Term deposits offer guaranteed, predictable returns on your savings — at the cost of locking your money in for a set period. In New Zealand, they’re one of the simplest and safest ways to earn more than a standard savings account.
Term deposits in NZ currently pay around 4.5–5.5% p.a. for 6–12 month terms (with the RBNZ OCR around 3.5–4.0% in 2026). Heartland, SBS, and Rabobank consistently offer the best rates — often 0.25–0.75% above the big 4. Check Canstar NZ for current live rates.
How Term Deposits Work
A term deposit is a fixed-term savings agreement: you deposit a set amount for a set period, the bank pays you an agreed interest rate, and you cannot withdraw without penalty until the term ends.
Key features:
- Fixed interest rate agreed at the start — no rate changes during the term
- Terms available: 30 days to 5 years
- Minimum deposit: typically $1,000–$5,000 (varies by bank)
- Interest paid: monthly, quarterly, six-monthly, or at maturity (your choice)
- Early withdrawal: usually possible but with an interest reduction penalty
- Covered by NZ deposit guarantee scheme (up to $100,000 per institution)
Current NZ Term Deposit Rates (2026)
With the RBNZ OCR around 3.5–4.0% in early 2026, indicative term deposit rates:
| Term | Big 4 banks (approx) | Specialist banks (approx) |
|---|---|---|
| 30 days | 3.8–4.2% | 4.0–4.5% |
| 3 months | 4.2–4.6% | 4.5–5.0% |
| 6 months | 4.5–5.0% | 4.8–5.5% |
| 12 months | 4.3–4.8% | 4.6–5.2% |
| 2 years | 4.0–4.5% | 4.3–5.0% |
| 5 years | 3.8–4.5% | 4.0–4.8% |
Rates are indicative and change frequently. Always check Canstar NZ or each bank directly for current rates before depositing.
Best Term Deposit Providers in NZ
Specialist banks consistently offer better term deposit rates than the big 4:
| Bank | Known for | NZ-owned? | Min deposit |
|---|---|---|---|
| Heartland Bank | Consistently highest rates; digital-first | Yes | $1,000 |
| Rabobank NZ | Top savings and term deposit rates | No (Dutch cooperative) | $1,000 |
| SBS Bank | Competitive rates; member-owned | Yes | $1,000 |
| Co-operative Bank | Good rates; NZ-owned | Yes | $1,000 |
| TSB Bank | Competitive; NZ-owned | Yes | $1,000 |
| ANZ | Convenient if existing customer | No | $1,000 |
| ASB | Convenient; good online tool | No | $1,000 |
The rate premium at specialist banks is typically 0.25–0.75% p.a. On $100,000 for 12 months, 0.5% extra = $500 more interest. Worth opening an account.
Interest Payment Options
When setting up a term deposit, choose how interest is paid:
| Option | When paid | Best for |
|---|---|---|
| Monthly | At end of each month | Those who want regular income |
| Quarterly | Every 3 months | Balance of access and compounding |
| Six-monthly | Twice a year | Medium terms |
| At maturity | End of term | Short terms or reinvestment plans |
Compounding: If interest is paid at maturity, it effectively compounds. Monthly payments give you the cash but at a marginally lower effective rate (no reinvestment).
Early Withdrawal from a Term Deposit
Breaking a term deposit early is possible at most NZ banks, but costs:
- Early withdrawal fee — typically a reduction in your interest rate
- Common structure: if you break early, you receive a reduced rate (e.g., 50–75% of the agreed rate for the period held)
- Some banks charge a fixed dollar fee in addition
Example: 12-month term deposit at 5.0%. Break at 6 months — bank may pay only 2.5–3.5% for the period held.
Strategy: Only put money in a term deposit that you genuinely won’t need for the full term.
Tax on Term Deposit Interest
All term deposit interest is subject to Resident Withholding Tax (RWT), deducted by the bank:
| Annual income | RWT rate |
|---|---|
| Up to $14,000 | 10.5% |
| $14,001–$48,000 | 17.5% |
| $48,001–$70,000 | 30.0% |
| Over $70,000 | 33.0% |
Set your RWT rate correctly with your bank — if it’s not set, banks default to a higher rate (sometimes 33% or 45%). Update it to match your marginal tax rate.
Term Deposit Laddering Strategy
Rather than putting all your savings in one term, spread across multiple terms for flexibility and rate exposure:
Example — $60,000 ladder:
| Tranche | Amount | Term | Matures |
|---|---|---|---|
| A | $20,000 | 3 months | Jan 2027 |
| B | $20,000 | 6 months | Apr 2027 |
| C | $20,000 | 12 months | Oct 2027 |
As each tranche matures, reinvest at the best available rate. Benefits:
- Access to a portion of funds every few months
- Exposure to different points on the yield curve
- No single large bet on current rates
Term Deposit vs Savings Account — When to Use Each
| Situation | Better choice |
|---|---|
| Money you won’t need for 3+ months | Term deposit (higher rate) |
| Emergency fund or monthly expenses | Savings account (instant access) |
| Regular income from savings | Monthly interest term deposit |
| Uncertain timeline for the money | Savings account |
| Maximum return, no withdrawal needed | Term deposit at longer term |
The decision comes down to one question: How confident are you that you won’t need this money during the term?
Opening a Term Deposit
Online: Most banks allow term deposit applications entirely online — search for “term deposit” in your internet banking portal or on the bank’s website.
New customer: You’ll need to open an account with the bank first (identity verification required). For Heartland or Rabobank, this is done fully online.
Rollover: At maturity, banks typically auto-roll your term deposit into the same term at the current rate. If you want to change the term or move the money, act before or at maturity — set a calendar reminder.
Deposit Guarantee Scheme
NZ’s deposit guarantee scheme covers deposits up to $100,000 per depositor per institution at registered banks. This covers all major banks including Heartland, Rabobank NZ, and SBS Bank.
If you have more than $100,000 to deposit, split across multiple banks to maximise coverage.
Next Steps
- Best term deposits NZ — current rate comparison
- Savings account guide NZ — savings accounts for flexible money
- How to get a better interest rate NZ — broader savings strategy
- Heartland Bank review — consistently best rates in NZ