What interest rate should I be getting on my savings?
Dave McLeish
June 24, 2025
That's 3.25% today (as at 24 June 2025).
How am I so sure? Because that’s the interest rate the safest entity in our country pays.
You see, the Debt Management Office issues Treasury Bills on behalf of the New Zealand Government every Tuesday at 2.30pm. And the weekly auction results show the Government consistently pays the Official Cash Rate (OCR).
So, if our own AAA-rated government pays 3.25%, I believe this should be the starting point for what a less safe financial institution should pay you for the privilege of holding your savings.
Which is why I was careful to say, “at least the Official Cash Rate”. Because there are plenty of very recent examples of very high credit quality entities in New Zealand paying much higher than the OCR on alternative savings products.
Take, for example, AA-rated Auckland Council who last Thursday agreed to pay the equivalent of 0.6% over the OCR when they issued their latest Floating Rate Secured Sustainability-Linked Bonds. And before that there was both Kiwibank and Rabobank, who earlier this month agreed to pay the equivalent of 0.77% and 0.74% above the OCR (respectively) to those who bought their Senior Unsecured Floating Rate Notes.
I imagine some of you reading this might be thinking, “Hold on, how can this be? You’re talking about interest rates of above 3.75% while most savings accounts in New Zealand offer less than half that.”
This really isn’t some sort of conspiracy – it’s a very successful business model.
Banks rightly pay the minimum they have to in order to fund their business. And because banks don’t have to compete particularly hard for your “retail” savings, they don't need to pay much on their savings accounts.
While, on the other hand, “wholesale investors” like Wedge, have a bit more sway thanks mostly to our collective size. Giving us access to the far higher interest rates offered on these alternative savings products – many of which are offered by banks themselves, or even higher quality institutions like Auckland Council.
This yawning gap between retail and wholesale interest rates in New Zealand is one of the most overlooked disparities in our financial system. And it is costing New Zealander’s billions of dollars a year in missed interest.
Welcome to Wedge. And welcome to reaching your savings goals faster.
