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Helpful Information

What is a savings account?

As the name suggests, a savings account is a bank account into which you deposit money in order to return a modest interest rate and build savings.

Savings accounts simplify the process of saving money by creating a separation between the money you’re saving and everyday spending – which is usually kept in a transaction account.

Savings are important for many reasons – a rainy day, unexpected expenses, and of course, retirement.

The key to growing your savings is to set realistic goals and understand what to look for when choosing a savings account. Canstar’s guides can help you with this.

Head on over to our budgeting and savings guide for tips and tricks to help your savings thrive.

Common features and fees of savings accounts

There are a few basic features for any savings account and, depending on your financial needs, you’ll want to pay attention to these:

  • High interest rates (beware of high introductory rates that drop after a certain length of time)
  • Low account fees
  • Maximum and minimum deposit requirements
  • Transaction fees
  • Accessibility (mobile apps, branches and ATMs)

Common fees to look out for include:

  • Withdrawal fees
  • Monthly account-keeping fees
  • Branch deposit fees
  • Over-the-counter transaction fees
  • EFTPOS, electronic transaction and ATM fees

It’s worthwhile knowing that not all fees are created equal. Many savings accounts don’t charge fees for electronic transfers, and you can usually waive the monthly account-keeping fee by simply depositing a certain amount each month.

What are the current interest rates for savings accounts?

After a sustained period of historic lows, over the past year the Official Cash Rate (OCR) has been lifted to its current level of 2.5%. For savers, this has led to increased returns.

Compare interest rates for regular and bonus savings accounts as well as online savings accounts on our website.

When it comes to our star ratings of savings and transactional accounts and savings awards, Canstar assesses the savings and deposit offerings for two customer profiles: Flexible Savers and Regular Savers.

  1. Flexible Saver / Online Saver:

Flexible savers do most of their banking online and will seldom visit a branch. They need an account with a reasonable interest rate where money is easy to access and there are no restrictions on the interest earned. For this reason, a flexible account is much more suitable than locking money away in a term deposit.

  1. Regular / Bonus Saver:

Regular savers will deposit a certain amount of money each month towards general savings or a specific goal. They usually earn a good base rate plus bonus interest for making regular deposits and so, will need a great interest rate without requiring frequent access to their money.

Notice Saver Accounts

Notice saver accounts are similar to term deposits so far as your money is locked away for a term. However, these accounts offer more flexible options which may include gaining access to funds not at the end of the term, but by giving notice (usually 30 or 90 days). The interest rates on these accounts are highly changeable and savers need to check often to ensure the rates received are still competitive.

It’s common to seek different levels of performance from your savings, which is why some investors choose to split savings between a savings account and a term deposit. It’s easy to compare the two on our website, and we encourage you to remember that keeping a consistently competitive rate is the best way to grow your savings.

Note: This glossary offers a general explanation of terms in relation to savings accounts, which may differ from those used by your bank or financial institution. To ensure you remain informed, read all documentation provided by your bank or financial institution (including the product disclosure statement) thoroughly.

Account-keeping fees: An ongoing fee charged to cover, or partially cover, the bank’s internal costs of creating and maintaining an account.

At call: At call transaction or savings accounts allow you to immediately withdraw your money from the account whenever you like. These contrast with savings accounts that require you to deposit your money for a fixed period to earn interest.

ATM (Automatic Teller Machine): A cash machine. Most ATMs operate around the clock, so users can access cash whenever they need it.

Balance: The amount of money currently in an account.

Banking Ombudsman: If you’ve a dispute with your bank and haven’t been able to resolve it through the bank’s internal complaints resolution process, you can contact the Banking Ombudsman of New Zealand. It’s a free and independent service that helps people resolve disputes with their financial institution.

Basis points: A unit of measurement used in financial situations to describe the percentage change in interest rates or the value of a financial product. One basis point is 0.01% or 0.0001 in decimal form.

Bonus savings account: Accounts that give bonus interest whenever the accountholder meets certain conditions. These might include making no withdrawals, or depositing a certain amount of money into the account each month.

Branch: The physical building where your bank or financial institution does its business.

Cash management account: A savings account for higher balances that are usually between $10,000 and $20,000. These accounts have a higher interest rate and the flexibility of a transaction account.

Cheque account: A transaction account that allows purchases with your own money by writing a cheque. These, however, are in the process of being phased out.

Checking account: A transaction account that allows withdrawals and deposits of your own money. They are most commonly accessed electronically.

Compound interest: Interest calculated on the total funds in the bank account, including interest earned, as opposed to interest paid only on the principal amount. Almost all savings accounts use compound interest.

Consumer: Someone who buys and uses products or services.

Credit card: A card that gives the cardholder access to credit. Users can spend up to a pre-determined limit, but must pay back the borrowed amount by a certain date, otherwise the sum owing will incur interest.

Debit card: A card linked to a transaction account that allows the cardholder to make transactions with merchants and withdrawals from ATMs. Also known as a bank or cheque card.

Deposit: Money put into an account with a financial institution.

Direct debit: When a sum is moved between bank accounts. They can be set up to occur automatically. For example, wages removed from an employer’s account and paid into an employee’s account.

EFTPOS (Electronic Funds Transfer at Point of Sale): A payment system that utilises debit cards to make payments for goods or services, or to withdraw cash. EFTPOS machines are used to process payments at store check-outs.

Electronic banking: A broad term used to refer to a banking system utilising online banking, telephone banking, apps, ATMs or EFTPOS to access accounts. You can use electronic banking to make withdrawals, payments, deposits or transfers.

GST (Goods and Services Tax): The New Zealand tax levy on payments for goods and services.

Income: Money earned, including hourly wages, salary, interest on your bank account balance, and government benefits.

Inflation: The percentage by which the price of goods and services rises each year.

Introductory rate: An introductory bonus rate applied to an account for a set period.  At the end of the bonus period, rates revert to base rates.

Junior savings account: Savings accounts for children. A parent or guardian operates the account in the child’s name, but the child also has access to their account.

Online savings account (OSA): A savings account that is primarily managed online.

Promotional rate: An interest rate that is only offered during a specified promotional period. When the promotional period ends, the interest rate generally reverts to the base rate. Similar to an introductory rate.

Reserve Bank of New Zealand (RBNZ): The Reserve Bank is the central bank of New Zealand, and they are responsible for setting the official cash rate. They manage monetary policies, such as the official cash rate, to stabilise inflation and the economy; maintain a sound and efficient financial system; and supply our national banknotes and coins.

Savings account: Bank accounts in which funds accrue interest according to certain terms, such as no withdrawals or minimum deposits. Savings accounts typically have higher interest rates than transaction accounts.

Term deposits: Also known as a fixed deposit, these are fixed-term investments where money is deposited into an account for a set term (period of time), earning interest when the term ends.

Transaction: The movement of money in or out of your account, including deposits, withdrawals, and transfers between bank accounts.

Transaction account: A deposit account that serves the purpose of providing frequent access to funds in your account for debit card transactions made through EFTPOS at merchants, branches, ATMs.

Transfer: Moving money from one account to another account, e.g. from your savings account to your transaction account. This is different to a payment, when you send money from your account to somebody else’s account.

Withdrawal: Removing money from your account, e.g. withdrawing cash from an ATM.

Yield: The rate of return earned on an investment.

For savings accounts, term deposits and rate comparisons, look no further than this list of providers researched and rated by Canstar:

  1. ANZ Bank: ANZ offers a range of savings accounts including online savings, bonus savings and cash management accounts. Founded in Sydney, Australia, in 1835 as the Bank of Australasia, nearly one in two Kiwis have a banking relationship with one of ANZ’s brands, which include OnePath, and UDC Finance.
  2. ASB Bank: ASB Bank offers several savings accounts, including an online savings account and bonus savings account. Opened in 1847 as the Auckland Savings Bank, ASB services more than 1.3 million Kiwi customers.
  3. BNZ: The Bank of New Zealand (BNZ) offers a range of savings accounts, including an at-call savings account, bonus savings account and TotalMoney family accounts. Opened in 1861, BNZ was the first bank to become carbon neutral, in 2010, and is recognised as one of New Zealand’s largest Fairtrade workplaces.
  4. Co-operative Bank: The Co-operative Bank offers a range of savings accounts, including an online savings account, bonus savings account and the Prize Draw Saver, which offers entry to monthly competitions. Founded in 1928 as the Public Service Investment Society (PSIS), the Co-operative Bank now services approx. 165,000 customers throughout New Zealand.
  5. Heartland Bank: The Heartland Bank offers at-call savings accounts and notice saver accounts, as well as term deposits and bonus saver accounts. Founded in 1875 as the Heartland Building Society, the bank as we know it was registered in 2013, and offers a range of services to Kiwi households and businesses.
  6. Kiwibank: Offering savings facilities that include online savings, bonus savings, at-call and notice-saver accounts, Kiwibank also offers special terms for non-profit organisations. Proudly New Zealand owned and operated, the bank was founded in 2002. It has branches located in many NZ Post stores.
  7. Rabobank: Formerly RaboDirect, Rabobank is a specialist savings bank that offers a Premium saver account with no account-keeping fees, a bonus savings account, and a notice saver account. Initially founded by farmers for farmers, the Rabobank Group has become the world’s leading agribusiness bank, financing more than $145bn across the global food and agriculture sector.
  8. SBS Bank: Otherwise known as the Southland Building Society, SBS offers online savings accounts and goal-based bonus savings accounts. The bank was founded in 1869 and earned bank registration in 2008. It remains NZ-owned, as members have previously voted against its purchase by the bigger banks.
  9. TSB Bank: Offering an online savings account with entry to a monthly prize draw as well as a bonus savings account, the Taranaki Savings Bank (TSB) originated in 1850 and has grown to 25 branches across the country.
  10. Unity: Unity offers a comprehensive range of savings accounts, including online, bonus, retirement, junior saver, Christmas Saver, and personalised Goal Saver accounts. Unity is not a registered bank, rather it’s a credit-union, which means it operates not-for-profit. Its earnings are offered back to members through lower fees, interest rates and/or dividends.
  11. Westpac NZ: As one of New Zealand’s major banks, Westpac offers a wide range of savings accounts, which include online, bonus PIE, notice saver and youth savings accounts. Established in NZ in 1861, the bank has grown to more than 1.5 million customers nationwide.

More information about the Canstar rating process can be found in our latest star ratings report.