Why New Zealanders earn almost nothing on $120 billion in savings
New Zealanders hold nearly $120 billion in savings accounts, yet many earn almost no interest on their news deposits. Some banks offer rates as low as 0.05%, leaving savers with minimal returns. Despite this, low interest rates continue to benefit banks by generating steady income streams.
A recent review of savings accounts reveals stark differences in returns. Westpac's Simple Saver and ANZ's Select account both pay just 0.05% interest. ANZ's account requires a minimum balance of $5000 and charges a $6 monthly fee, though this can be waived under certain conditions. Westpac, however, includes email reminders encouraging customers to save more.
Co-Operative Bank's Smile On Call and ASB's Savings On Call accounts offer slightly better terms, with both paying 0.1% interest. The Co-Operative account applies this rate only to balances exceeding $4000. Meanwhile, research by the Financial Markets Authority shows that most savers prioritise high interest rates above all else. For older New Zealanders, particularly those aged 65 to 74, stability and easy access to funds matter just as much as interest. Despite these preferences, the average unconditional savings account rate hovers just above 1%, leaving many with limited growth on their deposits.
With nearly $120 billion sitting in low-yield accounts, savers face a challenging environment. Banks benefit from the gap between low deposit rates and their own earnings. For now, most New Zealanders continue to receive minimal returns, even as financial priorities shift with age.
