While interest rate offers between banks for home loans or term deposits are tightly bunched, that is not the case for savings accounts

While interest rate offers between banks for home loans or term deposits are tightly bunched, that is not the case for savings accounts
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Banking is competitive. And interest rate offers are usually where this competitive instinct shows up directly, with rate offers closely bunched.

For example, the range of rates for mortgage rate offers is a tight +/- 30 basis points within each term.

For term deposits it is even tighter; +/- 20 basis points.

But there is one category where the range is unusually wide - Savings Accounts.

Most of the main banks are pitching the base savings account interest rate at just 0.10% pa. But they compete harder for bonus savings accounts where, if you make limited or no withdrawals in a calendar month, potential rates of 2.00%/2.10% are paid. But break the conditions and that slips back to the 0.10% level. The pitch is that this helps savers stay disciplined. But even disciplined savers will find the rate slips back to the minimum in the month where they withdraw when they use their savings for their planned objective.

Among the challenger banks however, there is more variety and more flexibility.

Some of these challenger banks also use the bonus saver structure, but are much more generous/realistic with their base rate.

Others, like Heartland Bank, just offer their best rate without the 'encouragement structures'. And they offer unlimited withdrawals and no minimum balance requirement.

And that means the overall range is a wide 0.10% to 2.50% for savings accounts - a wide 240 basis points range.

It is rare for any bank to negotiate on these rates - in fact, we haven't heard of any savings account rate off-card flexibility in a long time. It's take-it-or-leave-it'.

The latest headline rate offers are in this table.

online savings account Rating Account   Base   Bonus Potential
Main banks          
ANZ AA- Online savings 0.10 n.a. 0.10
    Serious Saver 0.10 1.90 2.00
ASB AA- FastSaver 0.10 n.a. 0.10
    SavingsPlus* 0.25 1.90 2.15
AA- Personal on-call 0.10 n.a. 0.10
    Rapid Save 0.05 2.05 2.10
Kiwibank A On-line call 0.50 1.00 1.50
    Fast Forward ** 0.10 1.00 1.10
Westpac AA- Simple saver 0.10 n.a. 0.10
    Bonus Saver 0.10 2.00 2.10
Other banks          
BBB Online 1.00 n.a. 1.00
    Step Saver 0.25 1.90 2.15
Heartland Bank BBB Heartland saver 1.75 n.a. 1.75
    Direct call 2.50 n.a. 2.50
HSBC AA- E-saver 0.20 n.a. 0.20
ICBC A Savings 2.25 n.a. 2.25
RaboDirect A RaboSaver 0.75 n.a. 0.75
    Premium Saver 0.55 1.55 2.10
RaboDirect BBB i-Save 1.00 n.a. 1.00
    Incentive saver 0.15 2.00 2.15
A- WebSaver ** 1.55 n.a. 1.55

* Some banks with slightly better rates only apply them where the minimum balance exceeds a threshold, like $2,000.

** Others have a tiered system where even higher rates apply for higher balances (or lower, for lower balances).

Generally the rates in the table above apply from the first dollar. But check the banks website or our tables because other higher starting balance requirements are not uncommon.

Comparing with what is available in Australia

Interestingly, at call or bonus saver rates in Australia can be higher. Citibank Australia has a promotion of 3.10% for the first four months, then 1.75% as their regular rate.

ANZ Australia offers a bonus saver with a base of 0.50%, and with their 1.80% bonus, a potential rate of 2.30% which is +30 basis points higher than available in New Zealand. (ANZ Australia also has a "Progress Account" that offers a potential rate of 2.40%.)

CBA (ASB's parent) has a goal saver structure that is more conditional and not as generous as ASB.

NAB (BNZ's parent) has an iSaver account with a base of 0.50% and a potential of 2.55% on an introductory basis. They also have a Reward Saver account with the same 0.50% base and a potential of 2.40%. Both offers are far better than the New Zealand BNZ offers. But after four months the iSaver rate reverts to just 0.50%. (You can hold up to AU$20 mln in one of these accounts.) There is no reversion for the Reward Saver, which is a true goal saver account.

Westpac Australia has an eSaver account also with a 0.50% base and currently with a 2.51% five month "introductory" potential rate. Their regular rate reverts to just 0.50% however after the five months.

Online call rate

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All of those rates are taking a loss after taxes against inflation. Check out Kiwisaver's 90 day noticesaver account. It's about 3.25% which is just keeping your head above water.

It is an interesting scenario where since 2008, interest rates for borrowers has come down so much that it has created huge household credit debt. Those who have had savings are being hit hard to support this credit debt while the banks make Billions in profit. Here's the question - how are the young meant to save for a house deposit if they aren't earning big money after the Government contribution was also halved on KiwiSaver, or Term Deposits or just no extra money after paying rising rents and living costs. As a mature person it infuriates me that our savings have been stolen in effect to support this credit debt.

That's exactly what has happened.

There are so many potential outcomes, some more extreme than others, yet all equally likely. But there is one certainty with this current system, i just hope i invest in the right areas to take advantage.