Finding the 'best' interest rate return from all the term deposit offers out there involves a number of factors, some of which are not easy to assess.
In the low rate environment we are currently in, getting these things right is now more important.
A low tolerance for risk, a low tolerance for loss, are strong factors that keep many savers in term deposits as opposed to alternatives that may offer superior returns.
If you are committed to only using term deposits from investment grade institutions, the table below shows how each institution has offered savers rates for a one year term.
Shopping around, negotiating with banks, and being prepared to move, is always good advice. But banks these days are flush with funds; their enthusiasm to negotiate has all but evaporated.
So another way to think about this is to tend to choose a bank with a better track record of offering above-market rates.
That track record for the past year is in this table.
After all, its takes time and energy to set up an account at another bank. Not a lot, it is true, but some. So why not choose a bank that you will be more likely to roll-over with?
Among the big five main banks, for a 1 year term, that is clearly BNZ. At this moment, Kiwibank offers a +5 bps advantage, but consistently over the past year it has been BNZ who has offered the better premium.
If you cast your view a little wider, you will find both Heartland Bank and RaboDirect who will give you +15 bps more than BNZ at this time.
Heartland has been winning favour with savers with strong deposit growth. This flow has allowed them to lower their rate offers back in line with the other challenger banks.
Casting your view even wider, UDC, who has a credit rating like their parent ANZ, offers a rate even higher at 3.45%, +5 bps more than Heartland or RaboDirect and a strong +20 bps more than ANZ is offering.
And don't forget, many banks offer also Term PIEs which can also 'enhance' your after-tax returns slightly.
Use our deposit calculator to figure exactly how much benefit each option is worth; you can assess the value of more or less frequent interest payment terms, and the PIE products, comparing two situations side by side.
The latest carded rate offers for a one year term are in this table, which also shows how they changed over the past year.
|for a $25,000 deposit||Rating||1-Jun-15||1-Sep-15||1-Dec-15||1-Feb-16||1-Apr-16||1-Jun-16|
* Originally in error, now corrected
Our unique term deposit calculator can help quantify what each offer will net you.