If you use a bonus saver account you will have noted relentless reductions in the interest rates offered.
This is no different to the rate direction for home loans and term deposits.
But with any savings account, the bank has the option to reduce what you receive with only minimal notice. With term deposits (and home loans) you can fix the term and avoid instant reductions (or rises).
But bonus savings accounts have some nice features, especially the ready access to funds without incurring an interest penalty (although you may not qualify for much interest in the month you draw the account down).
So a key consideration is how the institution maintains its rate attractiveness over time.
We have previously reported that RaboDirect has scored best on that basis, and that is still true.
But this time, we want to point out that these rates are falling faster than the underlying benchmark rates.
Back in April 2014 the average bonus saver rate offered was 4.00% and the best offered was 4.25% when the OCR was 3.00%. That is a +1.00% to +1.25% of a 'premium'.
In August 2015 that had steadily diminished to +0.60% and +0.90%.
Today that 'premium' is down to +0.50% and +0.75%, levels that are just half what they were 18 months ago.
Banks are not competing as hard for bonus saver money, probably relying on the embedded balances hanging around, and that allows them to extract extra profit from them.
It is a hard thing for savers to notice.
When assessing the most advantageous bonus saver for you, the track record of the rate is what you should assess, rather than just today's rate. When banks put on the squeeze, you are the one paying for it.
And we recommend you always look at term deposit, PIE or savings account returns on an after-tax basis and the best way to do that is to use our deposit calculator. This won't change the relative comparisons, but it will get you to focus realistically on what net earnings you will receive. When rates sink, 'surprises' hurt more than usual.
Here are the current bonus saver rates on offer by banks today:
(These rates are taken from our comparison page here.)
* Kiwibank also offers a Notice Saver account where you can earn 2.75% if you give them at least 32 days notice to withdraw and 3.20% if you give them 90 days notice to withdraw. Kiwibank Notice Saver accounts require a minimum balance of $2,000 for these rates to become effective.
[This story is an update of an earlier one published on September 27, 2015.