Savers are to pay for ASB's market leading mortgage interest rate offers. Many at-call accounts cut to about the current inflation rate

Savers are to pay for ASB's market leading mortgage interest rate offers. Many at-call accounts cut to about the current inflation rate

Hard on the heels of its mortgage rate cuts, ASB and BankDirect have cut their savings and transactional account interest rates.

Almost all the reductions are -25 basis points.

These changes come ahead of the widely expected Reserve Bank Official Cash Rate cut to 2.75% from 3% this Thursday.

The key reduction is to take their ASB Fastsaver product to just 1.90%, down -25 bps from 2.15%.

The 1.90% rate also applies to ASB's Business Saver account and their Unlimited Saver account (if you have $100,000 or more in it).

BankDirect's transactional account will also now only pay 1.90% for balances over $100,000. They will need to be careful with the naming of this account - it is called a "High interest transactional account" but there is nothing 'high interest' about this account.

BankDirect's Savings account has been reduced to 2.25%, down from 2.50%.

Cuts also apply to ASB's Cash Fund, Savings on Call, and their bonus saver Savings Plus products.

The bonus saver has also fallen -25 bps from 3.65% to 3.40% if you make no withdrawals in a month.

Crossing the inflation Rubicon

These changes cross a line. No longer can customers in most of ASB's savings accounts that now pay 1.90% count on these returns being higher than inflation. Savers on a 33% tax rate will net just 1.27%, those on a 17% tax rate will net less than 1.58%. At these levels they will be barely matching inflation any more. 'Real' gains have now evaporated for these ASB savers.

This is where 'financial repression' starts to mean something intensely personal for Kiwi savers.

At this time ASB have made no announcements on their term deposit rates. But reductions there will not come as a surprise when they do.

Until then, savers still have the option to shift at-call balances out to committed term deposits. But you will probably need to move quite quickly.

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.

All carded, or advertised, term deposit rates for all institutions for terms less than one year are here, and for terms one-to-five years are here.

Term PIE rates are here.

The latest headline rate offers are in this table. Remember, these are not where rates will settle to, just where they are at 9:00am on Tuesday, September 8, 2015.

for a $25,000 deposit 6 mths 1 yr 18 mths 2 yrs 3 yrs 5 yrs
             
3.55 3.70 3.80 3.85 3.90 4.00
ASB 3.55 3.70 3.85 3.90 3.95 4.05
3.60 3.80 3.85 3.90 3.95 4.10
Kiwibank 3.60 3.80   3.85 4.00 4.40
Westpac 3.40 3.55 3.70 3.75 3.80 3.90
             
3.50 3.70 3.90 4.00 4.10  
Heartland Bank 3.70 3.85 3.95 4.00 4.10 4.25
HSBC Premier 3.30 3.40 3.60 3.75 3.80 3.90
RaboDirect 3.70 3.80 3.85 3.90 4.05 4.25
SBS Bank 3.60 3.80 3.85 3.90 4.00  
3.60 3.80 3.90 4.00 4.10 4.40
             
F&P Finance 4.10 4.30 4.35 4.50 4.60 4.80
UDC 3.60 3.75 3.80 3.85 3.95 4.25

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

7 Comments

Comment Filter

Highlight new comments in the last hr(s).

So move your money to somewhere paying more?

Fastsaver??
Another approach is to use up money rather than save.

Seems like a perfect storm really, maybe savers should buy property in Auckland ? Oh, i see. The real kicker is all those people saving their deposits for houses. Inflation is just another form of stealth taxation. Maybe gold ?, bugger that gone too. Um, Artworks are the new game in town.

Yes, I have substantial savings in Fastsaver over 100K. As a non-resident, I think the tax rate is 2%. People like myself are better off shifting money around, but it's not easy to do even with the wonderful technology platforms. Bastards.

Actually, it's been much better for savers to have sat on JPY in P12M at their miniscule rates than have money sitting in a high-interest bank account.

Heartland call account 3.85%, as of today, for reference.

Residential property investors are enjoying better yields.

P2P lenders even better