Savers can expect to wave goodbye to 6% term deposit rates very soon. It is tougher to now earn a positive after-tax, after-inflation return - but still doable

It has only been a week since our last term deposit update, but there have been a lot of changes. The general direction is down of course, but not everyone has moved lower. So that opens up some competitive options which savers will likely want to consider - before there are catchup changes.

Oddly, Wednesday's less-than-expected rise in unemployment which happened just as global market worries eased, both seem to have pushed 'pause' on wholesale rate declines.

In turn, that may well have some banks holding off further changes (read: cuts) for a short while at least.

The key local influence is loan demand, and that weakness probably hasn't eased.

The first thing to note is that there are now no main banks offering 6% rates. It has only been one year that we have had main bank term deposit (TD) rates at, or over, 6%. In hindsight, it hasn't lasted very long.

Secondly, most of the reductions have been for terms of one year or more.

So for savers, these options are worth considering before 4% rates start blowing in.

Six percent or higher rate offers are now only available from:

- Bank of China for six months

- Heartland Bank for six months and nine months

- ICBC for six, nine and 12 months

- Kookmin Bank for one year

- Rabobank for six, nine and 12 months

- TSB for one year

Now rates in the 4% range have already blown in for three years or more. ASB in fact is down to 4.90% for two years, the only bank that low for that term. We suspect we will be seeing more rates starting with a '4' across shorter terms relatively soon.

The highest rate from any bank, any term, is Rabobank's 6.10% for 12 months. After-tax of 30%, that is 4.27% and still positive after inflation that seems to be running at 3.3%.

But for taxpayers on 30% and living in a 3.3% inflation world, that gets breached when offer rates fall below 4.70%. We still have headroom of about 1% before that is reached in the shorter terms. But you have to think we are looking at a future where tax-paid term deposit rates are likely to fall below inflation again. Many savers have been there, done that, and know it is not nice.

Both the wholesale and retail rate curves are falling and flattening, a trend we expect to see for a while yet.

We should also point out that after-tax returns can be enhanced for some savers with higher tax rates, by the choice of PIE structures. Not all banks offer these, but most of the main banks do. For a nine month bank offer, they can be boosted by about 30 basis points going this way. In some cases that will make up any difference, or more.

Always ask a bank for a better rate. Many bank staff have discretion to offer more than the advertised rate. (And check your bank's app offers as they too are often enhanced to retain you). But in this environment don't get your hopes up for a positive response. Carded rates are likely to now be the 'best rate', except in quite special circumstances.

Use the term deposit calculator here, or the one below the table, to calculator your expected net returns.

The latest headline term deposit rate offers are in this table after the recent changes. Update: Westpac has now also cut its rates, which are in the table now also. Update II: The table has been updated with new BNZ rates, taking them down to among the lowest of any main bank.

for a $25,000 deposit August 8, 2024	Rating	3/4 mths	5 / 6 / 7 mths	8 - 11 mths	1 yr	18mth	2 yrs	3 yrs
Main banks
ANZ	AA-	4.30	5.75	5.75	5.60	5.30	5.05	4.80
	AA-	4.40	5.75	5.70 -0.05	5.50 -0.10	5.20 -0.20	4.90 -0.20	4.80 -0.30
	AA-	4.30	5.90 -0.05	5.60 -0.30	5.40 -0.40	5.00 -0.40	4.80 -0.40	4.60 -0.40
	A	5.00	5.90 -0.10	5.80 -0.10	5.65 -0.15		5.25 -0.20	5.00 -0.10
	AA-	4.30	5.80 -0.10	5.70 -0.10	5.50	5.20 -0.30	4.90 -0.30	4.70 -0.30
Other banks
Bank of China	A	5.40 -0.10	6.00 -0.10	5.95 -0.15	5.85 -0.20	5.55 -0.40	5.50 -0.20	5.15 -0.20
China Constr. Bank	A	5.50	5.80	5.90	5.95 -0.05	5.85	5.50 -0.15	5.30 -0.10
Co-operative Bank	BBB	4.30	5.85	5.75 -0.05	5.65 -0.15	5.30 -0.30	5.05 -0.30	4.85 -0.30
Heartland Bank	BBB	5.40 -0.10	6.10 -0.05	6.00 -0.10	5.85 -0.15	5.65 -0.25	5.45 -0.20	5.15 -0.20
ICBC	A	5.50	6.10	6.05	6.05	5.90	5.60	5.40
Kookmin Bank	A	4.40	5.60	5.70	6.00		5.00	4.60
	A	4.55	6.00	6.00	6.10	5.70	5.50	5.20
	BBB	4.30	5.95	5.90	5.80	5.60	5.30	5.30
	BBB+	4.25	5.80	5.80	6.00	5.60	5.40	5.20