$60 Billion Earning Nothing - How Banks Profit From Your Idle Money
Over $60 billion sits in NZ bank accounts paying zero interest. We break down which banks hold the most - and how to make your money work harder.
Updated 23 December 2025
Summary
To help explain what you need to know, our guide covers:
Disclosure: MoneyHub has past and/or present promotional relationships with some of the providers mentioned in this guide, including Booster Savvy, Heartland Bank (YouChoose), and Wedge, among others. Any such arrangement does not influence our independent research, opinions, or findings. Please see our advertising policy for more details.
- More than $60 billion sits in New Zealand bank accounts paying zero interest. If banks paid just the Official Cash Rate on these deposits, savers would earn nearly $2 billion a year.
- Instead, banks lend that money out at 6%, 7%, even 20%+ on credit cards, while depositors get nothing.
- This guide breaks down exactly how much each bank holds in zero-interest deposits, which banks are the worst offenders, and what you can do to make sure your money is actually working for you.
- There are interest-paying transactional account alternatives - Booster Savvy is growing in popularity and offers useful tools to track money and 'sweep' it to keep it off-limits from everyday spending.
- While we acknowledge it's idealistic to expect banks to pay interest on the $60 billion sitting in everyday accounts, we have published this guide to raise further awareness of how banks profit from everyday New Zealanders. Our dedicated guide, 10 Ways Banks Make Billions From New Zealanders, further explains the state of affairs.
To help explain what you need to know, our guide covers:
- The Full Picture - Total Zero-Interest Deposits by Bank
- The $2 Billion Calculation - Understanding Our Methodology
- Why Does $60 Billion Sit in Accounts Earning Zero Interest?
- What Banks Do With Your Zero-Interest Money
- How to Make Sure Your Money Works for You
- Our Conclusion
- Frequently Asked Questions
Disclosure: MoneyHub has past and/or present promotional relationships with some of the providers mentioned in this guide, including Booster Savvy, Heartland Bank (YouChoose), and Wedge, among others. Any such arrangement does not influence our independent research, opinions, or findings. Please see our advertising policy for more details.
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Christopher Walsh, MoneyHub's Founder, shares his comments about the issues zero-interest creates:
"New Zealand has spent 17+ years building KiwiSaver into a $135 billion national savings scheme (as at 30 September 2025). Government co-contributions, employer matching, tax incentives, dedicated regulators, endless media coverage about growth fund returns and MoneyHub's dedicated focus all support KiwiSaver as our retirement income flagship. Meanwhile, $60 billion sits in bank transaction accounts earning nothing - almost half the entire KiwiSaver balance -, and nobody says a word. Almost every bank has decided to profit from paying zero interest on everyday transaction account deposits - it's just seen as business as usual. New Zealanders widely accept their zero-earning bank accounts, and Australians do too - Westpac, ANZ, ASB's parent CBA and BNZ's parent NAB don't pay interest on everyday accounts either. However, things are changing - Macquarie Bank in Australia was paying 2% on transaction balances in late 2025 (when the official cash rate, known as the Cash Rate, was 3.60%), which was higher than New Zealand's OCR at the same time. But it's still something, and New Zealand banks make billions of dollars in profit every year, so they can afford to pay interest on the money they use. My view is simple - the same banks sponsor financial literacy programmes, fund school education initiatives, and publish budgeting tips - while their core product teaches the exact opposite lesson. Someone with $5,000 in their account earns the same as someone with $50 - absolutely nothing. This means there's no incentive to build a buffer or the ability to see compounding interest for keeping money in the bank instead of spending it. Small interest payments matter more than banks realise. You see $1.50 credited to your account and you notice it. You check your balance more. You start thinking about whether that money should stay or go. That's how habits form - when you see your money do something. The banks fund school programmes and sponsor financial literacy initiatives, and that's fine. But their main product - the account every New Zealander has - does the opposite. It tells people their savings don't matter. We want to build a country that's good with money - we would get a tailwind if we pay people interest on the funds in their everyday bank account balance, even if it's only a few dollars a month for most working people. I'm genuinely encouraged to see challengers stepping up. Booster Savvy pays interest on everyday balances and provides tools to automatically sweep money into savings. Heartland's YouChoose account proves that a registered bank can make this work. Wedge pays a higher rate of interest for on-call deposits than any major bank. These aren't fringe products - they're proof that the model works. Zero-interest deposits are the cheapest funding banks have, far cheaper than term deposits or wholesale markets. Every dollar sitting idle in your transaction account is a dollar the bank lends out at 6%, 7%, or even 20%+ on credit cards, while paying you nothing. The big banks, including Kiwibank, don't want to give up their cheapest funding source. They all offer the same deal, so there's no competitive pressure and switching is friction. The system is working exactly as designed, just not for us. MoneyHub has, since launching in 2018, challenged everything from credit card fees to parking fines; however, getting one bank to pay something, anything, on their everyday accounts is our biggest challenge. New Zealanders deserve better. Some providers (like Booster Savvy and Heartland's YouChoose) are already showing what's possible. The question is whether the rest of the industry will put New Zealanders first (at the expense of some profits), or whether they will keep profiting and reminding us that the accounts are free and this is 'how things are'. I'll wait and see". |
Christopher Walsh
MoneyHub Founder |
The Full Picture - Total Zero-Interest Deposits by Bank
We analysed the latest disclosure statements from New Zealand's major banks to find out how much customer money sits in accounts paying no interest at all.
Bank |
Report Date |
Non-Interest Bearing Deposits |
Total Customer Deposits |
% Earning Nothing |
Source |
ANZ NZ |
SEP 2025 |
$17.33B |
$143.54B |
12.1% |
|
BNZ |
SEP 2025 |
$14.97B |
$87.08B |
17.2% |
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Westpac NZ |
SEP 2025 |
$12.17B |
$82.83B |
14.7% |
|
ASB |
June 2025 |
$10.67B |
$91.77B |
11.6% |
|
Kiwibank |
June 2025 |
$4.12B |
$30.34B |
13.6% |
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TSB |
March 2025 |
$1.04B |
$8.74B |
11.9% |
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Co-operative Bank |
March 2025 |
$0.22B |
$3.15B |
6.9% |
|
Heartland Bank |
June 2025 |
$0.04B |
$6.53B |
0.6% |
|
All Banks Total |
- |
$60.56B |
$553.98B |
10.9% |
- |
Big Bank Total |
- |
$55.14B |
$405.22B |
13.6% |
- |
Your Money, and How the Banks Turn it Into Profits
Sources: Individual bank disclosure statements, latest available (March-September 2025). "Non-interest-bearing deposits" refers to customer deposits classified as paying no interest in bank financial statements.
You can read the full financials here (PDFs will download)
- Per the table above, around 1 in 6 dollars deposited with BNZ earns the customer nothing (17.2%). That's the highest proportion among major banks.
- The Big Banks collectively hold $55 billion in zero-interest deposits, averaging 13.6%.
Sources: Individual bank disclosure statements, latest available (March-September 2025). "Non-interest-bearing deposits" refers to customer deposits classified as paying no interest in bank financial statements.
You can read the full financials here (PDFs will download)
The $2 Billion Calculation - Understanding Our Methodology
We calculated what bank customers could have earned if banks paid the Official Cash Rate on zero-interest everyday account balances throughout 2025.
OCR rates during 2025:
The OCR started 2025 at 4.25%, then fell steadily through seven cuts: to 3.75% in February, 3.50% in April, 3.25% in late May, 3.00% in August, 2.50% in October, and 2.25% in late November where it finished the year.
Weighted average OCR for 2025: Approximately 3.25%
Applying this to the deposit totals:
Key assumptions:
OCR rates during 2025:
The OCR started 2025 at 4.25%, then fell steadily through seven cuts: to 3.75% in February, 3.50% in April, 3.25% in late May, 3.00% in August, 2.50% in October, and 2.25% in late November where it finished the year.
Weighted average OCR for 2025: Approximately 3.25%
Applying this to the deposit totals:
- Big bank deposits total $55.14B, representing ~$1.79B in foregone annual interest for savers
- All banks total $60.56B, representing ~$1.97B in foregone annual interest for savers (rounded to ~$2B)
Key assumptions:
- Balance sheet dates vary between banks (March, June, September), but represent reasonable point-in-time snapshots
- We have assumed balances were relatively stable throughout the year and have not calculated an average balance based on previous closing balances (available within each annual report).
- The OCR is genuinely the floor - it's what the Reserve Bank pays banks for overnight deposits, so this represents the absolute minimum banks could pay customers
- The real figure could be higher or lower depending on how balances fluctuated day by day, but the order of magnitude is clear - it's nearly $2 billion in foregone interest.
Why Does $60 Billion Sit in Accounts Earning Zero Interest?
In a nutshell:
Know This: Your bank isn't going to email or alert you to suggest moving your savings to a higher-rate account. Your everyday bank account balance is their cheapest source of funding - far cheaper than wholesale markets or term deposits.
- Some zero-interest deposits are unavoidable. Businesses need operational float in their business bank accounts and people need transaction accounts for everyday spending. Not every dollar can (or should) be locked away earning interest. However, $60 billion is significant and arguably not an operational necessity for banks to function.
- However, the reality is simple - transaction accounts are designed for convenience, not returns. Banks don't pay interest because they don't have to - every New Zealander needs somewhere to receive their income (salary or NZ Super, etc.) and pay bills.
- While banks offer interest-earning savings, call and Notice Saver, we appreciate that moving money around takes effort and that each step involved is friction that benefits the bank.
- We believe many New Zealanders don't track whether their money is earning interest - they see a balance, not an opportunity cost. However, we're pleased to see everyday accounts such as Booster Savvy and overnight interest-earning options like Wedge challenge the market and offer leading products.
Know This: Your bank isn't going to email or alert you to suggest moving your savings to a higher-rate account. Your everyday bank account balance is their cheapest source of funding - far cheaper than wholesale markets or term deposits.
What Banks Do With Your Zero-Interest Money
When you deposit money with a bank, it doesn't sit in a vault. The bank lends it out:
Our View: A dollar sitting in your transaction account at 0% might be funding someone else's mortgage at 6.00%. The bank keeps the entire 6.00% margin. Across $60 billion, assuming an average lending spread of 5% to 6.5% (based on the lending rates listed above), our conservative estimates suggest banks earn $3 to $4 billion annually from zero-interest deposits. The $2 billion "lost interest" figure represents what customers would have earned at the OCR; banks actually earn significantly more because they lend at rates well above the OCR.
Important: You have options
If you have more than a few thousand dollars sitting in a transaction account "just in case," you're probably part of this $60 billion. We outline the cost of idle money in the table below (pre-tax).
Our view: These aren't hypothetical figures below - this is money you could be earning with minimal effort by switching to an interest-paying everyday account that moves up and down with the OCR. For example, Booster Savvy paid its customers a competitive rate of 3.25% in June 2025 per this social media post, later dropping the rate when the OCR fell.
- Mortgages at 5% to 7%+
- Overdrafts at 13%+
- Personal loans at 12% to 16%+
- Car finance at 10% to 20%+
- Business lending at 8% to 20%+
- Credit cards at 10% to 25%+
Our View: A dollar sitting in your transaction account at 0% might be funding someone else's mortgage at 6.00%. The bank keeps the entire 6.00% margin. Across $60 billion, assuming an average lending spread of 5% to 6.5% (based on the lending rates listed above), our conservative estimates suggest banks earn $3 to $4 billion annually from zero-interest deposits. The $2 billion "lost interest" figure represents what customers would have earned at the OCR; banks actually earn significantly more because they lend at rates well above the OCR.
Important: You have options
If you have more than a few thousand dollars sitting in a transaction account "just in case," you're probably part of this $60 billion. We outline the cost of idle money in the table below (pre-tax).
Our view: These aren't hypothetical figures below - this is money you could be earning with minimal effort by switching to an interest-paying everyday account that moves up and down with the OCR. For example, Booster Savvy paid its customers a competitive rate of 3.25% in June 2025 per this social media post, later dropping the rate when the OCR fell.
Average Bank Balance |
Interest Lost at 3.25% (Average 2025 OCR estimate) |
Interest Lost at 4.50% |
Interest Lost at 5.50% (Where the OCR was in 2023) |
$500 |
$16/year |
$23/year |
$28/year |
$1,000 |
$33/year |
$45/year |
$55/year |
$6,000 |
$195/year |
$270/year |
$330/year |
$10,000 |
$325/year |
$450/year |
$550/year |
How to Make Sure Your Money Works for You
The steps below outline your options for earning more and prompting the banks to find other sources of free money to lend.
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Step 1: Work out what's sitting idleLog in to your banking app and review all your accounts. Check your transaction account balance right now - is it more than you need for the next fortnight?
Some (fortunate) people find they're holding $2,000, $5,000, sometimes $10,000+ in accounts paying nothing, simply because it landed there and never moved. |
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Step 2: Figure out your "safe balance"This is the minimum amount you need to keep in your transaction account so nothing bounces. To calculate this, we suggest you add up:
Our view: More New Zealanders are using a rewards-earning credit card to pay most of their everyday costs before clearing the balance in one payment before it's due. If you can do this without carrying a balance into the next month (or beyond), it means more of your everyday money will earn interest while you 'borrow' from your credit card and spend interest-free. |
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Step 3: Decide what to do with the restAnything above your safe balance is money that could be earning interest. Options include:
If switching banks feels like too much hassle, at least move idle money somewhere it earns:
Know This: Even moving $3,000 from a transaction account to a savings account earning 4% puts $120 back in your account each year (pre-tax). It's not life-changing, but it's yours. |
Our Conclusion
We believe now is the time to consider making changes:
- Banks aren't charities, and profitable banks mean a stable financial system - we're not suggesting otherwise.
- But $60 billion earning nothing isn't a necessity - it's a design choice that benefits banks and costs everyday New Zealanders. We argue that zero-interest discourages some account holders from saving, given there is no 'reward'.
- Nearly $2 billion in foregone interest is transferred from New Zealand savers to bank shareholders (and, for the most part, Australians) every year.
- The banks won't fix this - your idle money is their cheapest funding. However, the fix is yours to make.
- You may want to consider switching to an interest-paying everyday account like Booster Savvy. We believe your money should work for you, not for someone else.
Frequently Asked Questions
Why don't banks pay interest on transaction accounts?
Because they don't have to. Every New Zealander needs somewhere to receive their pay and make payments, so banks have no competitive pressure to offer interest on everyday accounts. Your idle balance is their cheapest funding source.
How much should I keep in my transaction account?
Enough to cover two weeks of automatic payments and direct debits, plus a buffer for variable bills. For most people, that's $500 to $2,000. Anything above that could be earning interest elsewhere.
Are there transaction accounts that pay interest?
Yes. Booster Savvy pays interest on everyday balances and includes tools to sweep money into savings. Wedge earns overnight interest on balances. Heartland Bank offers its interest-earning YouChoose account.
