The ground is about to sink faster for savers. ANZ brings back a TD rate starting with a '3', and now only one bank offers a rate starting with a '5'

Update: The table below has been updated with subsequent Kiwibank and Co-operative Bank rate reductions.

With banks chasing a very slim landscape of lending opportunities, the prospects for savers is dulling fast.

After Wednesday's 50 basis points (bps) Official Cash Rate cut, the knife is out on term deposit rate offers.

Savers don't do themselves many favours by staying very short. And in a falling rate market, it is an uncomfortable place to be.

Just 10 days after we essentially waved goodbye to main bank term deposit (TD) rates of 5% or more, now we are watching the approach of rates that may soon start with a '3'.

In fact, ANZ's latest 90 day TD rates has fallen -20 bps to 3.95% and the only bank this low. Most of ANZ's changes were of -25 to -40 bps reductions.

This move by the nation's largest bank has opened up quite a separation even from other big banks. It may not last of course - why would BNZ for example offer 30 bps more than ANZ? - or Kiwibank offer 40 bps more than ANZ? - but these opportunities are there right now.

Our guess - and its only speculation - is that the other banks will follow ANZ down soon. There is no cost for them to do so, only gain. And they can't really let ANZ gain home loan market share with lower mortgage rates.

In the background, wholesale rate falls seem to have stalled, and are still at about the same level they were a month ago. So no wholesale pressure here for lower rates. Loan demand levels will be playing an outsized part in why banks are offering savers less.

When you invest, always check how interest is compounded. Depending on how much you are committing, compounding more often is materially better. But some banks advertise their "interest at maturity" rates different to their compounding rates, which for some can be set a little lower. Both Kiwibank and Rabobank do this, although most other main banks don't.

Use the calculator at the foot of this article to see the differences.

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 over the past week. The background colour-code indicates 5%+ rates still available.

for a $25,000 deposit February 20, 2025	Rating	3/4 mths	5 / 6 / 7 mths	8 - 11 mths	1 yr	18mth	2 yrs	3 yrs
Main banks
ANZ	AA-	4.00	4.40	4.35	4.20	4.15	4.10	4.15
	AA-	4.15	4.40	4.45	4.30	4.30	4.20	4.30
	AA-	4.20	4.70	4.60	4.50	4.40	4.35	4.40
	A	4.00	4.50	4.25	4.25		4.10	4.10
	AA-	4.10	4.55	4.65	4.40	4.40	4.40	4.40
Kiwi Bonds. 'risk-free'	AA+		4.00		3.75		3.75
	Rating	3/4 mths	5 / 6 / 7 mths	8 - 11 mths	1 yr	18mth	2 yrs	3 yrs
Other banks
Bank of China	A	4.40	4.90	4.75	4.70	4.65	4.45	4.45
China Constr. Bank	A	4.25	4.90	4.70	4.65	4.55	4.45	4.40
Co-operative Bank	BBB+	4.15	4.70	4.60	4.50	4.40	4.35	4.40
Heartland Bank	BBB	4.55	4.90	4.80	4.65	4.50	4.45	4.45
ICBC	A	4.40	5.00	4.85	4.80	4.60	4.45	4.40
	A	4.35	4.85	4.70	4.55	4.50	4.35	4.35
	BBB	4.25	4.85	4.75	4.60	4.40	4.40	4.40
	BBB+	4.15	4.60	4.55	4.40	4.40	4.40	4.40
Non-Bank Deposit Takers	Rating	3/4 mths	5 / 6 / 7 mths	8 - 11 mths	1 yr	18mth	2 yrs	3 yrs
Community institutions
First Credit Union	BB	4.25	5.00	4.80	4.70	4.60	4.50
Heretaunga Bldg Society		4.30	4.90		4.70		4.50
Nelson Building Society	BB+	4.40	4.40	4.30	4.20		3.90	4.00
Police Credit Union	BB+	4.20	4.80	4.70	4.55	4.40	4.20
UnityMoney	BB	4.25	4.75	4.55	4.45	4.25	4.20	4.15
Wairarapa Bldg Society	BB+	4.05	4.50	4.80	4.75	4.50	4.30
Finance companies
Christian Savings	BB+	4.25	5.00	4.90	4.85	4.65	4.45	4.45
Finance Direct			3.95		6.50	5.90	6.00	6.10
General Finance	BB	4.55	6.05	6.15	6.25	6.00	5.75	5.50
Gold Band Finance	BB-		3.75	3.75	6.40	6.20	5.75	5.75
Liberty Financial	BBB	4.25	5.85	5.65	5.50	5.00	5.00	4.90
Mutual Credit Finance	B+				6.50	6.50	6.75	6.25
Xceda Finance	B+		6.50	6.40	6.40	6.00	5.80	5.50