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  1. #1
    Senior Member
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    Nov 2018
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    Default USD Bank Account + Term Deposit Rates

    I've received a letter from BNZ saying they will be reducing the interest paid on account from around 3% to 0.20% p.a. For those that don't know since last year BNZ no longer does term deposits in foreign currency accounts.

    I'm disappointed with the outcome as for many banks in NZ, they also won't accept cheque deposits to foreign currency accounts. I suspect this all has to do with the AML and gov't regulations.

    A consideration is to send the $ to my IBKR account which already pays a generous 5%+ p.a. on daily cleared balances. However there may be a time I would like access to the funds for use in NZ.

    Does anyone hold a USD bank account and has been able to earn attractive interest rates? I feel like my USD cash could be doing a lot better.

  2. #2
    Quiet Observer
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    Jun 2005
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    New Zealand.
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    Default

    Hi SBQ,

    Jarden Direct, via their CMT account, pays interest on USD funds; starting from 3.55%.
    Success is a journey AND a destination!

  3. #3
    Senior Member
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    Default

    I've just made a silly mistake in interpreting the BNZ letter. The 0.20% rate is the amount less from the advertised going rate that BNZ advertises. Currently at 3.73% so that means net difference 3.53% so really not much different to what Jarden Direct would offer.

    Still a far cry compared to what IBKR offers.

  4. #4
    Quiet Observer
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    New Zealand.
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    396

    Default

    Quote Originally Posted by SBQ View Post
    I've just made a silly mistake in interpreting the BNZ letter. The 0.20% rate is the amount less from the advertised going rate that BNZ advertises. Currently at 3.73% so that means net difference 3.53% so really not much different to what Jarden Direct would offer.

    Still a far cry compared to what IBKR offers.
    There you go, good news, you were getting alarmed unnecessarily.

    BTW. Just something to keep in the back of your mind.... is security of deposits with overseas based providers. I'm thinking IBKR would be totally unsecured (as they are at JD too). But of course JD, like BNZ is domiciled in NZ, so you potentially would have a little less of a fight on your hands if the "poo hits the fan".

    FWIW: JD's USD current rates, start at 3.55% and increase the higher the account balance.
    Last edited by FTG; 05-10-2023 at 06:52 AM.
    Success is a journey AND a destination!

  5. #5
    Senior Member
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    Quote Originally Posted by FTG View Post
    There you go, good news, you were getting alarmed unnecessarily.

    Just something to keep in the back oy your mind.... is security of deposits with overseas based providers. I'm thinking IBKR would be totally unsecured (as they are at JD too). But of course JD, like BNZ is domiciled in NZ, so you potentially would have a little less of a fight on your hands if the "poo hits the fan".

    BTW: JD's USD current rates, start at 3.55% and increase the higher the account balance.
    If i'm not mistaken, security of deposits in NZ would be different than abroad as NZ doesn't have depositor insurance. If they did on NZD, they certainly would not on foreign currency. This has been the case where I grew up in Canada where Cdn currency deposits were insured up to $100K per account in CDN currency but anything foreign is not covered.

    Therefore the issue of where you park your funds is important, hence i'm speaking big fish here. Also each broker has varying coverage on insured balances. SIPC comes to my mind which both IBKR and TDAmeritrade/Schwab offers to ALL account holders.

    What I don't like about NZ brokers like Jarden is their high administration fees. Also if I choose to leave NZ to live abroad, i'm much happier with a large overseas broker than someone local only to NZ.

  6. #6
    Senior Member
    Join Date
    Jun 2008
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    878

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    Quote Originally Posted by SBQ View Post
    If i'm not mistaken, security of deposits in NZ would be different than abroad as NZ doesn't have depositor insurance. If they did on NZD, they certainly would not on foreign currency. This has been the case where I grew up in Canada where Cdn currency deposits were insured up to $100K per account in CDN currency but anything foreign is not covered.

    Therefore the issue of where you park your funds is important, hence i'm speaking big fish here. Also each broker has varying coverage on insured balances. SIPC comes to my mind which both IBKR and TDAmeritrade/Schwab offers to ALL account holders.

    What I don't like about NZ brokers like Jarden is their high administration fees. Also if I choose to leave NZ to live abroad, i'm much happier with a large overseas broker than someone local only to NZ.
    Yes IBRK has a SIPC guarantee up to $US250k and a FDIC sweep program above that up to $US2m so it is arguably safer than any NZ bank account.

    The problem with IBRK cash account is that any amount over $US60k is liable for US estate taxes. So if you die, the US govt takes 40% over the $60k threshold. Invest the cash instead in Irish domiciled USD money market ETFs like IB01 or VDST. Both yielding ~5.5% at the moment.

    Wise are rolling out pretty much that as an interest option for their USD accounts so maybe wait for that. They sweep the USD into a USD money market fund albeit one with a relatively high management fee.
    Last edited by Jaa; 13-10-2023 at 05:56 PM.

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