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Some banks are improving their term deposit rate offers slightly, but savers are yet to be impressed enough to hold more of their growing cash funds with term commitments; BNZ now joins the up trend

Some banks are improving their term deposit rate offers slightly, but savers are yet to be impressed enough to hold more of their growing cash funds with term commitments; BNZ now joins the up trend

There are a few term deposit rate changes to report effective this week. But they are still minor.

Kiwibank popped up last week raising its 0.45% four month rate to 1.00%, but has now reverted this back to 0.45% and shifted the 1.00% offer to a six month term.

And they have shifted their 1.00% one year rate offer back to 0.85%.

Heartland Bank has been more aggressive, adding a new 1.00% five month rate offer, and raising all its offers for 18 months through to five years.

It is featuring a 1.35% offer for a three year term, but at five years they are now offering 1.75% (which matches ASB and ICBC for that long term).

Update: BNZ has raised all its term deposit rate offers from nine months to five years. Offers for one year, eighteen months, and two years are now the best of any of the main banks.

Savers are rejecting term deposits as a way to hold their savings. In the latest (February) household data from the RBNZ (S40), the level of funds held in term deposits fell by -14.3% from the same month in 2020 (-$14 bln). That is an accelerating decline, and the total still in household term deposits is back to 2017 levels - and back then, they were growing at +14.7% pa.

It is not as though savers aren't saving at the bank - they are. Total household bank deposit balances rose +9.3% in the year to February (up to $202 bln), and at about the same year-on-year expansion we have seen for the past seven months (+$17 bln). Only TDs are being rejected.

Not in the table below are four and five year rates. There are none offering 2% yet.

One easy way to work out how much extra you can earn by switching is to use our full function deposit calculator. That will not only give you an after-tax result, you can tweak it for the added benefits of Term PIEs as well. It is better you have that extra interest than the bank.

The latest headline rate offers are in this table and the markings are for changes this week so far.

for a $25,000 deposit Rating 3/4 mths 5 / 6 / 7
mths
8 - 11
mths
  1 yr   18mths 2 yrs 3 yrs
Main banks                
ANZ AA- 0.45 0.80 0.80 0.80 0.85 0.85 0.90
ASB AA- 0.45 0.80 0.80 0.80 1.00 1.00 1.25
AA- 0.45 0.80 0.90 1.00 1.05 1.10 1.20
Kiwibank A 0.45 1.00 0.80 0.85   0.90 0.90
Westpac AA- 0.45 0.80 1.00 0.80 0.80 0.85 0.85
Other banks                
Co-operative Bank BBB 0.40 1.00 0.95 0.95 1.05 1.15 1.25
Heartland Bank BBB 0.45 1.00 0.90 1.00 1.00 1.20 1.35
HSBC Premier AA- 0.25 0.60 0.60 0.60   0.60 0.60
ICBC A 0.55 0.85 0.90 0.90 1.00 1.00 1.30
Rabobank A 0.25 1.00 1.00 1.00 1.00 1.00 1.05
SBS Bank BBB 0.50 0.90 0.90 1.00 1.00 1.20 1.35
A- 0.45 0.80 0.80 0.80 0.80 0.80 0.90

Term deposit rates

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26 Comments

Looks like ASB is consistently a better deal out of the bunch.

???

You are correct if you mean the opposite.

11
up

Aye slim pickings still for the piggy banks, indeed. And meanwhile, prowling outside of the door, the hungry wolf, inflation is on the fold.

Yes will only be going short term if I re-invest my TD, rates are only going to go one way from here. Inflation is taking off at a rapid rate and if banks want to stop the hemorrhaging of deposits then they had better make rates more attractive. Hopefully the 12 month rate will be back over 1.5% come August at ASB.

TD rates are unlikely to return to historical norms with the introduction of depositors' insurances.

I think the opposite, banks WANT the interest rates to return to historical norms, then they can take that 0.5% off you for the insurance without everyone with TD's screaming. Rates get back to 6-8% then I would be more than happy to pay the insurance to cover all my whole TD.

and who will this wonderful insurance company be that will guarantee hundred of billions of savings I wonder?

will we need insurance for the insurance company too?

Banks whining about costs is like landlords whining about interest deductibility.

Why not just own digital gold (with full custody) and earn interest of approx 5%.

https://www.prnewswire.com/news-releases/celsius-now-offers-yield-on-gol...

Amusing how the crypto freaks slag gold but at the same time try and leverage off the name 'gold' as a digit.
Crypto is the new God, not the new gold - exitance based on belief only.

Digital gold is great. I don't own PAX Gold so I can't earn interest from Celsisus.

Stereotyping crypto owners is unnecessary. I also personally get annoyed at the fan boys (stupid laser eyes and the 'have fun staying poor' meme they use).

I remember before the last GFC, everyone was buying gold. This time it seems to be Crypto. People have short memories and there is so much greed. There are going to be winners, and there are going to be some people that are going to lose a lot of money. Billions were lost in 07 08 with the finance company failures, were in NZ, nearly 50 finance companies failed. I lost thousands, but luckily got most of my money out as it matured. But it was a good lesson not to trust the flashy brochures and hype.

At least those who bought Gold at $850oz going into 2008 have slept well for the past 13 years with their diversification allocation-wouldn't call that losing money.

Shame they assume Kiwi's believe investments only exist within these borders. It's a big world out there with countless investment opportunities....and beyond housing. UP UP UP

So true.
Many Kiwi investors are still stuck in a 19th century mentality, with their almost exclusive focus on housing. Quite sad really, This does not just create systemic and personal risks associated with lack of diversification and an unbalanced economy, but also deep social issues and the missing out on investment opportunities in the real economy at home and overseas.

I'll keep my dosh out of term deposits until they start offering a realistic return. If everyone shifts their dosh out of term deposits the banks would have no option but to start offering more attractive rates. Unfortunately there are still plenty of absolute idiots willing to keep their money in term deposits in return for a few pitiful crumbs. We'll never get anywhere so long as these numpties do whatever the banks want them to do.

The current TD rates are the realistic rates and the people who kept their money in TD aren't idiots.

Want more returns? Buy a house.

Hey Tom, bad news for you but anyone with a big TD in the bank is clearly not an idiot. Anyone with a mortgage free house and money in a TD is even less of an idiot. Idiots don't end up with all the money Bro.

In the 1960s TDs were known as IBDs. A saying at that time, by way of promoting them, was the best return on capital invested, was the return of that capital. That rings true too, today. Some have no capacity whatsoever, to risk loss of their capital through an unsound investment.

Yes those with enough money and are not greedy still chasing higher returns are happy just to put it in the bank so they can sleep easy at night. Sure you could argue that its not zero risk, but then nothing is zero risk is it ? If the banks all fail its Armageddon anyway and having lots of bits of paper money will be the least of your problems.

Exactly!

Stop calling people 'numpties' who have worked hard all their lives to save for their retirement and are trying to simply preserve their capital in a safe-ish way to help out their children and grandchildren. My husband worked hard until he was 72 so that we could do this and we haven't got onto the property ponzi as we don't believe in it. We have no choice but to keep our money in TDs and have already helped our daughter buy a house.

Stop calling people 'numpties' who have worked hard all their lives to save for their retirement and are trying to simply preserve their capital in a safe-ish way to help out their children and grandchildren. My husband worked hard until he was 72 so that we could do this and we haven't got onto the property ponzi as we don't believe in it. We have no choice but to keep our money in TDs and have already helped our daughter buy a house.

Interested in peoples views on why cash in banks is increasing yet deposits are decreasing. The obvious thought is that deposit holders are not renewing their deposits. Thus more cash but less deposits. However, there must be more to it than this. Boomers starting to sell up businesses/residential property portfolios/retirement schemes? and that cash is sitting in the banks as its not worth putting on deposit. The opportunity cost of locking your money away in the banks for 6+ months is too great when there are plenty of other better yielding options (without having to move too far up the risk curve). Keen to hear some thoughts though please.

Just another note re some peoples comments on interest rate expectations to go back to 6% - 8% level. I cant see it. Not for a long time. The world has more debt than it ever has before. Thousands of NZ families are mortgaged up to their eye balls in order to get on the home ownership journey. Banks need a margin between deposit rates and mortgage rates to generate profits (although of course they make money in other ways too). So in order to see deposit rates at these levels (6% - 8%) you will need to expect mortgage rates above these. I cant see banks (retail or central) being interested in seeing rates go to that level in the short/medium or arguably the long term. The pressure that would put on NZ Inc. would be immense and likely push the economy into a recession. Get used to deposit rates near what they are now for a long long time IMO.

The last time those interest rates were seen was leading up to the 2008 GFC when Dr Bollard introduced quite a series of increases to the OCR to combat inflation and dampen a reasonably strong ongoing surge in property values. Actually the GFC sorted all that out anyway. Obviously the figures detailed here reveal quite a bit of cash sitting around in banks, without banks even having to compete for it, no pressure to raise anything there then. The rogue element is inflation. NZ consumers in day to day activities, retail and more, regardless of official stats, will tell you prices are going up, well and truly, and it is hurting their pockets. Does the RBNZ then re- introduce Bollard’s measures to fight it? What other alternatives do they have?