Mozo guides

Term deposits vs savings accounts

It's a question you may have asked yourself a few times: should I get a term deposit or savings account? The real answer is that it really depends on your situation as both have advantages and disadvantages in different areas. 

What is a term deposit?

A term deposit is a fixed interest investment of your cash. When you put your money in a term deposit you lock it away for an agreed term (anywhere from 1 month to 5 years), to earn interest at a set rate until maturity. 

The only catch is that you can’t make withdrawals or deposits until that term ends. If you do decide to withdraw, you’ll often be required to give 31 days notice. Sometimes, providers may knock down your rate or not pay interest at all. That’s why it’s important to make sure you’re locking away cash you know you can live without. 

Why should I choose a term deposit?

A term deposit might be a good savings strategy if you want to grow your stash at a fixed rate. This is one of the reasons retirees favour term deposits, as their nest egg is protected against potential changes in the market. 

A term deposit might also be useful if you need a helping hand to stop yourself from unnecessarily dipping into your savings. Heavy penalties for early withdrawals mean you're much more likely to leave your emergency savings fund for real emergencies. 

What is a savings account?

A savings account is usually more flexible and accessible than a term deposit. It allows you to put your money away in a place that’s separate from your everyday bank account, but can easily be accessed if you need it. You can also make regular deposits to a savings account with no trouble at all, and can often dip into it without penalties.

The tradeoff for this added flexibility is that a savings account has a variable interest rate attached. If market rates go down, the amount of interest you earn goes with them.

For more info, head over to our guide to read up on everything you need to know about stashing your cash in a savings account.

Why should I choose a savings account?

The main drawcard of a savings account is that it’s accessible, but not too accessible. A savings account might be right for your money if you don’t want to spend it straight away, but also want to have the ability to make withdrawals and deposits when you need to.

How do they compare on...


Winner: Term deposits.

While a savings account isn’t a high-risk investment, term deposits win on this score because of their fixed rate, fixed term features. You’ve ensured a stable, secure return on your money for the life of the term deposit, regardless of whether the RBA chooses to hike, hold, or cut. 

The interest rate on your savings account on the other hand, is subject to market conditions and may change pretty quickly. This can make it difficult to estimate how much your savings account will earn you over time as providers can change the rate as soon as they see fit.


Winner: Savings account.

When your funds are in a savings account, you can withdraw or deposit as much as you like. The only restrictions to this are requirements you may need to meet for bonus interest, which might include making no withdrawals or a minimum deposit amount in a month.

With a term deposit, on the other hand, you’ll pay hefty penalties if you decide to withdraw early, and making extra deposits is usually not an option.


It’s a draw.

One of the best things about a term deposit is that it’s fee free as long as you don’t withdraw early. That said, since most savings accounts are online now, they tend to be fee free as well. So, as far as fees go, term deposits and savings accounts are pretty much on par.

Extra features?

Winner: Savings account.

Savings account providers often offer features like bonus interest rates, different facilities to access your money (such as a linked transaction account and debit card), and options for setting up automatic payments.

On the other hand, a term deposit is very simple - you put the money in and can mostly forget about it until the maturity date rolls around.

Interest rates?


Interest rates are often comparable on term deposits and savings accounts - although savings accounts often have the highest rates overall. 

Generally, the best rate is dependent on where the market is. A term deposit might look great if market rates are dropping, but not so hot if they’re rising and your savings are being left behind. A savings account is the opposite - you might be worried when rates start to drop, but rising market rates are great news.

The important thing for either product is to compare interest rates before you go ahead, to be sure you’re getting the best deal on the market. You can also read our RBA interest rate tracker to get an idea of where rates are heading.

Things to consider when choosing between a term deposit and a savings account

Now you’ve seen how term deposits and savings accounts compare. But some things can’t be summed up with a simple side-by-side comparison. It may come down to how you use your money.

So make sure you keep these things in mind when deciding where to stash your hard-earned cash:

  • Your budget: Ask yourself if you’ll need to make withdrawals from that lump sum any time soon. If the money you’re thinking of putting in a term deposit is part of your monthly budget, it might be better off in a savings account. Crunch the numbers with our budget calculator to work out how much wiggle room your budget will give you.
  • Saving goals: Are you saving for a big spend in six months, or in five years? Or maybe you’re just trying to set up an ongoing savings plan. Your savings goal will not only affect whether you opt for a savings account or term deposit but also what kind of term deposit might be best for you.
  • Saving habits: Are you someone who makes regular deposits to your savings? If you are then make sure you have the option to do so. If you’re not great at saving and locking your money away, a term deposit could be just the thing to curb unnecessary spending.

In general, be honest with yourself about your budget, goals and saving habits, and choose the product that will suit them best.

Find a savings account or term deposit

You can check out savings account and term deposit providers on our main hub pages. Alternatively, you can check out some providers in the tables below…

Term Deposit Comparison Table - last updated 29 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.


Savings Account Comparison Table - last updated 29 May 2024

Search promoted savings accounts below or do a full Mozo database search. Advertiser disclosure
  • Mozo Expert Choice Badge
    High Interest Savings Account

    5.75% p.a. (for $0 to $250,001)

    4.40% p.a.(for $0 to $250,001)

    Yes up to $250,000

    Bonus rate for the first 4 months from account opening

    Reward yourself with a higher rate for your good savings habits with the Rabobank High Interest Savings Account. No Account keeping fees. No minimum balance. Support Aussie farmers with every dollar you save.

  • Savings Account

    5.35% p.a. (for $0 to $250,000)

    4.75% p.a.(for $0 to $1,000,000)

    Yes up to $250,000

    Bonus variable rate is available for the first four months.

    Competitive introductory variable rate for first 4 months (on deposits up to $250,000). No account keeping fees to pay. Multiple 2023 Mozo Experts Choice Award winner.

  • High Interest Save Account

    5.10% p.a. (for $0 to $250,000)

    0.10% p.a.(for $0 and over)

    Yes up to $250,000

    Deposit at least $200 to either Spend, Bills or Save account from an external source each month.

    No monthly fees on any of your save accounts. Split your money with up to 10 Save accounts. Set savings targets and track the progress of all your Save accounts. Deposits guaranteed up to $250K per customer.

  • Mozo Expert Choice Badge
    AMP Saver Account

    5.40% p.a. (for $0 to $250,000)

    1.20% p.a.(for $0 to $5,000,000)

    Yes up to $250,000

    Enjoy a bonus rate when you deposit at least $1000 per month with the AMP Saver Account.

    No account fees. Unlimited transactions when linked to an AMP Bank transaction account. Easy online access to your money. Option to link your savings account to an everyday transaction account. 2024 Mozo Experts Choice Award winner.

Cameron Thomson
Cameron Thomson
Money writer

Cameron has a Bachelor of Creative Writing and History, and a background in broadcast media from his time at 2SER Radio. This diverse set of skills has informed his analytical yet creative approach to dissecting financial data and uncovering long-term trends in consumer finance. Cameron is RG146 certified for Generic Knowledge and keeps a keen eye on current and historical deposit and savings rates on the Mozo database. Cameron is also interested in tracking the investment space, particularly share trading platforms, to help Aussie consumers save and invest their money more wisely.

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

^See information about the Mozo Experts Choice Savings Account 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.