Banks pull back their headline term deposit offers to shorter terms. Savers scramble over minor differences. Some PIE funds give a little bit extra

The term deposit interest rate offerings from banks are quietly changing lower.

Since we last looked at these in early September, there has been some further slippage.

It has now been six whole months since maximum rates were last offered at 4% or higher by a national bank. (The local branch of the Bank of India was the last of any bank to slip below that threshold and they did that at the beginning of this month).

What we are seeing are 'headline' rates getting shorter and shorter.

For example, the latest to do this was ANZ, shifting its 3.60% rate offer from 18 months to now just 8 months.

Here is a summary of each institution's top rate offer for terms less than two years:

	Top rate	for Term ...	As at PIE, equiv.
		(less than 2 years)	for a 33% taxpayer
	%		%
	3.60	8 months*	3.87*
	3.45	18 months	3.75
	3.65	18 months	3.98
	3.55	9 months	3.86
	3.30	18 months	not offered
Kiwibank	3.60	6 months	3.76
	3.50*	6 months*	3.75*
	3.60	6 & 18 months	not offered
	3.40	12 & 18 months	3.69
HSBC	2.90	12 months	not offered
	3.50	6 months	3.76
	3.40	12 months	3.65
SBS Bank	3.60	18 months	not offered
	3.25	18 months	not offered
UDC	3.50	9 months	not offered
	3.55	12 months	not offered
	3.65	18 months	not offered

[* Updated. This rate was missed in an earlier version of this story.]

If you are in the top 33% tax bracket, you have to option to use a PIE account to get a more effective after tax rate. (The PIE rates in the above table show what the equivalent non-PIE rate would be, enabling a fair comparison with regular rates).

At this time, you can "almost get 4%" using the ASB 18 month offer as a PIE. Either way, ASB will only offer you 3.65%, but the tax is at 28% for those in a PIE account (hence the higher comparison rate above for those who would otherwise pay tax at 33%).

Every little bit counts when rates are low.

You can of course go up the risk curve by checking out other types of institutions. Finance company Liberty Financial, which has an investment grade credit rating of BBB-, is still offering rates of 4% and above. Most sub-investment grade rated finance companies do so as well.

But the balance of security (as measured by credit ratings) needs to be weighed against return (as measured by interest rates).

The option with the highest security (Government issued "Kiwi Bonds") are currently only paying 2.00%.

Our unique term deposit calculator can help quantify what each offer will net you.