Kiwibank trumping with flexible, high rate deposits
Kiwibank has once again trumped other banks in the deposit space, introducing a product that offers an attractive interest rate coupled with the flexibility that many would like to have.
Tuesday, October 26th 2010, 2:27PM
by Sophia Rodrigues
The bank this morning announced a product called "Notice Saver" that will give investors a rate as high as that currently offered by some banks for 5-6 month deposits but can be withdrawn by giving 32-days notice.
The minimum amount for the deposit is $2,000 and the rate currently offered is 5%. There is no fixed term and the returns are calculated daily and compounded monthly, and is PIE compliant.
Many banks offers call accounts which offer complete flexibility in terms of withdrawal but the rate offered is usually in line with the prevailing cash rate.
In rate changes last week, UDC Finance made some big increases as the company competes with interest rates offered by banks on one hand, and the guaranteed finance companies at the other.
At AA UDC has the best rating among finance companies but investors are generally shying away because it doesn't have the benefit of extended Crown guarantee. And the ones keen to invest are expecting a good spread to the deposit rate currently offered by the major banks. This is likely the reason UDC had to push its rates higher. At 5% for 90-days, UDS is beating all the major banks but is behind the rate offered by some guaranteed finance companies.
Its offer of 5.50% for six months matches the rate offered by Marac Finance and Equitable Mortgages on guaranteed deposits.
HSBC has surprisingly opted out of the race for longer-term deposits, reducing the rate on its premier deposits for terms over two years and minimum amount of $100,000. The bank's five-year rate is now 6.20% and is no longer competitive with 6.75% maximum rate offered by some of the major banks.
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