Term Deposit Rates New Zealand

The term deposit rates offered by New Zealand banks can be very competitive and the New Zealand economy appears to be recovering well, taking similar precautions to our own, with government guaranteed deposit schemes for example. So why are financial forecasters predicting an interest in Australian term deposits from New Zealand investors, and are they wise to be making such a switch.

Term Deposit Investments in New Zealand

Term deposit investment operate in New Zealand in much the same way as they do here, and we also share many of the same banks, ANZ bank for example stands for Australia and New Zealand when you stop and think about it, plus there are a number of direct banks which operate both here and in New Zealand such as Rabobank, operating as Raboplus online.

Term deposit rates in New Zealand:

• Term deposit rates are stable as NA term deposits are guaranteed. On the very same day the Kevin Rudd announced an Australian Government deposit scheme to protect Australians’ deposits up to the value of $1 million until October 2011, the New Zealand Prime Minister Helen Clark announced a similar guarantee. Clark’s guarantee also covers deposits up to $1 million, but runs only until October 2010 leaving New Zealand savers without a deposit guarantee a full year before our government reviews their scheme. The New Zealand deposit scheme is also more selective about the banks and financial institutions which qualify for the guarantee, and New Zealand deposit taking institutions have to register, and only those with less than NZ $5 billion in deposits are guaranteed for free, while those banks with more than $5 billion in deposits must pay 0.1% per year to offer the guarantee to their customers.
• Predictions are that New Zealand term deposit customers will cross the Tasman. There have been speculations and doubts about the success of the government’s deposit scheme from the beginning, and whether it was really helping, or whether it was simply delaying the effects of the GFC for three years, or in the case of New Zealand, two years. Some New Zealand finance experts predict there will be an exodus from NZ term deposits, to AU term deposits before October 2010, because our deposits remain guaranteed for another year at least, possibly more. In converting their deposits into Australian dollars the exchange rate from New Zealand to Australia is only 1.32 and the Kiwis therefore lose money as they convert their investment into Australian dollars.

New Zealand Term Deposit Rates Compared to Australia’s

While some of the same banks operate in Australia and New Zealand, each has their own independent operations, management teams, profits and losses. However, it is interesting to compare the interest rates offered in New Zealand, compared to those offered on Australian deposits (all the following rates are correct as of April 2010, they may not be correct at time of reading).

On an ANZ term deposit for 12 months, with a $5000 investment:

• ANZ in New Zealand are offering 5.10% interest.
• ANZ Australia are offering 5.00% interest.

On a HSBC term deposit for 12 months, with a $5000-19999 investment:

• HSBC in New Zealand are offering 1.80% interest.
• HSBC Australia are offering 2.86% interest.

On a Raboplus term deposit for 12 months, with a $1000 investment:

• Raboplus in New Zealand are offering 5.25% interest.
• Raboplus in Australia are offering 5.45% interest.

When you consider New Zealand investors would lose money thanks to the current exchange rate as they converted their investments to Australian dollars to make a deposit in an AU term deposit account, New Zealand and Australia seem to be in the same boat. To make more comparisons of Australian term deposit investment accounts view the Savings Account Finder™ comparison tables here. You can follow the secure link from each comparison, to the provider’s website to find out more, start an application, or enquire about their international investment options.