Term Deposits vs. Savings Accounts in NZ

At First Credit Union, we know Kiwis want their savings to work harder, without the hassle of big banks. The choice between a term deposit and a savings account comes down to two key factors: how much you want to earn and how quickly you might need your money. Let’s explore which option suits your financial goals.    

Understanding the Basics 

A term deposit locks your money away for a set period, anywhere from three months to two years, at a fixed interest rate. This means you’ll know exactly how much you’ll earn by the end of the term. The trade off? You can’t access your funds early without losing interest. See our early withdrawal T&Cs.  

A savings account, on the other hand, keeps your money accessible. You can withdraw whenever you need, but the interest rate is usually lower and can change over time. 

Term deposit rates are fixed, meaning they won’t drop even if the market changes for the term agreed at the inception of the term deposit. Then at the end of that term the rate is negotiated again for the following term. Savings account rates, however, can fluctuate with the Reserve Bank’s Official Cash Rate (OCR). 

Which Option Is Right for You? 

It really depends on what your financial goals are. If you’re saving for a specific goal, like a wedding, a car, or a holiday a higher interest rate account could help you grow your savings faster. On the other hand, if you need quick access to cash, a savings account may be the better option.  

At First Credit Union, we offer both term deposits and savings accounts with competitive rates  and no hidden fees. Plus, because we’re member-owned, our profits go back to you, not overseas shareholders. 

Making the Decision Easier. Still unsure? Ask yourself:

• Do I need this money within the next six months or a year? If yes, a savings account might be best.
• Am I comfortable locking my money away for higher returns? If yes, a term deposit may be a good option for you. 

You can also split your savings, keep some in a flexible savings account for emergencies and invest the rest in a term deposit. 

Whether you’re leaning toward a term deposit or a savings account, First Credit Union makes it easy to grow your money with competitive rates and local service. Compare our options online or visit a branch to chat with one of our friendly staff members. With the right strategy, your savings can work harder for you, without the hassle of big banks.