Why term deposits have become a star savings performer in 2022

With an increase in interest rates from the Reserve Bank of Australia (RBA), many are starting to see this as a better time than ever to start pumping money into their savings accounts. 

Term deposits—where you lock away your money for a set period of time to gain higher interest—have similarly seen a boom in interest rate returns. 

In July of 2021, the average rates for a 2-year term were at just 0.53%. But a year later, the picture is so much better for savers.

The average rate had increased to 2.28% as of July 2022.

Not only that, Mozo’s own analysis showed that as of November, term deposits like Judo and AMP are currently offering term deposit interest rates of over 4% for 1-5 year terms.

Overall, the increase in interest rates has created a safe place for Australians to park their savings and grow their wealth whilst tougher living conditions continue.

But I already have a savings account that I like, why should I consider a term deposit heading into 2023? 

You might be wondering; “If I already have a high-interest savings account, are term deposits worth considering?” 

Splitting your savings through multiple accounts can be a good strategy if you have the cash to do it. That being said, it isn’t always the best choice for everyone. 

If you’re young or tight on cash, you may find it better to keep your money in a savings account. The advantage of this is that you can access your savings when you need them but at the cost of a lower interest rate. 

However, if you’re older or generally just have enough spare cash in your pocket, you may find it more helpful to store it away in a term deposit to reap the benefits of higher interest rates over a set period. 

Additionally, having a savings account for more immediate situations and a term deposit for a long-term goal can help you define savings buckets that can help organise your money better. 

Say, for instance, you want to save up for a car deposit. While your term deposit grows the money needed for your goal, keeping a savings account for everyday transactions can help with last-minute purchases you have for your everyday life.

Interested? Check out our comparisons of term deposit accounts and start saving.