House Prices

Beware the high interest lure

Turn on the TV today and the chances are you'll be hit with reassuring adverts inviting you to invest in "first ranking debenture stock".

Tuesday, August 23rd 2005

You could be forgiven for thinking that your money couldn't be safer. But before you pile your life savings into Pacific Retail Finance, the company behind the adverts that keep capturing my attention, or any of the 80 plus other finance companies in the country, you need to ask some questions.

In colloquial English, first ranking debenture stock is a term deposit, which, in turn, is an interest-bearing account offered by institutions such as banks, building societies and finance companies.

The interest rate is fixed for a certain period of time and, at maturity, you receive the interest, which may have been compounded over a period of time, and the amount invested is returned.

All up, interest.co.nz's research shows that people have more than $72 billion invested in retail term deposits. About three-quarters of that is at the four main banks. The remainder is with finance company debentures, building societies and other co-operatives such as the PSIS.

Rates of interest on term deposits vary hugely - often ranging from 4 per cent at the bottom end up to 12 per cent or more.

But investors often haven't a clue about the risk, thinking term investments are safer than the share and property markets.

Read More - Opens in a new window
Heartland Bank - Online 6.69
SBS FirstHome Combo 6.74
Wairarapa Building Society 6.95
Unity 6.99
Co-operative Bank - First Home Special 7.04
ICBC 7.05
China Construction Bank 7.09
BNZ - Classic 7.24
ASB Bank 7.24
ANZ Special 7.24
TSB Special 7.24
Unity First Home Buyer special 6.45
Heartland Bank - Online 6.45
China Construction Bank 6.75
TSB Special 6.75
ICBC 6.75
ANZ Special 6.79
ASB Bank 6.79
AIA - Go Home Loans 6.79
Kiwibank Special 6.79
BNZ - Classic 6.79
Unity 6.79
Westpac Special 6.39
China Construction Bank 6.40
ICBC 6.49
SBS Bank Special 6.55
Kiwibank Special 6.55
BNZ - Classic 6.55
Co-operative Bank - Owner Occ 6.55
ASB Bank 6.55
AIA - Go Home Loans 6.55
TSB Special 6.59
Kainga Ora 6.99
SBS FirstHome Combo 6.19
AIA - Back My Build 6.19
ANZ Blueprint to Build 7.39
Credit Union Auckland 7.70
ICBC 7.85
Heartland Bank - Online 7.99
Pepper Money Essential 8.29
Co-operative Bank - Owner Occ 8.40
Co-operative Bank - Standard 8.40
First Credit Union Standard 8.50
Kiwibank 8.50

More Stories

Support for regulation

Monday, March 18th 2024

Support for regulation

REINZ has emphasised the need for property management regulation to Parliament’s Social Services and Community Committee.

A better investment market

Thursday, March 14th 2024

A better investment market

“Reinstatement of interest deductibility starting from the new tax year on 1 April brings property investors back in line with every other business in the country, where interest costs are a legitimate deductible expense," Tim Horsbrugh, New Zealand Property Investors Federation (NZPIF) executive committee member says.

[OPINION] Recessionary times

Thursday, March 14th 2024

[OPINION] Recessionary times

It is not the best out there for many businesses and property sector people. Sales are down across the board, our clients’ confidence is falling, and there is a lot of uncertainty.

Interest rate expectations: It’s not over yet

Thursday, March 07th 2024

Interest rate expectations: It’s not over yet

Most Kiwis think interest rate increases have peaked.