Is your money working hard enough? How transaction accounts are costing Kiwis billions
When was the last time you checked how much interest your money is earning? If you’ve got a decent sum sitting in a transaction account, chances are you’re missing out on hundreds - if not thousands - of dollars in passive income.
In New Zealand, it turns out a lot of us are leaving money on the table. According to David Cunningham, chief executive of mortgage brokerage Squirrel, there's currently $39 billion sitting in transaction accounts, most of it earning 0% interest. That’s billions of dollars essentially doing nothing.
Why It Matters
Back when interest rates were close to zero during the height of Covid, it made sense that many people didn’t bother moving their cash around. But times have changed. Now, even a modest 3% return could generate close to $1.2 billion a year in interest for Kiwi savers collectively.
Yes, it’s always smart to keep a little float in your everyday account for bills and unexpected expenses. But beyond that, experts agree: it’s time to put your money to work. This kind of financial inertia isn't just costing individuals; it's boosting bank profits since they benefit from holding your idle cash.
What's Holding Us Back?
According to Massey University banking expert Claire Matthews, a big part of the problem is access and perception. Many Kiwis worry about limited access or fees on savings accounts, or assume the interest isn’t worth the hassle. But for larger balances, the difference can be well worth it.
Let’s say you’ve got $20,000 sitting in a transaction account earning nothing. At 3% interest, that money could earn you $600 a year - just by transferring it into a higher-yielding account.
Even with some banks cutting term deposit and savings rates recently, options still exist that beat zero by a long shot.
How to Take Action
If you’re ready to stop leaving money on the table, here are three simple steps:
Audit your accounts – Check your transaction account balance and see how much you actually need as a buffer.
Compare interest rates – Look at what your bank (or other providers) offers on high-interest savings or term deposits.
Make the move – Don’t let the "too hard" basket cost you real dollars. Setting up automatic transfers can help you grow your savings painlessly.
Let’s Make Your Money Work Smarter
At Affinity Accounting, we believe in making your money work as hard as you do. Whether it’s budgeting advice, business forecasting, or personal cashflow strategies, our team is here to help you make smart financial decisions that grow your wealth over time.
Looking for experienced accountants in Wellington? Contact us today to find out how our Wellington business advisory team can support your financial goals.
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