The sad truth is we’ve all become accustomed to earning shamefully low interest rates on our savings.

The proof is everywhere, with billboards and bus stops advertising rates on this and that savings account of 2 and 3%, like they are something special and worthy of shouting about.

But let’s be clear from the outset. These interest rates are atrociously low and are not what you should expect to earn on your savings.

To demonstrate the point, you only have to look at how much our own government must pay to borrow money.

The New Zealand government regularly issues Treasury Bills, a common way lots of governments around the world borrow for short periods. And even they, a AAA-rated entity, has to pay an interest rate that is close to or at the Official Cash Rate.

Those not familiar with what the Official Cash Rate is, it’s currently 4.25%.

So, if the New Zealand Government has to pay around 4.25% to borrow, there is simply no way our banks should be able to get away with borrowing from us at interest rates that are 1%, 2%, or even 3% below that.

The reality is banks offer us these terrible interest rates because they can.

New Zealand has one of the least competitive savings markets in the world. Dominated by the “Big 4” Australian-owned banks, we get what we are given and as a result lose out on billions of dollars in interest every year.
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Winds of change

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Thankfully, the winds of change are beginning to blow, with avers all around the world from Australia to Singapore, and from the United Kingdom to the United States are now benefiting from rising competition across their savings markets.

Spurred on by innovation and technology, financial services companies are breaking the stronghold banks have over their customers. And with it, they are bringing fairness and choice to traditional banking products.
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Wedge is one of those passionate companies, who is on a mission to get those billions of dollars in missed interest into the rightfully pockets of our fellow New Zealanders.

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Source: https://debtmanagement.treasury.govt.nz/tender/treasury-bill-tender-18032
Source: https://www.rbnz.govt.nz/monetary-policy/about-monetary-policy/the-official-cash-rate
Source: https://www.interest.co.nz/saving/e-saver-online‍