The attractiveness of bonus saver accounts has reduced markedly in the past six months.
Savers who use 'at-call' accounts have all seen their returns drop in line with the RBNZ OCR cuts.
In fact, as our second table below shows, some banks have reduced their bonus saver rates by even more.
At the same time banks have been reducing their term deposit rates.
But whereas a year ago, bonus saver rates compared quite well with one year term deposit rates, these days they compare more with ninety day term deposit rates.
There is now little 'bonus' in these special savings accounts.
The idea behind them is to encourage saving by rewarding savers with extra interest so long as additions are made to the account monthly and no withdrawals are made.
But banks are not focusing their competitive instincts in this area, and it shows.
Their current pitches seem to be in the 18 month TD area where they offer 3.60%+ or so. The incentive apparently is for a slightly higher rate if they can lock you in to a much longer term.
There is a lot of money tied up in savings accounts and very short term TDs. Letting interest rates paid slip for these at-call and short term accounts has a directly positive impact on bank margins.
A handful of banks offer Notice Saver accounts and the rates on these are often as good as bonus saver accounts.
Here are the current bonus saver rates on offer by banks today:
(These rates are taken from our comparison page here. And the change arrow
| Bonus savers compared | Minimum Balance |
Base Rate + |
Bonus interest + |
Potential Rate = |
nearest equiv. |
Term Deposit |
|
| September 5, 2016 | |||||||
| req'd | % | % | % |  |
% | ||
 |
Serious Saver | $1 | 0.10 | 2.65
|
2.75
|
3 mths | 2.60 |
 |
Savings Plus | $1 | 0.50
|
2.40
|
2.90
|
4 mths | 3.00 |
 |
Rapid Save | $1 | 0.10 | 2.65
|
2.75
|
3 mths | 2.60 |
| Kiwibank | On-line Call* | $2,000 | 0.75
|
1.00 | 1.75
|
3 mths | 2.60 |
 |
Online bonus | $1 | 0.05
|
2.70
|
2.75
|
4 mths | 2.70 |
 |
Step Saver | $1 | 0.25
|
2.50
|
2.75
|
3 mths | 2.95 |
 |
Premium Saver | $1 | 1.00 | 2.00
|
3.00
|
3 mths | 2.85 |
| SBS Bank | Incentive Saver | $1 | 0.15
|
2.85
|
3.00
|
9 mths | 3.15 |
* Kiwibank also offers a Notice Saver account where you can earn 2.25% if you give them at least 32 days notice to withdraw and 2.75% 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.
RaboDirect (3.00% for 60 day notice) and Westpac (2.80% for 32 days notice) also have NoticeSaver accounts which may make for more flexible options, Kiwibank and Westpac offer them as PIEs which offer tax incentives for savers on the top tax rate.
TSB Bank deals with bonus interest differently to other banks. It's core everyday offer is its Premier account. This has a tiered interest rate offer that pays 1.35% for balances of less than $20,000, 1.55% of the portion of the balance from $20,000 to $35,000, 1.90% on the balance from $35,000 to $50,000, 2.50% on the balance from $50,000 to $100,000 and 2.65% on the portion over $100,000.
Even if you had $100,000 in the account all year you would not earn 2.65% gross from TSB Bank. You would earn $2,037.50 or 2.04% pa before tax. And they only pay this interest once a year at March 31.
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 |
Dec-14 | Aug-15 | Sep-15 | Jan-16 | Sep-16 | change | |
| September 5, 2016 | ||||||||
| req'd | % | % | % | % | % | bps | ||
|
Serious Saver | $1 | 4.25 | 3.75 | 3.75 | 3.20 | 2.75 | 150
|
|
Savings Plus | $1 | 4.25 | 3.65 | 3.40 | 3.15 | 2.90 | 135
|
|
Rapid Save | $1 | 4.10 | 3.65 | 3.40 | 3.00 | 2.75 | 135
|
| Kiwibank | On-line Call* | $2,000 | 3.15 | 2.75 | 2.50 | 2.25 | 1.75 | 140
|
|
Online bonus | $1 | 4.30 | 3.60 | 3.35 | 3.05 | 2.75 | 155
|
|
Step Saver | $1 | 4.40 | 3.70 | 3.45 | 3.10 | 2.75 | 165
|
|
Premium Saver | $1 | 4.55 | 3.90 | 3.50 | 3.25 | 3.00 | 155
|
| SBS Bank | Incentive Saver | $1 | 4.25 | 3.75 | 3.75 | 3.25 | 3.00 | 125
|
| RBNZ | OCR | 3.50 | 3.00 | 2.75 | 2.50 | 2.00 | 150
|
|
3 Comments
There is a lot of money tied up in savings accounts and very short term TDs. Letting interest rates paid slip for these at-call and short term accounts has a directly positive impact on bank margins.
Even more in O/N accounts? View RBNZ data
39.36% of reported "funding", in fact. Up from 35.60% in 2014, for the same calendar month.
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