Term deposits remain one of the most widely used investment tools in New Zealand — particularly for conservative investors, retirees, and anyone with a short investment horizon. In 2026, with RBNZ rates having normalised after the 2022–2023 peak, term deposit rates still offer meaningful returns.
A term deposit locks your money with a bank for a set period (30 days to 5 years) at a fixed interest rate. They're simple, safe (covered by the Crown Deposit Guarantee Scheme up to $100,000 per institution), and currently yielding approximately 4.0%–5.2% p.a. in NZ. Best for money you need in 1–3 years and don't want to expose to share market risk.
What Is a Term Deposit?
A term deposit is a savings account where you agree to leave your money with the bank for a fixed period. In return, the bank offers a higher interest rate than a standard savings account.
Key features:
- Fixed term: 30 days to 5 years
- Fixed rate: set at the start, does not change
- Early withdrawal: usually possible, but with a break cost (interest penalty)
- Government guarantee: covered by the Crown Retail Deposit Guarantee Scheme up to $100,000 per institution
NZ Term Deposit Rates (Mid-2026)
Rates are indicative for mid-2026. Always check current rates directly with banks before depositing.
Major banks — indicative rates
| Term | ANZ | ASB | BNZ | Westpac | Kiwibank |
|---|---|---|---|---|---|
| 30 days | 3.5%–4.0% | 3.5%–4.0% | 3.5%–4.0% | 3.5%–4.0% | 3.5%–4.0% |
| 90 days | 4.0%–4.5% | 4.0%–4.5% | 4.0%–4.5% | 4.0%–4.5% | 4.0%–4.5% |
| 6 months | 4.2%–4.8% | 4.2%–4.8% | 4.2%–4.8% | 4.2%–4.8% | 4.2%–4.8% |
| 12 months | 4.0%–4.5% | 4.0%–4.5% | 4.0%–4.5% | 4.0%–4.5% | 4.0%–4.5% |
| 24 months | 3.8%–4.3% | 3.8%–4.3% | 3.8%–4.3% | 3.8%–4.3% | 3.8%–4.3% |
Smaller banks and non-bank institutions
Heartland Bank, Rabobank, and other smaller institutions typically offer rates 0.2–0.5% above the major banks. These are also covered by the guarantee scheme (check institution eligibility on the RBNZ register).
→ See: Best Term Deposit Rates NZ — 6-Month
→ See: Best Term Deposit Rates NZ — 12-Month
Term Deposit Strategy: Getting the Most From Your Deposit
Strategy 1 — Term deposit ladder
Rather than locking all your money in one term, spread it across multiple terms. When each term matures, reinvest at current rates.
Example: $60,000 laddered
| Tranche | Amount | Term | Action when matures |
|---|---|---|---|
| 1 | $20,000 | 3 months | Reinvest at new rate |
| 2 | $20,000 | 6 months | Reinvest at new rate |
| 3 | $20,000 | 12 months | Reinvest at new rate |
Benefits: one tranche matures every quarter — you have regular liquidity without breaking a term. You benefit from rate changes at each maturity rather than being locked in for 12 months.
→ See: Term Deposit Ladder Strategy NZ
Strategy 2 — Match the term to your goal
| Goal | Recommended term |
|---|---|
| Emergency fund extension | 30–90 days (keep accessible) |
| Saving for holiday in 6 months | 6-month term deposit |
| Saving for home deposit (18 months away) | 12-month, roll over once |
| Defensive portion of retirement portfolio | 6–12 months, ladder |
| Capital you may need within 3 months | Savings account (not term deposit) |
Strategy 3 — Compare smaller banks
The major banks (ANZ, ASB, BNZ, Westpac, Kiwibank) often offer lower rates than smaller institutions. Heartland Bank consistently offers some of the highest term deposit rates in NZ. Their deposits are covered by the same Crown guarantee (subject to scheme limits).
Term Deposits vs Savings Accounts
| Feature | Term deposit | Savings account |
|---|---|---|
| Rate | Higher | Lower |
| Accessibility | Locked (penalty to break) | Instant access |
| Rate fixed? | Yes | Variable (changes any time) |
| Best for | Short-term savings with a target date | Emergency fund, buffer account |
| Minimum | Usually $1,000 | Usually $1 |
At current rates (mid-2026), a 12-month term deposit typically yields 0.5–1.0% more than a savings account. For $50,000, that’s $250–$500 more per year.
Term Deposits vs Shares/Index Funds
| Feature | Term deposit | Shares (index fund) |
|---|---|---|
| Expected return | 4.0–5.2% (fixed, guaranteed) | 7–10% p.a. (not guaranteed) |
| Risk | Very low (government guaranteed) | Medium-high |
| Best horizon | Under 3 years | 5+ years |
| Tax | RWT deducted at source | PIR via PIE fund |
| Inflation protection | Limited | Good long-term |
Rule of thumb: Use term deposits for money you need in under 3 years. Use index funds for money you won’t need for 5+ years.
Tax on Term Deposits
Interest income from term deposits is taxed at your RWT rate (Resident Withholding Tax). The bank deducts this at source.
| Income | RWT rate |
|---|---|
| Under $14,000 | 10.5% |
| $14,001–$48,000 | 17.5% |
| $48,001–$70,000 | 30% |
| $70,001–$180,000 | 33% |
| Over $180,000 | 39% |
RWT rates on term deposits match marginal income tax rates — higher than the PIR rate (max 28%) available through PIE funds. For high earners, this makes term deposits slightly less tax-efficient than PIE funds at the same return rate.
Crown Retail Deposit Guarantee Scheme
The Crown guarantees eligible deposits up to $100,000 per depositor per institution if a registered bank fails. This covers deposits at ANZ, ASB, BNZ, Westpac, Kiwibank, Rabobank, Heartland, and other registered banks.
What it means:
- Up to $100,000 at ANZ is covered; up to $100,000 at ASB is separately covered
- If you have $200,000 to deposit, splitting it across two banks gives full coverage for both tranches
- Deposits at non-bank lenders (not registered banks) may not be covered — check before depositing
The scheme was introduced in 2023, based on the RBNZ Financial Stability Act recommendations. It provides confidence for NZ savers that was previously absent compared to Australia’s scheme.
Term Deposit Guides
- Term Deposit Ladder Strategy NZ
- Short-Term vs Long-Term Term Deposits NZ
- When to Break a Term Deposit Early NZ
- Term Deposits for Retirees NZ