What are our savings habits?

Congratulations, New Zealand – we’re doing well! When it comes to saving, the good news is that we are.

It seems that New Zealanders have indeed learned their lessons from the global financial crisis. According to Statistics New Zealand, households have been saving more than they spent since 2011 – an impressive record.

According to Reserve Bank of New Zealand statistics, Kiwis now have more than twice as much in savings as we did in March 2005. In fact, the dollar value of New Zealand resident household deposit (savings) has grown to $155,324 in May 2016, from a paltry $141,464 in May last year.

After five cuts, the official cash rate (OCR) is currently down to 2.25% and interest rates on savings accounts have lowered considerably. But at least our inflation rate remains low, at just 0.40%. That means that savers are still receiving a healthy margin on their money.

Even better news – we are doing better than our neighbours.


In Australia, the official cash rate is also going down and is now at 1.75% while their inflation is currently running at 1.30%. That combination means that our Australian neighbours are hard-pressed to grow their savings in real dollar terms.

Here’s a quick comparison, based on the average deposit interest rates on Canstar’s database.

Product Standard At-Call
Savings Account
Term Deposit
6 Months
New Zealand
Interest rate 1.31% 3.16%
Inflation 0.40% 0.40%
Net return 0.91% 2.76%
Interest rate 1.65% 2.48%
Inflation 1.30% 1.30%
Net return 0.35% 1.18%
Source: CANSTAR. Based on average interest rates on CANSTAR databases on 25 July 2016.

Of course, average figures are just that: an average. The interest rates on offer do vary from institution to institution so it’s important to do your homework when deciding who to trust with your hard-earned savings.

Canstar takes the hard work out of this decision, by researching and rating accounts for you. In 2016, we rated 54 accounts from 11 institutions, so you can find out not only which accounts suit your transaction profile but also products that offer outstanding value for different profiles of saver.

You can check out our research in this year’s star ratings for savings and transaction accounts. We also grant an annual Everyday Banking Award for the institution that provides outstanding value to consumers.


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What is the maximum real rate of return you could get?

When it comes to savings accounts, a major drawcard is understandably going to be the interest rates on offer. And while some savers may feel current rates to be disappointingly low, the reality is that once inflation is taken into account, rates now are actually better than they were five years ago.

So – what are they? Well, assuming a balance of $10,000 to invest, the maximum interest rates on Canstar’s database in June 2016 are as follows:

Savings Accounts

Savvy savers who shop around for the maximum interest rate on a standard at-call savings account or bonus savings account can still end up with a healthy 2.60% return in their pocket after inflation.

Of course, we have to point out that while the maximum rate listed for an at-call savings account is its standard base rate, the maximum rate listed for a bonus account is its total base rate plus conditional bonus rate. That means if you’ve got a bonus savings account, you must meet the conditions every month in order to receive that maximum total rate – otherwise your real rate of return will be much lower.

Savings Accounts (At-Call and Bonus Rates)
Maximum interest rate 3.00%
Less inflation 0.40%
Real rate 2.60%
Source: www.canstar.co.nz *Maximum Rate is Total Rate, which includes base plus promotional rate. Rates taken as at 25 July 2016. Rates are based on a $10,000 balance.

Term Deposits

The real rate of return (after inflation) for term deposits is more of a mixed bag. While a 1 month term deposit will return a lower real rate of return than the maximum on a savings account, a term deposit of 6 months or longer will return a better real rate of return than savings accounts. Those savvy savers on the maximum rate for a term deposit could receive real rates of return this year as follows:

30 Day Term Deposit (1 Month)
Maximum interest rate 2.25%
Less inflation 0.40%
Real rate 1.90%
90 Day Term Deposit (3 Months)
Maximum interest rate 2.95%
Less inflation 0.40%
Real rate 2.55%
180 Day Term Deposit (6 Months)
Maximum interest rate 3.40%
Less inflation 0.40%
Real rate 3.00%
1 Year Term Deposit
Maximum interest rate 3.45%
Less inflation 0.40%
Real rate 3.05%
3 Year Term Deposit
Maximum interest rate 3.75%
Less inflation 0.40%
Real rate 3.35%
5 Year Term Deposit
Maximum interest rate 3.90%
Less inflation 0.40%
Real rate 3.50%
Source: www.canstar.co.nz *Maximum Rate is Total Rate, which includes  base plus promotional rate.
Rates taken as at 25 July 2016.  Rates are based on a $10,000 balance.

Where do we put our savings?

We know that a lot gets funnelled into housing. Statistics New Zealand notes that housing costs continue to increase as a proportion of our household income – and anyone who glances at the news would be aware of rising property prices. But some of our savings also end up as cash deposits in the banking institution of our choice.

According to the Reserve Bank of New Zealand’s statistics (RBNZ), Kiwi households collectively have deposited savings of around $155 billion stored in registered banks as at April 2016. In the period to the start of June, that represented year on year growth of 10.7%. Approximately $10 billion of these funds are held within a PIE account.

Director of Deposits Jo McGregor says Westpac New Zealand has seen continued growth in their personal online savings products, though customer preference for these accounts pre-dated the official cash rate changes.Saving-in-a-low-interest-environment

“In a relatively low interest environment, customers are seeking to maximise returns, and our Portfolio Investment Entities (PIE) products like Online Saver PIE, Online Bonus Saver PIE and the recently introduced 32 day Notice Saver PIE have become increasingly popular,” she said.

“Regulatory changes tightening up on early withdrawals from term investments, greater accessibility for relative returns, as well as more enhanced features on savings products have helped drive the switch from term to on call savings accounts.”

Diligent savers were no doubt disappointed by the RBNZ’s decision in March 2016 to cut the official cash rate to 2.25% – the fifth cut made over the past 12 months. It may be some small consolation to note that this rate is still significantly higher than many countries around the world. But with actual inflation running at just 0.40%, at least our savings are not being eaten away!

Compare Savings Accounts with Canstar


Compare savings accounts

Canstar compares term deposit accounts, bonus savings accounts and online saver accounts, and transaction accounts. You can compare these accounts on our website, as well as many more types of banking and financial products.

Read Canstar Savings and Transaction Accounts Star Ratings Report

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