If you use a bonus saver account you will have noted relentless reductions in the interest rates offered.
This is no different to the rate direction for home loans and term deposits.
But with any savings account, the bank has the option to reduce what you receive with only minimal notice. With term deposits (and home loans) you can fix the term and avoid instant reductions (or rises).
But bonus savings accounts have some nice features, especially the ready access to funds without incurring an interest penalty (although you may not qualify for much interest in the month you draw the account down).
So a key consideration is how the institution maintains its rate attractiveness over time.
We have previously reported that RaboDirect has scored best on that basis, and that is still true.
But this time, we want to point out that these rates are falling faster than the underlying benchmark rates.
Back in April 2014 the average bonus saver rate offered was 4.00% and the best offered was 4.25% when the OCR was 3.00%. That is a +1.00% to +1.25% of a 'premium'.
In August 2015 that had steadily diminished to +0.60% and +0.90%.
Today that 'premium' is down to +0.50% and +0.75%, levels that are just half what they were 18 months ago.
Banks are not competing as hard for bonus saver money, probably relying on the embedded balances hanging around, and that allows them to extract extra profit from them.
It is a hard thing for savers to notice.
When assessing the most advantageous bonus saver for you, the track record of the rate is what you should assess, rather than just today's rate. When banks put on the squeeze, you are the one paying for it.
And we recommend you always look at term deposit, PIE or savings account returns on an after-tax basis and the best way to do that is to use our deposit calculator. This won't change the relative comparisons, but it will get you to focus realistically on what net earnings you will receive. When rates sink, 'surprises' hurt more than usual.
Here are the current bonus saver rates on offer by banks today:
(These rates are taken from our comparison page here.)
| Bonus savers compared | Minimum Balance |
Apr-14 | Dec-14 | Aug-15 | Sep-15 | Jan-16 | |
| January 26, 2016 | |||||||
| req'd | % | % | % | % | % | ||
 |
Serious Saver | $1 | 4.00 | 4.25 | 3.75 | 3.75 | 3.20 |
 |
Savings Plus | $1 | 4.25 | 4.25 | 3.65 | 3.40 | 3.15 |
 |
Rapid Save | $1 | 4.00 | 4.10 | 3.65 | 3.40 | 3.00 |
| Kiwibank | On-line Call* | $2,000 | 3.00 | 3.15 | 2.75 | 2.50 | 2.25 |
 |
Online bonus | $1 | 4.00 | 4.30 | 3.60 | 3.35 | 3.05 |
 |
Step Saver | $1 | 4.25 | 4.40 | 3.70 | 3.45 | 3.10 |
 |
Premium Saver | $1 | 4.20 | 4.55 | 3.90 | 3.50 | 3.25 |
| SBS Bank | Incentive Saver | $1 | 4.20 | 4.25 | 3.75 | 3.75 | 3.25 |
| RBNZ | OCR | 3.00 | 3.50 | 3.00 | 2.75 | 2.50 | |
* Kiwibank also offers a Notice Saver account where you can earn 2.75% if you give them at least 32 days notice to withdraw and 3.20% if you give them 90 days notice to withdraw. Kiwibank Notice Saver accounts require a minimum balance of $2,000 for these rates to become effective.
[This story is an update of an earlier one published on September 27, 2015.
29 Comments
TIme is up for savers: The OCR is only going to drop further until we too reach zero. IF wanting a monetary correction you will have to force one by taking out at least ONE bank via an on mass withdrawal, best starting with an Aussie worst performing most at risk bank like ANZ or Westpac.
The RBNZ can never raise interest rates without killing the property bubble. They have put themselves in a rock and hard place, only serving the interests of the most in debt individuals to thus protect the banks who they also serve from a default position.
The economy is going nowhere under this post 2008 sham. So, some very hard choices are needed to be made. Join the ponzi scheme and add to the private debt bubble, or...... get the hell out before the whole thing comes crashing down and what if any savings and investments are used to re-inflate it!
One thing is sure they will not be calling in the mortgage holders
Up to you. The government and RBNZ have chosen who they are backing and it ain't the cash rich.
Withdraw all and everything, get some gold or silver, buy a good safe and start a debt collection agency! ;-)
Maybe forget about the silver part... otherwise quite correct! And if you ever get the chance to ask an honest and reputable gold bullion dealer, they will confirm that you wouldn't be alone in doing just that. I certainly have opted out of the banking ponzi scheme almost completely, except for short term (3-6 months living costs) needed fiat paper. I sleep quite soundly these days...
Thanks for this David. In the case of ASB, the bonus saver account interest rate is slightly less than term deposits without the benefit of "locking in." The b'starts don't do a particularly good job with transparency for savers. We're more a nuisance than anything else.
but it will be, South Canterbury Finance should never have been allowed in but the politicians wanted it in, why votes and friends and family
same with the banks I would put money on it in the event of an OBR the government of the day will under write depositors to a certain amount
then they will be looking for someone to blame and punish and it wont be the banks or depositors or home occupiers
I always wondered if the OBR is just hot air from central planners. Surely a bail-in would be catastrophically deflationary, and no government or bank would want that. Perhaps the real intention of the OBR is to prevent cash hording in this deflationary world by threatening people with confiscation and negative interest rates. Perhaps we’ll look back in 20 years time and say “wow 2016 was the time to get into cash”, just like we look back now and say “wow 1996 was the time to buy property”.
I think credit union offers a similar rate to theses guys if not better,last time I checked. credit union also don't have gimmicks were you have to top up by X every month to get the premium rate!
Regarding guarantees for deposits is this something in the t&cs or is there a general rule of say up to 100 is guaranteed if there was a run on the banks? There would or should surely be something.
Not sure the difference between credit union and banks regarding such a guarantee.
Can anyone advise.
3.4% at credit union beats all as far as I can tell, but no mention of it here... beats rabo 3.25% with conditions...
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