Long term deposit rates

How does a long term deposit work?

Depending what you consider to be a long time, a long term deposit can be anywhere from 12 months to 5 years. Generally, 5 years is the maximum amount of time most banks will let you lock your money into a term deposit.

You'd need to lock your money away for the length of time that you select, and you'll earn a fixed interest rate on your investment that will be locked in too. Some banks offer better fixed rates on longer terms, but this isn't always the case.

Is a long-term deposit right for you?

Longer-term deposit lengths often offer more competitive rates than terms of less than 12 months, but it could also be more of an inconvenience to lock your money away for more time. It could be a good option for you if you know you won't need money in the short term.

A long-term deposit may be right for you if:

• You are happy to lock a set amount of cash away for at least one year
• You're confident you won't need the money before the term length ends
• You're looking for a low-risk, safe investment option
• You want a set-and-forget investment
• You'd prefer not to invest your deposit in shares, but you still want a small level of return
• You don't want to have ongoing deposit and savings goals to meet each month (if you're okay with this, a high -interest savings account may suit you better)

Is it a good time to open a long term deposit?

The RBA has started to cut the cash rate and as a result, interest rates on term deposits and savings accounts are starting to fall. It's likely that rates will continue to go down over the next year or so. For this reason, it could be a great time to lock in a strong, fixed rate on a long term deposit before the rates drop more.

Pros and cons of long-term deposits

How to compare long term deposits

What is the interest rate?

This is arguably the most important feature, and one that can differ dramatically between different lenders. The higher the rate, the more interest you'll earn over the life of your term.

How often is interest paid?

Long term deposits can offer different methods for receiving your interest, ranging from monthly, quarterly or yearly. Some accounts only pay interest when the account reaches maturity.

What are the fees?

Most term deposits have no account fees, but you should try to avoid any lenders that charge for early withdrawals (you never know if you will need to withdraw the money in an emergency situation).

What are the balance limits?

At minimum you will find accounts that allow an initial deposit of just $1,000, but most will expect more. Make sure you're comfortable with the amount required, and leave enough money available in your savings account for living expenses and emergencies.

Similarly, if you've got a large amount to invest, look for a term deposit that allows for large deposits (some are capped at $20,000, for example).

Best long term deposit rates

Some of the best long term deposit rates at the moment include:

• 4.3% for 5 years with RaboBank
• 4.25% for 5 years with Judo Bank
• 4% for 5 years with Unity Bank

Frequently asked questions

• Which bank is best for long term deposits?

  At the moment some of the best long-term deposit rates are by RaboBank, Judo Bank and Unity Bank. Banks frequently change their fixed rates on term deposits, so it's best to compare between banks to see which has the best rate available at the time you want to open an account.

• What's the best 12 month term deposit?

  Judo Bank was named the winner of the best 12-month term deposit in the Finder Awards.

• How does a 12 month fixed deposit work?

  With a 12 month fixed deposit, you lock your money away for 12 months and earn a fixed rate of return over that time. You can choose how much to deposit. The rate you get when you open the account will not change until the term reaches maturity in 12 months.

• Can I do a fixed deposit for 10 years?

  Most banks offer fixed term deposits for a maximum period of 5 years. This is because the rates on offer may change quite a lot over this amount of time. Once your 5 year term ends, you can choose to roll it over into a new 5 year term at the current fixed rate.

Why you can trust our banking experts

Obsessed with great rates - We nerd out over RBA decisions and monitor the market daily to make sure you get the best interest rates from banks big, small and digital (and the odd credit union).

Cash in your own time frame - over 160 term deposit options tracked against 8 time frames from 3 months to 5 years. Dig into the data, or get the quick and easy editorial "best" if you're in a hurry.

No BS - We don't have a call centre, we're not owned by a bank. Heck, you don't even need to give us your email. Our job is to get your money to work harder and let that sweet interest grow.

To make sure you get accurate and helpful information, this guide has been reviewed by Aaron Christie-David, a member of Finder's Editorial Review Board.

Written by

Alison Banney

Editorial Manager, Money

Alison is an editor at Finder and a personal finance journalist with over 10 years of experience, having contributed to major financial institutions and publications such as Westpac, Money Magazine, and Yahoo Finance. She is frequently quoted in media outlets like SmartCompany and SBS, offering expert insights on superannuation and money management. Alison holds a Bachelor of Communications in Public Relations and Journalism from the University of Newcastle, and has earned three ASIC RG146 certifications in superannuation, securities and managed investments and general financial advice, ensuring her expertise is fully aligned with ASIC standards. See full bio

Alison's expertise

Alison has written 639 Finder guides across topics including:

• Superannuation
• Savings accounts, bank accounts and term deposits
• Budgeting and money-saving hacks
• Managing the cost of living