How much should you start a term deposit with?

Term deposits are a simple and easy way of earning interest on cash. However, knowing the right amount to first lock up can be a bit difficult. Part of this, is that you generally can’t withdraw money from term deposits the way you can with a savings account.

So it’s worth thinking about what amount you’re ready to stash. Let’s go over some basics to make the task easier. 

What are the basics of term deposits?

A term deposit is a fixed interest rate account where your money is locked away for a predetermined period. They can be pretty useful when the market is coming out of a high interest rate environment, as the locked in rate can remain above the cash rate as interest rates fall. 

However, if you’re in an environment where interest rates continue to rise, term deposits are not ideal as you lock yourself into a rate that is possibly well below the cash rate. That’s why it can be a good idea to check out where term deposit interest rates are and the Reserve Bank of Australia’s recent moves.

Minimum investment amounts

The entry point for term deposits can vary a lot between providers. Unlike savings accounts, it’s pretty rare to see a “no minimum deposit” term deposit. A few providers may allow you to open an account with as little as $500 though, which could be good for dipping your toes into one of these accounts.

What’s the right amount to lock up?

Term deposits usually require that you give 31 days notice before withdrawing your cash. What this means is that you need to be careful about how much you put in, especially if you don’t have an emergency fund.

The answer isn't a one-size-fits-all. It really depends on several factors, including your financial goals, risk tolerance, and the interest rates on offer.

Let’s consider some options for various cash amounts:

  • Starter - lower deposit: For newcomers, a $1,000 investment can be a solid starting point. This amount is usually enough to get a term deposit with a provider that is offering a fairly good rate.
  • Intermediate - mid-size deposit: If you have $5,000 to spare, a broader array of options becomes available. At this level, banks often offer more competitive interest rates, making your investment more lucrative. This tier is suited for investors who have some experience and are looking to enhance their returns without veering into high-risk territories.
  • Super saver - larger deposits: Some great rates on offer are currently with accounts that require a deposit of at least $25,000. These are ideal for savers seeking to park a large sum in a secure, low-risk vehicle while capitalising on competitive interest rates. Just check what the maximum account balance is, or you may be put on to a lower interest rate. 

Where to find great term deposit rates

Term deposits are offered by loads of Authorised Deposit-taking Institutions (ADIs), so you’ll have a lot of recognisable (and maybe some unrecognisable) names to choose from. Generally though, comparing interest rates and deposit requirements are the main things you want to keep an eye out for.

At Mozo, we track over 80 term deposits on our database so you can easily compare between providers. Check out the term deposit hub page or have a look at some of the providers in the table below… 

Term deposit comparisons on Mozo - last updated 23 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)

    Compare
    Details
  • Term Deposit

    5.25% p.a.
    6 months

    $1,000

    Yes up to $250,000

    Looking for returns that return? Invest as little as $1,000 or as much as $1,000,000. Apply online today in as little as 5 minutes. Protected by the Australian Government’s Financial Claims Scheme up to $250,000.

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    Details
  • SMSF Term Deposit

    5.25% p.a.
    6 months

    $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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    Details
  • Term Deposit

    4.90% p.a.
    6 months

    $1,000

    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.

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    Details
  • 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.

    Compare
    Details
  • Mozo Expert Choice Badge
    Term Deposit

    5.00% 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

* 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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