RaboDirect increases 1-5 year term deposit rates, says 5-year rate of 6% offers 'excellent guaranteed return' compared with sharemarket risk

RaboDirect, Rabobank's online bank, has increased its one to five-year term deposit rates by between 10 and 40 basis points, giving it the highest, or near highest, advertised rates from a bank across the range of lengthier term deposits.

Greg McAweeney, RaboDirect's Australasian general manager, said with a volatile economic outlook the bank decided the time was right to offer customers "above average" returns on long dated term deposits. RaboDirect knew investors had been "burnt badly" over the past few years due to very volatile sharemarket returns and finance company collapses.

Above average returns on longer duration term deposits was "especially important to existing retirees and those approaching retirement who need certainty of return and security," McAweeney said. "For example, a 6% rate on a five-year term deposit is an excellent guaranteed return compared to the risk related returns on the stock market."

RaboDirect has increased its one-year rate by 10 basis points to 4.60%. This is the equal best rate on offer from a bank, with Bank of Baroda and Bank of India, although the two BBB- rated banks require a minimum deposit of NZ$5,000 compared with the AA rated RaboDirect's NZ$1,000 minimum deposit across all its longer deposit terms. See an explanation of credit ratings here.

RaboDirect has hiked its 15 month rate by 35 basis points to 4.65%, its 18 month rate by 40 basis points to 4.75% which is the best advertised rate in the market, its two-year rate 30 basis points to 5%, again in line with the two Indian banks, its three-year rate 20 basis points to 5.20% (Bank of Baroda and Bank of India offer 5.25% for a minimum NZ$10,000 deposit), four year 30 basis points to 5.50% which is equal best with the AA- rated BNZ with the latter requiring a minimum NZ$5,000 deposit, and five-year rate 35 basis points to 6%, which is the best advertised five-year rate.

See all term deposit rates for one to nine months and see all term deposit rates for one to five years.

Meanwhile, BNZ and sister banks ANZ and National have increased the rates on some savings products. BNZ has lifted the bonus interest rate available on its BNZ Rapid Save account by 55 basis points to 3.05%. It has also cut the base rate by 5 basis points, meaning the total rate available is up 50 basis points to 4.05%. Customers can earn the bonus interest if no more than one withdrawal is made monthly and the account balance increases.

ANZ has hiked the bonus interest rate available on its Serious Saver account by 50 basis points to 4.40% meaning this product now offers total interest of 4.50% when the 0.10% base rate is included. Bonus interest is earned when customers make a deposit of NZ$20 or more and make no withdrawals within the account's monthly date cycle.

National Bank has lifted the premium interest available on its eSaver account  by 50 basis points to 4.40%, meaning the total interest rate, including the standard 0.10% rate, available is 4.50%. The bank says premium interest is earned if customers make no withdrawals and deposit a minimum of NZ$20 each calendar month.