Bank Term Deposits
In New Zealand a deposit with a Registered Trading Bank is generally regarded as second only to Government Stock in terms of security. But they do not carry a Government Guarantee.
Currently interest rates are low by historical standards but then so is inflation.
You invest for a "term". You promise to leave the money with the bank for a fixed period of time. In return the bank promises to pay you interest at a fixed rate for that term. Depending on the bank, interest may be paid monthly, quarterly, six monthly, annually or on maturity. Find one that suits your needs.
Resident withholding tax (rwt) will be deducted by the bank at a rate nominated by you. Be sure to nominate a rate or they will automatically deduct rwt at 33%.
Terms are available from 30 days to 5 years. Banks will occasionally have special rates for a maturity term where they need the money to "balance their books" and so you might be able to pick up a little bit more interest than otherwise.
It used to be easy to break a term deposit if you needed the money early but that is no longer the case. Be sure to check on the consequences of breaking the term of the deposit before you commit to a term.
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