How to open a bank account in New Zealand

You can open a New Zealand bank account from outside the country or after your arrival, although given the widespread use of cashless transactions in New Zealand, it’s better to open an account before you arrive.

To open an account while overseas, you need to find the nearest office of a New Zealand bank, e.g. by looking in the telephone directory or asking your bank for assistance. You probably won’t find a great deal of choice, but there are branches of New Zealand banks in most major cities in Europe, North America and Asia. You don’t usually need to visit a branch in person, as an account can be opened by telephone or post. Note that most banks require an opening balance of at least $200 and up to $500 in some cases.

To open a bank account in New Zealand, simply choose a branch of any of the registered banks that’s convenient to your home or place of work (or where you hope to live or work). Different banks require different documentation, so you should check exactly what’s required beforehand; typically you will need two forms of identification, your IRD number and possibly statements from your current or previous bank. Note that if you don’t have an IRD number when you open an account, you will be charged resident withholding tax (RWT) at 39 per cent. If you think that you may wish to apply for an overdraft, loan or mortgage in New Zealand at some time, it’s wise to obtain a reference from your overseas bank manager to the effect that your account has been maintained in good order.

Current Accounts

The normal account for day-to-day transactions in New Zealand is a current or cheque account. You receive a cheque book within a week of opening your account, even though cheques are becoming less widely used in New Zealand, where most people pay bills in shops with debit or credit cards and pay their regular household bills by direct debit. There are no cheque guarantee cards in New Zealand, which is why you may be asked to produce a driving license or credit card as proof of identity when paying by cheque. Not surprisingly, many shops and businesses are reluctant to take personal cheques (there may be a notice to this effect).

The design of cheques is basically the same as that in most other countries; you enter the name of the payee, the date, the amount in words and figures, and sign it. All cheques should be crossed, although crossed cheques are a fairly recent innovation in New Zealand. A crossed cheque can only be paid into a bank account in the name of the payee and cannot be cashed. The use of a cheque incurs cheque duty (a kind of stamp duty) of 5¢, which is automatically deducted by your bank (which makes it difficult to reconcile cheques you’ve written with the amounts that appear on your bank statement) and needn’t be paid separately.

Cheque clearing in New Zealand is highly efficient and a cheque paid into your account is usually credited the next day (occasionally the same day if it’s at the same branch or bank). A cheque drawn on your account and given to someone else may also be debited from your account on the same or next day and there isn’t a delay of between three and ten days as in some other countries. Nevertheless, when paying a cheque into your account, it’s probably best to wait a few days to spend the money just in case the drawer didn’t have sufficient funds to cover the cheque (in which case the cheque will be returned to you by post, which may take a couple of days). On the other hand, you should assume that a cheque drawn on your account is debited from it on the same day.

Account statements are usually provided monthly, although you can ask to have them sent weekly. It’s also possible to obtain details of your most recent transactions, request a mini-statement or make a balance enquiry at an automated teller machine (ATM), commonly referred to as a cash dispenser. Although you can withdraw cash from your account at any branch of your own bank by writing a cheque, it’s much easier to use an EFTPOS card in an ATM (it’s also possible to pay cash or cheques into your account at some machines).

Savings Accounts

You can open a savings (or deposit) account with any registered or savings bank. Over the last few years registered banks have become more competitive in this sector and have largely taken over the functions of the savings banks. Most financial institutions offer a range of savings accounts with interest rates varying depending on the amount deposited, the period for which the money must be left on deposit, and the notice which must be given before you can withdraw it.

An account with a minimum deposit period is known as a term deposit account, with terms ranging from one month to five years (the longer the term, the higher the interest paid). The interest rate may fluctuate according to the bank rate, be fixed for the entire term, or escalate (where the rate of interest paid rises annually irrespective of general interest rates).

Bank Charges

As in many countries, banks in New Zealand make charges for most transactions, which are highly unpopular with clients (a recent survey showed that some 75 per cent of bank customers find bank charges excessive) and are the main reason why people change banks. Most banks charge a monthly base fee for some accounts of at least $5 unless you meet certain conditions, such as maintaining a minimum monthly balance. Electronic transaction and cheque fees are around 50¢ and staff-assisted transactions cost around $2.50. Most banks also charge around $1.50 for the use of another bank’s ATM.

In order to reduce your bank charges, the Citizens’ Advice Bureau offers the following advice:

• Reduce the number of transactions you make, e.g. when you pay with an EFTPOS card, get some cash out at the same time.

• Use electronic banking which is cheaper than over-the-counter.

• Ask if there’s a flat-fee option, which may be cheaper if you have a lot of monthly transactions, and negotiate the best deal with your bank.

General Information

The following points are applicable to most New Zealand banks:

• All regular bills such as electricity, gas, telephone, mortgage or rent, can be paid automatically by direct debit from your bank account. The creditor or your bank will provide the necessary form for you to complete and return to them. You’re protected against loss as a result of error or fraud in the system.

• To stop a cheque contact your bank. If your cheque book or EFTPOS card(s) is lost or stolen, inform your bank immediately.

• Safety deposit boxes are provided at most branches and are an effective (although expensive) way of keeping your valuables secure. The annual rental charge for a small box is from $50 upwards, and you must usually pay a key deposit (bond) of around $80. Most banks conduct extensive security checks, including fingerprinting, when you use a deposit box.

• Registered banks offer a range of investments in addition to regular savings accounts, including stocks and shares, bonds and securities. Although you can also buy these through a stockbroker, banks offer competitive fees, particularly for smaller transactions. You don’t need to use your own bank and may be able to find a cheaper stock and share service elsewhere (e.g. via the internet).

• Most registered banks offer a range of non-banking services, such as insurance, including life insurance, and pensions. Charges and premiums are usually competitive compared with similar products available from other sources, such as insurance brokers. However, it’s important to shop around, as some banks sell only their own products or those from certain companies, rather than choosing the best deal from the whole range available.

There are officially just two kinds of financial institution in New Zealand: registered banks and what are euphemistically known as ‘other financial institutions’.

The main exception is the Reserve Bank of New Zealand ( www.rbnz.govt.nz ), which doesn’t fit into either of these categories and is the country’s central bank, performing a role similar to the Bank of England or the Federal Reserve Bank in the USA. It has a range of functions, including managing the money supply, supervising commercial banks, implementing the government’s financial policy, controlling the exchange rate, providing a banking service to the government and acting as a registrar for government stocks.

Savings banks in New Zealand were traditionally mutual organisations owned by their members or investors, which concentrated on personal savings accounts and mortgages for residential property. In this respect they were much like building societies in the UK and savings and loan organisations in the USA. However, deregulation in the financial sector during the ’80s allowed commercial banks to enter this market. With their greater financial clout and marketing expertise they’ve managed largely to take it over, and as a result many savings banks have either converted to commercial or registered banks or been taken over by them.

Changes in the banking system over the last few years have meant that most individuals and businesses in New Zealand carry out their banking, including savings, loans, mortgages and day-to-day transactions, with one of the registered commercial banks (there were 16 in 2005). Banks operating in this sector include: 

Australia New Zealand Bank (ANZ, www.anz.com/nz) 

ASB www.asbbank.co.nz formerly the Auckland Savings Bank. Not surprisingly, the ASB is strongest in Auckland but it's also popular throughout the rest of the country and in 2004, for the fifth consecutive year, was rated New Zealand’s number one major bank in terms of customer satisfaction in a University of Auckland survey of bank customers.

The Bank of New Zealand (BNZ, www.bnz.co.nz) is New Zealand’s largest bank in asset terms and, despite its name, is wholly Australian-owned. 

The National Bank ( www.nationalbank.co.nz ) and Westpac NZ ( www.westpac.co.nz ), which probably has the largest market share in the country (1.3 million customers in 2005) and is also the government’s banker.

It’s estimated that only some 12 per cent of the New Zealand banking market is operated by indigenous banks. Note that the New Zealand banking operations of Australian banks are completely separate, therefore customers of Australian Westpac, for example, cannot access their Australian accounts at Westpac in New Zealand, or vice versa.

Some banks are mainly telephone and internet-based, e.g. TSB ( www.tsb.co.nz ). PSIS is a financial institution owned by its customers, which offers banking services administered by the Bank of New Zealand, although it isn’t a bank and as such isn’t a member of the Banking Ombudsman scheme nor subject to supervision by the Reserve Bank. The large insurance group, AMP ( www.amp.co.nz ), also offers banking services, as does the New Zealand Post Office (at post shops) under the name Kiwibank.

In addition to locally registered banks, there are also many international banks in New Zealand, which are mainly located in the financial district of Wellington and don’t have extensive branch networks throughout the country. Other financial institutions that aren’t registered banks include merchant banks and leasing companies, which mainly serve the business sector. They aren’t authorised to accept deposits from the public and, in any case, registered banks offer a more comprehensive range of services. Finance companies aren’t registered banks, but provide consumer credit such as loans and hire purchase (or time purchase as it’s also known in New Zealand).

All New Zealand banks are efficient and highly automated. You will find that staff, who are generally friendly and informal, work behind low counters or desks rather than armoured glass. This isn’t to say that banks in New Zealand aren’t robbed (they most certainly are), but the transition towards cashless banking has done much to reduce the amount of cash shuffled across bank counters (or used in shops and other businesses).

Opening Hours

Normal banking hours are from 8.30 or 9am until 4.30pm, Mondays to Fridays, although banks may stay open for half an hour later one evening a week (which is the exception rather than the rule). Banks don’t open at weekends and are also closed on public holidays, although bureau de change open longer at weekends.