Each year CANSTAR research and rate savings accounts on offer from New Zealand’s financial institutions. The CANSTAR Savings Award is presented to the institution that offers outstanding value and this year CANSTAR congratulates Bank of New Zealand (BNZ) on picking up the award. In light of the win, CANSTAR caught up with BNZ’s Fiona Ehn to find out what savers are looking for…
Q: With interest rates now starting to rise after a long hiatus, has there been a change in the types of products that savers are favouring?
A: We have noticed customers with larger savings balances moving their cash to savings accounts to take advantage of the better rates on savings accounts. However, as the longer term rates start to increase making term deposits more attractive, we expect to see customers returning to term deposits.
Q: One of the products singled out by CANSTAR in the assessment was the BNZ Rapid Save account. In the low interest rate environment, have incentive saver accounts been increasingly popular?
Yes, incentive saver accounts have become more popular as they tend to offer better rates of interest compared to call accounts.
The BNZ Rapid Save has a good bonus rate that is paid when you grow your account balance by at least $1 and make no more than 1 withdrawal each month. This helps as you don’t always have to make large deposits, and if you need to make an emergency withdrawal, you may still be able to get your bonus interest. Having a full access product means you can transact on the account how and when you want to.
Q: In terms of savings products, what should customers look for in a good-quality account?
What is good for one person may not work for another. The most important consideration is to first work out what your individual circumstances, saving and spending habits, saving timeframes and goals are. From there you can find the best option or options that suit your needs. For example; those regularly growing their savings may consider an incentive type account while if they have a short time frame and are likely to make withdrawals, a call account may be more suitable. It may also be better to spread your savings across a number of products.
Once you’ve worked out what you want to achieve, it is best talk to your bank. Although it is tempting to go for the best interest rate, your requirements may mean a lower rate of interest with better access is more suitable. It is vital that you ask about and understand any conditions around interest rates and withdrawals and what that means for you.
It’s also important to regularly review your accounts (at least annually) to make sure that they are still the best ones available for your needs.
You want to know you’re going to get your money back, so saving with a stable organisation for security of your deposits also shouldn’t be dismissed.
Readers can download CANSTAR’s Savings Award report here.