Not much cheer for savers as 2025 heads towards its end, with term deposit rates being lowered by some, and soft everywhere

The gradual, but regular, easing of interest rates offered to savers is the theme as we rapidly head towards year's end.

Although in the last week of October there were no more financial institutions cutting term deposit rates below 3%, there have been a number dropping rates lower all the same. And SBS Bank ended its above 4% five month offer, reverting to market-normal levels.

As we have noted elsewhere, these cuts in 2025 have been deeper than the same institutions made for home loan borrowers, at least by the five big banks.

It is still the challenger banks that offer the highest rates for terms three months to three years.

Bank of China's 3.40% is still the highest for about three months. They and ICBC offer 3.70% for six months. They are joined by Rabobank to offer 3.55% for nine, and 12 months. Then it is either or both Bank of China and ICBC who have the premium offers out to three years (in fact, out to five years).

But the premiums over the main banks isn't large. It is hard to have fat premiums when rates are this low. However for savers, premiums are worth consideration.

And that is where the Depositor Compensation Scheme (DCS) protection comes into its own. Non-banks who have the DCS protection (to $100,000 per customer) are where more substantial premiums can be found. Five institutions among these non-bank deposit takers are still offering four-percent-plus rates, on for as short as a six month term (Welcome).

We should also note that the practical risk-free benchmark of Kiwi Bonds, which are directly guaranteed by the Government (not through the DCS), now have sub-3% rates.

The risk is still that there is downside for term deposit rates at present. Certainly if the New Zealand economy's struggles extend, it is hard to see loan demand picking up and thus requiring banks to raise more funding.

It does not help that CPI (consumers price index) inflation is now at 3% and household living costs are rising faster, especially some components like electricity and rates. After-tax term deposit rate returns just cannot complete with those living cost pressures. It's not much fun being a saver at present. "Investing" in renters is currently a surefire way to lose twice (with falling rents and falling capital values). So the alternatives that can possibly supply inflation and tax-paid gains are now with the funds management sector.

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 institutions 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 calculate your expected net after-tax returns.

The latest headline term deposit rate offers are in this table after the recent changes over the past three weeks. The yellow colour code for those under 4% and has spread comprehensively. Bolded rates are the "best-bank", the highest carded rate from any bank at this time. The pink-coded rates ae those under 3%.

This table only lists institutions covered by the Depositor Compensation Scheme.

for a $25,000 deposit November 3, 2025	Rating	3/4 mths	5/6/7 mths	8 - 11 mths	1 yr	18mth	2 yrs	3 yrs
Main banks
ANZ	AA-	3.10	3.45	3.40	3.40	3.40	3.45	3.60
	AA-	3.00	3.40	3.40	3.40	3.40	3.45	3.65
	AA-	3.10	3.55	3.45	3.50	3.45	3.50	3.70
	A	3.10	3.55	3.40	3.50		3.50	3.65
	AA-	3.30	3.50	3.40	3.45	3.40	3.45	3.60
Kiwi Bonds. 'risk-free'	AA+		2.50		2.50		2.75
	Rating	3/4 mths	5 / 6 / 7 mths	8 - 11 mths	1 yr	18mth	2 yrs	3 yrs
Other banks
Bank of China	A	3.40	3.70	3.55	3.55	3.60	3.65	3.90
China Constr. Bank	A	2.70	3.20	3.20	3.20	3.25	3.25	3.45
Co-operative Bank	BBB+	3.00	3.50	3.40	3.50	3.55	3.60	3.80
Heartland Bank	BBB	3.20	3.55	3.50	3.45	3.50	3.55	3.75
ICBC	A	3.35	3.70	3.55	3.55	3.55	3.65	3.90
	A	3.25	3.60	3.55	3.55	3.55	3.55	3.70
	BBB	3.15	3.55	3.45	3.45	3.45	3.50	3.70
	BBB+	3.10	3.40	3.40	3.40	3.45	3.50	3.65
Non-Bank Deposit Takers	Rating	3/4 mths	5 / 6 / 7 mths	8 - 11 mths	1 yr	18mth	2 yrs	3 yrs
Community institutions with DCS protection
First Credit Union	BB	3.40	3.80	3.80	3.80	3.70	3.70
Heretaunga Bldg Society		3.30	3.70		3.60		3.70
Nelson Building Society	BB+	2.75	3.20	3.15	3.15	3.50	3.50	3.20
Police Credit Union	BB+	3.10	3.45	3.40	3.40	3.40	3.45
UnityMoney	BB	3.15	3.40	3.35	3.30	3.35	3.45	3.45
Wairarapa Bldg Society	BB+	3.20	3.45	3.45	3.50	3.45	3.45
Finance companies with DCS protection
Christian Savings	BB+	3.20	3.65	3.60	3.55	3.60	3.65	3.85
Finance Direct			3.25		3.80	4.00	4.15	3.85
General Finance	BB	3.55	3.80	3.90	4.05	4.05	3.90	3.90
Gold Band Finance	BB-		2.75	2.75	4.00	4.00	4.05	4.20
Liberty Financial	BBB	2.95	3.70	3.75	3.90	3.90	3.85	3.80
Mutual Credit Finance	B+				3.30	3.30	3.40	3.50
Welcome			3.80	4.00	4.00	4.05	4.10	4.20
Xceda Finance	B+		4.05	4.10	4.00	3.95	3.90	3.95