Guide to Highest Interest Savings Accounts and Fixed Deposit Rates in New Zealand 2025

Term Deposit Rates and Market Context

In 2025, some term deposit rates offered by New Zealand banks like ANZ and Westpac slightly exceed 4% annually. Other banks typically offer rates near but generally below this threshold, reflecting a trend of moderate adjustments. This shift is influenced by slower household loan growth (around 2.9% year-on-year) compared to a rise in household savings (approximately 5.9%), which reduces banks’ motivation to increase term deposit rates.

Term Deposit Product Features:

• Term length: Ranges from 30 days up to 5 years.
• Interest rates: Vary between about 2.25% for short terms to just over 4% for longer terms.
• Early withdrawal: Withdrawing before maturity may lead to lower or no interest paid.
• Compounding: Interest can be paid at maturity or compounded monthly/quarterly, influencing total returns.
• Eligibility: Available to individuals and entities, often with minimum deposits (usually $1,000 or more).

Additional points:Some banks including Kiwibank and Rabobank offer “interest at maturity” rates that may differ from effective returns after compounding; using calculators helps compare actual returns. Choosing banks with tax-efficient PIE (Portfolio Investment Entity) structures might enhance after-tax returns for certain savers.

Starting July 1, 2025, the Deposit Compensation Scheme will insure deposits up to set limits at various major banks and non-bank financial institutions.

About the Squirrel On-Call Account

For savers seeking easy access without locking funds in term deposits, some savings accounts provide relatively competitive interest rates. The Squirrel On-Call account, as of April 15, 2025, offers a gross interest rate of 3.25% annually with no withdrawal limits.

• Access: Transfers between your main bank and Squirrel generally complete within two hours, available every day of the week.
• Security: Deposits are held in trust with a major AA- credit-rated New Zealand bank.
• Conditions: No minimum balance or deposit restrictions; interest accrues daily and is paid monthly.

This account suits those desiring liquidity combined with moderate interest returns.

Notice Saver Accounts Offering Flexibility

Notice saver accounts require advance notice—often between 32 and 90 days—before withdrawing funds, offering a balance between liquidity and interest rates.

• Banks: Kiwibank, Heartland, Rabobank, and Westpac provide notice saver accounts.
• Interest rates: Range from about 2.80% to 3.75%, depending on notice periods.
• Withdrawal: Funds can be withdrawn without penalties after the notice period.
• Best for: Savers who can plan withdrawals ahead and want higher interest than immediate access accounts.

Types of Savings Accounts

Savings accounts generally fall into two groups:

• No-conditions accounts: Provide flat interest rates, daily accrual, and easy access. These accounts usually offer lower interest but greater flexibility.
• Condition-based accounts: Offer higher interest if criteria like monthly net deposits and no withdrawals are met. Missing these conditions typically results in lower interest.

Choosing between these depends on your saving habits; conditional accounts can yield better returns if you meet the terms, while no-condition accounts offer more convenience.

Additional Tips for Optimizing Savings Interest

• Check interest compounding frequency; more frequent compounding (daily or monthly) may increase returns compared to interest paid only at maturity.
• Consider tax implications, such as PIE-structured accounts that can reduce tax liabilities and improve net returns.
• Ask bank staff about discretionary rates, especially on larger deposits, as some banks may offer better-than-advertised rates.
• Stay updated on bank promotions but verify terms carefully since conditions vary.
• Diversify across account types and term lengths to manage liquidity and potential earnings.
• Understand details of the Deposit Compensation Scheme effective July 1, 2025, for added deposit security.

For funds that can be locked away, term deposits generally offer returns near 4%, occasionally higher. For readily accessible savings, accounts like Squirrel On-Call provide competitive rates without withdrawal limits. Notice saver accounts offer a compromise between liquidity and interest, with rates up to roughly 3.75%. When choosing savings products, consider compounding, tax efficiency, fees, and deposit insurance.

By evaluating these aspects, savers in New Zealand can make informed decisions to manage their savings attentively regarding both safety and return potential.

Sources

• Interest.co.nz: Savers Are Increasing Balances … Banks Are Trimming TD Rates
• Squirrel.co.nz: Ranking New Zealand’s Best and Worst Savings Accounts

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