Term deposits are one of the safest investments available to New Zealanders. You lock in a fixed rate for a set period, and the bank pays you interest. The challenge is choosing the right bank, the right term, and the right rate — particularly when the OCR is moving.
In June 2026, the best term deposit rates in NZ are 3.8–4.8% p.a. for 6–12 month terms. Smaller banks (Rabobank, SBS, TSB, Co-operative) consistently beat the big four. PIE term deposits tax interest at your PIR (not marginal rate) — a meaningful advantage for earners over $70,000. With the OCR around 3.25%–3.50% in mid-2026, rates are lower than the 2023–2024 highs but still substantially above the 2020–2021 lows.
How Term Deposits Work in NZ
- You deposit a lump sum for a fixed term (30 days to 5 years)
- The bank pays a fixed interest rate for the duration
- At maturity, you receive principal plus interest (or principal only if interest was paid periodically)
- You can usually choose interest paid monthly, quarterly, or at maturity
Minimum deposit: Most banks require $1,000–$5,000 minimum. Some (e.g., Rabobank online) have higher minimums.
Breaking a term deposit: If you need funds before maturity, banks impose an early repayment adjustment — typically reducing your rate by 1.0–2.0% for the period you held it. Always read the early repayment terms before locking in.
Term Deposit Rates — April 2026
Rates indicative. Verify with each institution before investing.
3–6 Month Rates
| Bank | 3 months | 6 months |
|---|---|---|
| Rabobank | 4.30% | 4.55% |
| SBS Bank | 4.25% | 4.50% |
| TSB | 4.20% | 4.45% |
| Co-operative Bank | 4.15% | 4.40% |
| Kiwibank | 4.00% | 4.25% |
| BNZ | 3.90% | 4.10% |
| ANZ | 3.85% | 4.05% |
| ASB | 3.85% | 4.05% |
| Westpac | 3.85% | 4.05% |
12–24 Month Rates
| Bank | 12 months | 18 months | 24 months |
|---|---|---|---|
| Rabobank | 4.80% | 4.60% | 4.40% |
| SBS Bank | 4.75% | 4.55% | 4.35% |
| TSB | 4.65% | 4.50% | 4.30% |
| Co-operative Bank | 4.60% | 4.45% | 4.25% |
| Kiwibank | 4.45% | 4.30% | 4.15% |
| BNZ | 4.25% | 4.15% | 4.00% |
| ANZ | 4.20% | 4.10% | 3.95% |
| ASB | 4.20% | 4.10% | 3.95% |
| Westpac | 4.20% | 4.10% | 3.95% |
Which Term Should You Choose?
With the RBNZ OCR at around 3.25% in April 2026 (down from a peak of 5.50% in 2023), the rate curve is relatively flat. The outlook matters:
If rates are expected to rise: Shorter terms (3–6 months) let you reinvest at higher rates sooner. Don’t lock in long if you believe rates will increase.
If rates are expected to fall or stay flat: Longer terms lock in current rates. With OCR cuts likely complete or near-complete by April 2026, locking in 12–18 months could protect current rates.
General guidance (April 2026): The 12-month term offers the best combination of rate and flexibility at most banks. The 6-month rate is only marginally lower, so it’s worth considering if you’re uncertain about future rate direction.
The Term Deposit Ladder Strategy
Rather than putting all your savings into one term deposit, a ladder spreads maturity dates:
Example: $40,000 split across 4 terms
- $10,000 → 3 months → reinvest
- $10,000 → 6 months → reinvest
- $10,000 → 9 months → reinvest
- $10,000 → 12 months → reinvest
After the first year, you have a deposit maturing every 3 months. Benefits:
- Never fully locked out — you always have a deposit maturing soon
- Benefit from rate rises by reinvesting at market rates
- Smooths out timing risk
PIE Term Deposits — A Tax Advantage
Banks offer PIE versions of term deposits where interest is taxed at your PIR (10.5%, 17.5%, or 28%) rather than your marginal tax rate. This matters if you earn $70,000+ per year.
| Income | Marginal rate | PIR | Benefit on 4.5% $50k deposit |
|---|---|---|---|
| $0–$14,000 | 10.5% | 10.5% | $0 |
| $14,001–$48,000 | 17.5% | 17.5% | $0 |
| $48,001–$70,000 | 30% | 28% | $11/year |
| $70,001–$180,000 | 33% | 28% | $113/year |
| $180,001+ | 39% | 28% | $248/year |
For larger deposits or higher earners, the PIE advantage is significant. Kiwibank, ASB, and others offer PIE term deposits — ask specifically when opening.
Non-Bank Lenders Offering Term Deposits
New Zealand has a range of non-bank deposit takers (NBDTs) that are regulated but not traditional banks. They typically offer higher rates:
- Heartland Bank — registered bank, formerly Heartland Building Society, offers competitive rates
- Nelson Building Society — regional, conservative, competitive rates
- Police Credit Union — member-only, very competitive
- various finance companies — higher risk, not recommended for most savers (check they are a registered bank or NBDT with RBNZ oversight)
Always check the entity is registered with RBNZ at rbnz.govt.nz before depositing.
Tips for Term Deposit Success
- Compare smaller banks first — Rabobank, SBS, TSB, and Co-operative Bank consistently pay 0.3–0.6% more than the big four
- Ask about loyalty or relationship rates — existing customers sometimes receive slightly higher rates
- Choose PIE if your income is $70,000+ — the tax saving is real
- Ladder your deposits — don’t put everything in one term
- Read early repayment terms — understand the penalty before locking in large sums
- Set a reminder 2 weeks before maturity — auto-rollover at whatever the bank’s current rate is may not be optimal
Frequently Asked Questions
What is the best term deposit rate in NZ right now?
As of April 2026, Rabobank offers around 4.80% p.a. for a 12-month term, the highest from a registered bank. SBS Bank and TSB also offer competitive rates above 4.5%.
Are term deposits safe in NZ?
Term deposits at registered banks are generally very safe. New Zealand doesn’t have an official deposit guarantee scheme (unlike Australia), but registered banks are heavily regulated by RBNZ. No major NZ registered bank has failed in recent history.
Can I break a term deposit early in NZ?
Yes, but you’ll pay an early repayment adjustment. Typically the bank reduces the rate by 1.0–2.0% for the period held. In some environments this can mean you receive less interest than you would have in a savings account. Read your specific terms.
Is a PIE term deposit better than a regular term deposit?
For earners with a marginal tax rate above 28% (income over $70,000), a PIE term deposit will deliver a better after-tax return than a regular term deposit with the same rate. For those at 17.5% or below, there’s no difference.
How much do I need for a term deposit in NZ?
Most NZ banks require a minimum of $1,000. Some banks like Rabobank may require $5,000 or more via their online platform. The Co-operative Bank and Kiwibank accept smaller amounts.
How to Compare Term Deposit Rates Fairly
The headline rate is not always the full story. Consider:
Interest Frequency
Some banks offer different rates depending on how often interest is paid:
- At maturity (most common for short terms): highest effective rate
- Monthly or quarterly: slightly lower effective rate, but useful for income
On a $50,000 deposit at 4.5% for 12 months:
- Interest at maturity: $2,250 received at month 12
- Interest monthly: approximately $186/month — slightly less total due to compounding difference
Effective Annual Rate (EAR)
For deposits paying interest more frequently than annually, the effective annual rate differs from the stated rate. On a 12-month term deposit paying monthly at 4.5%, the effective annual rate is slightly above 4.5% due to compounding. This is a minor difference but worth noting when comparing at-maturity vs periodic payment structures.
Minimum Deposits and Online vs Branch
| Bank | Minimum deposit | Online availability |
|---|---|---|
| Rabobank | $5,000 (online) | Online only |
| Heartland Bank | $5,000 | Online or phone |
| TSB | $1,000 | Online and branches |
| Co-operative Bank | $1,000 | Online and branches |
| SBS Bank | $1,000 | Online and branches |
| ANZ | $5,000 | Online and branches |
| ASB | $1,000 | Online and branches |
| BNZ | $5,000 | Online and branches |
| Westpac | $5,000 | Online and branches |
| Kiwibank | $1,000 | Online and branches |
For smaller deposits ($1,000–$5,000), TSB, Co-operative Bank, SBS, and Kiwibank all offer competitive rates with no high minimum.
When to Use a Term Deposit vs Savings Account
The decision depends on three factors: timeline, rate comparison, and OCR direction.
| Scenario | Recommended choice |
|---|---|
| Need the money within 1–2 months | On-call savings account |
| Have $10,000+ you won’t touch for 6+ months | Term deposit (rate certainty + typically equal or higher rate) |
| Rates are rising (OCR likely to increase) | Short terms (3–6 months) — reinvest at higher rates |
| Rates are falling or at peak | Lock in a 12–18 month term now |
| Building emergency fund | Savings account (must be accessible) |
| Lump sum from property sale, inheritance | Term deposit ladder |
June 2026 context: The RBNZ OCR is around 3.25%–3.50%, near the end of the cutting cycle that began in 2024. Rates may stabilise or increase slightly. A 12-month term deposit locks in current rates without overcommitting in case of rate changes.
Tax on Term Deposits in NZ
Standard Term Deposits — RWT
Interest on standard term deposits is subject to Resident Withholding Tax (RWT). The bank deducts RWT at your elected rate before paying interest:
| Income | RWT rate |
|---|---|
| Up to $14,000 | 10.5% |
| $14,001–$48,000 | 17.5% |
| $48,001–$70,000 | 30% |
| $70,001–$180,000 | 33% |
| $180,001+ | 39% |
Ensure your IRD number and correct RWT rate are registered with the bank, or they will deduct at the default rate of 33%.
PIE Term Deposits — Lower Tax Rate
For earners on 30%+ marginal rates, ask specifically for a PIE term deposit. Available at ANZ, ASB, BNZ, Westpac, Kiwibank, and others. The rate may be the same as a standard term deposit, but interest is taxed at your PIR (maximum 28%) rather than your marginal rate.
The PIE option must be selected at the time of opening the deposit — you cannot switch a standard term deposit to PIE after the fact.
Breaking a Term Deposit Early — What It Really Costs
Early repayment is possible but comes with an adjustment. The cost depends on:
- How long you’ve held the deposit
- What current rates are vs your locked rate
Typical early repayment formula: The bank calculates the difference between your locked rate and the current rate for the remaining term, then charges you that difference for the remaining period.
Example:
- $30,000 locked at 4.5% for 12 months
- You break after 3 months (9 months remaining)
- Current 9-month rate: 4.2%
- Early repayment adjustment: $30,000 × (4.5% − 4.2%) × 9/12 = $67.50
In falling rate environments (like 2024), breaking early costs you money because banks are funding the same deposit at a lower current rate. In rising rate environments, the cost is smaller or may be nil.
Always ask for the early repayment formula in writing before locking in a large deposit.
Frequently Asked Questions
What is the best term deposit rate in NZ right now?
As of June 2026, Rabobank offers approximately 4.80% p.a. for a 12-month term, among the highest from a registered bank. SBS Bank and TSB also offer rates above 4.5% for 12 months. Verify directly with each institution as rates change weekly.
Are term deposits safe in NZ?
Term deposits at registered NZ banks are very safe — no major registered NZ bank has failed in modern history. New Zealand does not have a formal deposit guarantee scheme (unlike Australia’s $250,000 guarantee), but RBNZ regulation and capital requirements protect depositors. For amounts over $100,000, consider splitting across multiple banks as a precaution.
Can I break a term deposit early in NZ?
Yes, but with an early repayment adjustment (fee). In most rate environments, this means you’ll receive less interest than your original rate implied, but you’ll get your principal back. Read your specific deposit terms before committing.
Is a PIE term deposit better than a regular term deposit?
For earners with a marginal tax rate above 28% (income over $70,000), yes — a PIE term deposit with the same stated rate delivers a higher after-tax return. The saving is 5%–11% of the interest earned. Ask your bank specifically for the PIE version when opening.
What’s the minimum for a term deposit in NZ?
Most NZ banks accept $1,000 minimum. Rabobank and some larger banks require $5,000. The Co-operative Bank, TSB, and SBS accept $1,000 — useful for smaller lump sums.
How do I check my term deposit on maturity?
Banks notify you by email or letter approximately 2 weeks before maturity with options: renew for the same term at the current rate, renew for a different term, or withdraw funds. Always compare rates at maturity rather than auto-rolling at whatever rate the bank offers.