How savers can fight back against inflation
New Zealanders are holding more money in savings accounts and term deposits, even as interest rates remain low. Figures show savings account balances climbed from $110.7 billion to $118.4 billion over the past year. Meanwhile, term deposits rose from $227.4 billion to $228.6 billion in the same period.
Despite the growth, returns on savings are struggling to match inflation. The average interest rate for bonus-paying savings accounts sat at 1.82% in November 2025, while standard accounts offered closer to 1%. With inflation at 3%, savers are effectively earning zero or negative real returns after tax.
Financial experts warn that relying on bank deposits alone may not be enough. Liz Koh, founder of Enrich Retirement, suggests diversifying into other asset classes for better growth. She recommends strategies like diversified portfolios with stock and bond ETFs, tactical allocation with rebalancing, and using high-yield savings accounts or money market funds. Dean Anderson, founder of Kernel Wealth, agrees that savers should explore alternatives for long-term goals. He points out that keeping all savings in cash risks losing value over time. David Cunningham, CEO of Squirrel, adds that customer inertia often keeps money in low-interest transaction accounts, even when better options exist.
With inflation outpacing savings rates, experts urge a shift away from traditional cash accounts. Alternative investments, such as dividend stocks, REITs, or tax-efficient accounts, could offer higher returns. The current data highlights the need for savers to reassess their strategies to protect and grow their money.
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