Understanding how to invest your money using DepositRates.co.nz

How we sort data

Deposit Rates' view is that when you want to put money on deposit one of the first decisions you will make is on product type. For example, you may say, "I want to put my money into a term deposit for one year", or you may say, "I am looking for a good savings account".

For this reason we classify rates by the TYPE of investment product, rather than the INSTITUTION.

Types of investment products

We have seven types of investment products, namely:

• Call Accounts: Offered by most banks and you can access your money at any time.
• Savings Accounts: These tend to be products offered by banks where you can accumulate money. Rates are competitive, interest is calculated daily and security is good.
• Term Deposits: These are mainly bank term deposit rates and are generally on a fixed term basis.
• Cash Management Accounts: These are like call accounts. Cash management accounts (CMTs) are generally offered by fund managers and sharebrokers as an alternative to call accounts. CMTs are used as the core part of portfolio where dividends and payments are held before being reinvested.
• Debentures: Secured First Ranking Debentures are the staple product from finance companies. They are simply a fixed term investment in a finance company.
• Tax Paid Bonds: A handful of institutions offer tax paid investments. These have lower headline interest rates than other investments because they are tax-paid.
• Other: This section captures investment options such as unsecured notes offered by finance companies.

Terms offered

Deposit Rates uses standard terms for fixed rates, these are:

Call, 1, 2, 3, 5, 6, 9 and 18 month options, plus one, two, three, four and five year terms.

You will find that there are other terms on offer. For instance banks will have term deposit rates for four, seven and eight month investments. "Odd" rates, eg 27-months, are often used in special promotions.

Also you will find that some banks express their rates in days not months. A conversion table is here:

How institutions are grouped

Deposit Rates has a broad classification of firms, our main organisations include: Banks, Building Societies, Credit Unions and Finance Companies and Co-operatives.

There are also fund managers and sharebrokers who offer cash management accounts.

If you want to make an investment decision based on the type of institution you can create your own custom table using this calculator.

Interest payment options

Many organisations, which will put your money on deposit, offer a range of interest payment options. These range from interest calculated daily, to quarterly payments, but there are also options for monthly payments or interest at maturity. Added to this there is often the option of compounding interest payments to your initial investment.

To keep our interest rates tables on a consistent and fair basis, rates in our standard table are displayed with quarterly interest payment options.

As a general rule you will earn more money for your investment if you keep interest payment options till maturity and by having interest payments made during the life of the investment compounded into the original principal.

For instance a company may say they will pay you 8.95% with interest paid at maturity for a one year investment. However, if you chose to take quarterly interest payments then the rate falls to 8.55%, and if you go to monthly interest payments the rate falls another five basis points to 8.50%.