Inch-by-inch, banks are raising term deposit rates and the 4% offer term is getting shorter and shorter.

Today (Thursday), TSB Bank has launched a 4% term deposit offer for a two-year term. That's the shortest term for a 4% rate on offer from any New Zealand bank.

That trumps BNZ's three year 4% offer launched a week ago.

TSB Bank as done this at the same time as it withdraws its market-leading nine month 3.80% offer. The new rate for that term has reverted to 3.60%.

But most other rates for six months and longer have gone up.

TSB Bank's six month rate is now 3.40%, up +10 bps.

For one year, its rate is now up to 3.65%, a +15 bps rise.

For 18 months, the new rate is 3.75%, a small +5 bps rise.

There is a similar +5 bps rise for three years, to 4.05%.

But for four and five years, the rise is +10 bps to 4.20% and 4.30% respectively

TSB Bank also offers "interest compounding" rates which are set lower for terms above one year.

A fixed two year commitment will probably be too long for many savers because most money is at one year or shorter. But it is now in the zone where many will consider it.

Four percent is also available for a one year term from Liberty Finance, a non-bank deposit taker with an investment grade credit rating.

For higher rates still, you need to asses the offers of institutions with a lower credit rating.

As we have earlier noted, savers may wish to think through the wisdom of locking up of funds for longer terms in what seems to be a turning rate environment. This situation should have savers thinking through the risk/reward scenarios.

In fact, RBNZ Governor Wheeler recently said he is as likely to hike official rates next as lower them.

Wholesale swap rates have not been moving much for shorter terms, but are rising for terms longer than two years. However banks are mitigating some of this rise in wholesale funding cost by paying lower spread premiums.

Wholesale rates may be options for banks, but they are not for savers. But you can access bond rates on the secondary market, which offer liquidity in a way fixed term deposit commitments don't. But for that flexibility, you do concede retail rate levels. Depending on how you assess risk, you may well judge the flexibility to get your capital returned as more important the yield return. That is up to your personal tolerance for risk.

The benchmark 'risk free' return for savers are AAA Kiwi Bonds and they return just 1.75% for terms of six months and one year, 2.00% for two years, and 2.25% for four years. Any rate above that is a premium for risk. Credit ratings are one way to assess risk.

Use our deposit calculator to figure exactly how much benefit each option is worth; you can assess the value of more or less frequent interest payment terms, and the PIE products, comparing two situations side by side.

All carded, or advertised, term deposit rates for all institutions for terms less than one year are here, and for terms one-to-five years are here.

Term PIE rates are here.

The latest headline rate offers are in this table.

Our unique term deposit calculator can help quantify what each offer will net you.