Banks trim term deposit rate offers further with now no main bank offering a 5% rate

We have now reached the point where no main bank is offering any 5% term deposit rates.

And only three challenger banks are, plus two community-based non-banks.

The tide is going out very quickly on 5% rates.

Today, both Kiwibank and Westpac trimmed their term deposit rate cards again, and that took Kiwibank's 6 month offer below 5%.

But both ICBC and SBS Bank are still offering 5.35% for a six month TD, and Bank of China is offering 5%. These stand out, but for how long?

The SBS Bank offer is a 'special' and relatively new, although promoted as for "a limited time".

And if you are up for the added risk, we should note that SBS Bank has a capital bond issue open at present that offers 6.25%.

But that capital bond won't qualify for the guarantee under the Depositor Compensation Scheme when it kicks in mid-year.

When you invest, always check how interest is compounded. Depending on how much you are committing, compounding more often is materially better. But some banks advertise their "interest at maturity" rates different to their compounding rates, which for some can be set a little lower. Both Kiwibank and Rabobank do this, although most other main banks don't.

Use the calculator at the foot of this article to see the differences.

We should also point out that after-tax returns can be enhanced for some savers with higher tax rates, by the choice of PIE structures. Not all banks offer these, but most of the main banks do. For a nine month bank offer, they can be boosted by about 30 basis points going this way. In some cases that will make up any difference, or more.

Always ask a bank for a better rate. Many bank staff have discretion to offer more than the advertised rate. (And check your bank's app offers as they too are often enhanced to retain you). But in this environment don't get your hopes up for a positive response. Carded rates are likely to now be the 'best rate', except in quite special circumstances.

Use the term deposit calculator here, or the one below the table, to calculator your expected net returns.

The latest headline term deposit rate offers are in this table after the recent changes over the past week. The background colour-code indicates 5%+ rates still available.

for a $25,000 deposit February 3, 2025	Rating	3/4 mths	5 / 6 / 7 mths	8 - 11 mths	1 yr	18mth	2 yrs	3 yrs
Main banks
ANZ	AA-	4.25	4.80	4.70	4.75	4.55	4.45	4.35
	AA-	4.25	4.75	4.60	4.50	4.30	4.20	4.30
	AA-	4.20	4.80	4.75	4.55	4.50	4.35	4.40
	A	4.25	4.80	4.75	4.60		4.50	4.40
	AA-	4.25	4.80	4.70	4.75	4.60	4.40	4.40
Kiwi Bonds. 'risk-free'	AA+		4.50		4.25		3.75
	Rating	3/4 mths	5 / 6 / 7 mths	8 - 11 mths	1 yr	18mth	2 yrs	3 yrs
Other banks
Bank of China	A	4.40	5.00	4.85	4.80	4.65	4.45	4.45
China Constr. Bank	A	4.30	4.95	4.85	4.85	4.65	4.50	4.40
Co-operative Bank	BBB+	4.15	4.90	4.70	4.80	4.60	4.50	4.40
Heartland Bank	BBB	4.55	4.90	4.80	4.65	4.50	4.45	4.45
ICBC	A	4.65	5.35	5.05	4.95	4.75	4.55	4.40
	A	4.35	4.90	4.70	4.65	4.50	4.35	4.35
	BBB	4.25	5.35	4.85	4.65	4.40	4.40	4.40
	BBB+	4.15	4.80	4.70	4.55	4.55	4.40	4.40
Non-Bank Deposit Takers	Rating	3/4 mths	5 / 6 / 7 mths	8 - 11 mths	1 yr	18mth	2 yrs	3 yrs
Community institutions
First Credit Union	BB	4.25	5.25	5.00	4.90	4.60	4.50
Heretaunga Bldg Society		4.30	5.10		4.80		4.50
Nelson Building Society	BB+	4.00	4.50	4.40	4.55		4.15	4.15
Police Credit Union	BB+	4.20	4.90	4.75	4.75	4.50	4.30
UnityMoney	BB	4.25	4.75	4.55	4.55	4.45	4.25	4.25
Wairarapa Bldg Society	BB+	4.05	4.50	4.90	4.75	4.50	4.30
Finance companies
Christian Savings	BB+	4.25	5.00	4.90	4.85	4.65	4.45	4.45
Finance Direct			3.95		6.50	5.90	6.00	6.10
General Finance	BB	4.55	6.05	6.15	6.25	6.00	5.75	5.50
Gold Band Finance	BB-		3.75	3.75	6.40	6.20	5.75	5.75
Liberty Financial	BBB	4.25	5.85	5.65	5.50	5.00	5.00	4.90
Mutual Credit Finance	B+				6.50	6.50	6.75	6.25
Xceda Finance	B+		6.50	6.40	6.40	6.00	5.80	5.50