The day before spring starts, Kiwibank has become the first main bank to offer 6% for a one year term deposit.
They aren't the first bank, even the first main bank to offer 6% for any term deposit.
But because almost all term savings are in a 12 month TD or shorter, this becomes a significant benchmark.
In Kiwibank's case, interest is only payable at maturity.
But you can enhance the equivalent after-tax return by choosing a PIE account where the same rate applies. This is especially valuable for taxpayers who are on a 33% income tax rate, or especially a 39% rate. The higher your income, the better the advantage.
Other banks also offer 6% or above rates.
Among the main banks, ANZ offers 6% for an 18 month term, and interest is payable quarterly. Westpac offers 6% for a 2 year term commitment, also with quarterly. (Both also offer PIE equivalents.)
Among challenger banks, many - but not all - offer 6% or higher rates. For terms less than one year you can get these higher rates from Bank of China (6.08% for nine months), Heartland Bank (6.00% for nine months), ICBC (6.00% for nine months), and Rabobank (6.00% for nine months). For terms of 1 year and longer, 6%-plus rates are available from Bank of Baroda, Bank of China (6.18%), China Construction Bank, Heartland Bank, ICBC, Kookmin Bank, Rabobank, SBS Bank (they no longer offer their 6.5% rate however), and TSB.
(Note that Kiwibank also raised its fixed home loan rates by between +10 bps and +20 bps at the same time.)
One risk savers should watch is the cost of wholesale money and you can do that looking at swap rates. You can do that here. Wholesale swap rates jumped jumped recently, a week or two ago, but since have eased off.
An easy way to work out how much extra you can earn is to use our full function deposit calculator. We have included it at the foot of this article. That will not only give you an after-tax result, you can tweak it for the added benefits of Term PIEs as well. It is better you have that extra interest than the bank, especially if you are in the 39% tax bracket - PIEs are taxed at 28% flat.
* Kookmin Bank's 6.10% one year offer is for deposits of $100,000 and more. For a $10,000 minimum it is 6.00%.
The latest headline rate offers are in this table after the recent increases.
| for a $25,000 deposit August 31, 2023 |
Rating | 3/4 mths |
5 / 6 / 7 mths |
8 - 11 mths |
1 yr | 18mth | 2 yrs | 3 yrs |
| Main banks | ||||||||
| ANZ | AA- | 4.30 | 5.80 | 5.85 | 5.95 | 6.00 | 5.70 | 5.25 |
 |
AA- | 4.20 | 5.75 | 5.80 | 5.90 | 5.75 | 5.70 | 5.60 |
 |
AA- | 4.30 | 5.80 | 5.85 | 5.95 | 5.80 | 5.50 | 5.25 |
 |
A | 4.20 | 5.85 | 5.85 | 6.00 +0.10 |
5.70 | 5.20 | |
 |
AA- | 4.30 | 5.80 | 5.85 | 5.95 | 5.80 | 6.00 | 5.50 |
| Other banks | ||||||||
| Bank of China | A | 4.70 | 5.88 | 6.08 | 6.18 | 5.80 | 5.50 | 5.30 |
| China Constr. Bank | A | 5.00 | 5.85 | 5.90 | 6.00 | 5.85 | 5.50 | 5.40 |
| Co-operative Bank | BBB | 4.20 | 5.80 | 5.85 | 5.95 | 5.80 | 5.70 | 5.50 |
| Heartland Bank | BBB | 4.00 | 5.90 | 6.00 | 6.10 | 5.35 | 5.30 | 5.30 |
| ICBC | A | 4.80 | 5.90 | 6.00 | 6.05 | 5.85 | 5.55 | 5.40 |
| Kookmin Bank | A | 4.40 | 5.60 | 5.70 | 6.00* | 5.20 | 5.20 | |
 |
A | 4.75 | 5.90 | 6.00 | 6.15 | 6.00 | 5.70 | 5.60 |
 |
BBB | 4.20 | 5.75 | 5.70 | 6.00 | 5.35 | 5.35 | 5.35 |
 |
A- | 4.25 | 5.30 | 5.40 | 6.00 | 5.50 | 5.50 | 5.25 |
Term deposit rates
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19 Comments
That's a good deal, ASB pay out the interest monthly on TD's over 6 months as well so really that's better than 6.2% paid out at maturity that setup simply wouldn't work for me. 9 months later than I thought it would take to hit 6%, banks were slow to raise TD rates.
Buy some digital currencies and you will get +- 46% returns.
"Akshuree", if you had bought ratty at the absolute peak and bought everyday since then at an equivalent fiat value, you will be breaking even at min and likely ahead of the cash rate.
If you had bought USD stablecoin, you'd be up 12% over same period.
You may have bought gold at the same time as the ratty peak in Nov 2021, you'd be up approx 23% - better than a TD in my books. Silver = +24%.
Spruikers seem to think that interest rates will drop soon and that these current rates are high, not normal. But historically these rates are at more normal levels. We got into this mess due to the low rates which pushed up house prices, and lack of taxes, allowing for tax free capital gains.
Might be useful to look at the rates from 1972 to 2008... 35+ years when rates we typically higher (for much of the time much higher) than now. TDs also were way better.
As you say - one could easily argue that then was the norm.. Especially given the last 10 years rates were only dropped in emergency settings for (1) a near global banking collapse and (2) a massive global pandemic..... prior was relatively stable economically and politically too.
it will be interesting to watch the next 10 years...its likely to include power shifts between nations and continents, AI, trade wars, increased probability of resource wars and more pandemics, climate disasters and politics and more... interest rates and inflation graphs for this period might resemble a roller coaster lol.
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