Could the best returns be as easy as ABC?

With a stagnant interest rate environment, savers are having to work hard to get decent returns on their savings. But, according to Canstar, it’s the smaller institutions that may be worth a look as they could offer you better rates.

“In the current environment, it’s a lot harder to make your money work for you”, says Canstar general manager Jose George. “According to our research the smaller providers look to be offering more attractive rates, especially around term deposits. The flipside is that you will most likely be investing with an organisation with a lower investment credit rating.”

What is an investment credit rating?

In the same way a consumer’s credit score reflects how reliable they are at paying what they owe, a bank, or non-bank deposit taker’s credit rating reflects their ability to pay what they owe. These ratings are usually assessed and issued by an international ratings agency, usually Standard & Poor’s, Moody’s Investors Service and Fitch Ratings, and provide an easy way for consumers to compare the risk profiles of the different providers in the market.

Ratings range from a high of AAA down to C or D.

George continues:

“Unlike many countries, including Australia, New Zealand does not operate a deposit guarantee scheme that protects some or all of consumer savings. In fact, New Zealand is the only OECD country that does not operate one. Credit ratings therefore become an important consideration when investing your savings because if your financial institution is unable to pay interest or even return your initial investment, you have no safety net.

“At the end of the day it comes down to a person’s appetite for risk and ultimately, making an investment decision they are happy with. That said, there are some, well-respected, but lower investment graded providers who have been in the market a considerable time and are offering some of the more attractive rates.”

Latest household balance sheets from RBNZ show that as of March 2018, $172,235 million was held in consumer deposits.

Top rated provider - Savings

Canstar recently reviewed the savings landscape in New Zealand to evaluate which provider offers savers the most comprehensive and well performing suite of products and services. For the first time, we pleased to announce a challenger brand, New Zealand managed Heartland Bank, have been named Bank of the Year - Savings.

Accepting the award on behalf of Heartland Bank, Head of Retail Mel Cadman said:

“We are delighted to be recognised as Canstar’s Bank of the Year - Savings.

“We know that starting a savings journey early, and understanding why it’s so important, will make a tangible difference over time. We suggest that consumers think about when they will need their money and whether immediate access is important. A savings account like the Heartland Direct Call Account gives a market-leading rate and allows access at any time which is perfect for a shorter-term savings goal.”

Top rated provider – Everyday banking

In addition, Canstar also conducted a review of the everyday banking in New Zealand, evaluating the level and variety of products, services and tools available to customers. For 2018, we are delighted to recognise Westpac as Bank of the Year - Everyday Banking.

According to the Canstar number crunchers, Westpac performs strongly in the online banking space and their fee free transaction accounts as well the Airpoints debit Mastercard, have made them the stellar performers in this category.

Accepting the Award on behalf of Westpac, Shane Howell, chief product officer said:

“We put huge focus on our everyday banking services and are thrilled to have our efforts recognised by Canstar. People have different needs when it comes to their banking so we help our customers consider what’s important to them and how they want to access their money. More and more customers are choosing to bank online or go cashless, but there are still times when customers need to visit a branch, and some customers just prefer it. We make sure that they have the information they need to make an informed decision about their banking choices.”

For further information on the Everyday Banking Award, please click here. For the Savings Award, please click here.

ENDS

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