%
5-year term4.00%

As you can see there are plenty of good options around for term deposit savers right now. 

If you want to stay up-to-date with the latest term deposit news, check out our term deposit news page. Alternatively, you can start comparing term deposits below to find one that works for you.

Term deposit comparisons on Mozo - last updated 11 August 2022

Search promoted term deposits below or do a full Mozo database search . Advertiser disclosure
  • Mozo Expert Choice Badge
    Term Deposit
    interest rate
    Minimum deposit
    Govt Deposit Guarantee
    3.25% p.a.
    1 year
    $5,000
    Yes up to $250,000

    Competitive rates for one year term deposits. Start investing with as little as $5,000 to $1,000,000. For personal customers who want to invest above $500,000, or for non-personal customers, contact Challenger’s call centre to discuss account application options.

    Details
  • Hot Deal Earn a competitive rate of 3.24% half yearly or 3.25% annually on an 18 month term
    Term Deposit
    interest rate
    Minimum deposit
    Govt Deposit Guarantee
    3.10% p.a.
    1 year
    $5,000
    Yes up to $250,000

    Deposit of $5,000 up to $5 million. Choose a term from 1 month to 5 years. Select a range of convenient interest payment options. $0 establishment or ongoing fees. Easy tracking using the mobile banking app.

    Details
  • Mozo Expert Choice Badge
    Term Deposit
    interest rate
    Minimum deposit
    Govt Deposit Guarantee
    3.25% p.a.
    1 year
    $1,000
    Yes up to $250,000

    Start with as little as $1,000. Interest paid monthly, quarterly, half yearly or yearly (Terms and Conditions apply)

    Details
  • Mozo Expert Choice Badge
    Online Term Deposit
    interest rate
    Minimum deposit
    Govt Deposit Guarantee
    3.35% p.a.
    2 years
    $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.

    Details
  • Term Deposit
    interest rate
    Minimum deposit
    Govt Deposit Guarantee
    3.30% p.a.
    1 year
    $5,000
    Yes up to $250,000

    Competitive interest rates available. Terms ranging from 1 month to 5 years. No account fees to be paid. Interest can be paid to another account. Option to choose when interest is paid. Minimum deposit of $5,000 required.

    Details
  • Boost Saver Account with The Lock Saver Feature
    interest rate
    Minimum deposit
    Govt Deposit Guarantee
    2.60% p.a.
    1 month
    $0
    Yes up to $250,000

    Get all the perks of a term deposit but even more flexibility with the Virgin Money Boost Saver. Get up to 2.6%* variable interest when you switch on the Lock Saver Feature to lock your hard-earned savings away. Add money at any time, pay $0 fees and get access to your money with just 32 days’ notice*. Comes bundled with the everyday Virgin Money Go Account. (*Monthly criteria, T&Cs apply)

    Details

* 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.