Term Deposit Laddering: Investing in instalments in times of change

Within a rapidly changing interest rate environment, it can be worthwhile considering different investment techniques like term deposit laddering to help you make the most of your savings.

A term deposit is a type of investment product where you lock in a fixed interest rate on a fixed amount of money for an agreed period. Here at BNZ, we offer competitive rates determined by the term you select, with a rate that is agreed at the start of the term. We have a minimum deposit amount of $2,000 with a range of terms, so you can invest an amount over a length of time that suits your financial plan.

For many investors, a rapidly changing interest rate environment can raise the question ‘how can I get the best return for my term deposits when interest rates are changing so often?’

Currently, savings and term deposit interest rates are on the rise. It’s a time where savers may be looking at their options and assessing the right strategy to capitalise on the changing environment. If this is the case, term deposit laddering could be a technique to consider. It’s based on the concept of investing in a series of instalments, and staggering investment amounts over time.

How laddering works

As interest rates fluctuate, you may not want to put all your eggs in one ‘savings’ basket. Term deposit laddering offers flexibility with funds availability, as you set up multiple investments that pay out at different times, rather than opening one large term deposit set to mature at a specific time. This allows you to take advantage of times when interest rates are on the rise, and flexibility to access your funds if interest rates start to decline.

For example, say you have $15,000 to invest. You may choose to place $5,000 in a 6-month term deposit, $5,000 in a 1-year term deposit, and $5,000 in a 2-year. Once each term deposit matures, you have two options: take the money out (pay out) or reinvest your term deposit with a similar or newly agreed term and associated rate. Depending on your needs at the time, you can either continue to reinvest with a similar pattern, or choose to use your funds for other purposes as they become available at maturity.

With term deposit laddering, it’s important to pick investment amounts and terms that suit your financial situations and plans. For instance, if you prefer to have money available more regularly for income or expenses, you can ladder over a shorter period. It’s worth noting that there’s a 31-day notice period if you wish to break your term deposit before maturity, and be subject to a potential reduction in the interest payable to you. In some cases, the interest reduction might result in no interest being payable on the amount being withdrawn early. So, as part of planning you may want to consider what funds you may need ahead of time for things like property purchases, big bills, or expenses.

The idea is that your money is spread out so some may be earning higher rates, and some may be earning lower rates. Over time, this strategy may allow you to gain competitive returns, while also having flexibility in a fluctuating market.

If you have any questions or would like to discuss your individual situation, please contact your Private Banker or a BNZ financial adviser via 0800 275 269, or visit your local BNZ branch.


Account opening criteria and BNZ standard terms and conditions apply. Minimum deposit $2,000. Term deposit rates are only available for the first $5 million of total deposits you hold with BNZ. Contact us for help with larger amounts.  

This article is solely for information purposes. It’s not financial or other professional advice. For help, please contact BNZ or your professional adviser. 

No party, including BNZ, is liable for direct or indirect loss or damage resulting from the content of this article. Any opinions in this article are not necessarily shared by BNZ or anyone else.