Households are hoarding more cash as they prepare to face tougher times ahead.
Reserve Bank figures show household deposits rose nearly $12 billion between February and July this year to a record high of $196b - an increase of 6.4 per cent in just six months.
Household spending plummeted during the March and April level 4 lockdown with credit card data showing spending in New Zealand was just $1.78b for NZ-issued cards for the month of April - nearly 40 per cent down on the same month last year.
At the same time the Reserve Bank has slashed the official cash rate to just 0.25 per cent prompting mortgage rates to drop to all-time lows and deposit rates to drop as well.
Westpac senior economist Satish Ranchhod said it was a lack of confidence that was boosting savings.
"People are looking for somewhere safe to park their funds."
He said it was a sign that people were feeling nervous about their financial security.
Ranchhod said the fact that New Zealand households were saving more while also deferring or taking on more debt showed there were potentially two different groups in the economy with one group deciding not to spend and others doing it tough.
"There are definitely some parts of the economy where some households are finding it pretty tough."
Kiwibank chief executive Steve Jurkovich this week said the bank saw deposits rise 13 per cent in the year to June 30 while across the banking sector deposits were up 9 per cent.
"When the economy looks bumpy people want to put money aside and put it away where they think it is going to be safe."
Jurkovich said banks had seen a flight to safety.
And it seems Kiwis are wanting easy access to that money. The amount of money sitting in transactions accounts has risen from $81.4b in July 2019 to $104.9b in July this year.
Likewise for savings accounts it has gone up from $84.2b to $100.6b. But term deposits where savers have to lock in their money for a certain time have fallen from $195.4b to $185b.
The average interest rate on six-month term deposits has dropped from 3.06 per cent in July 2016 to just 1.49 per cent in July last year, Reserve Bank figures show.
Jurkovich said when term deposit rates were low many people didn't see the benefit in locking their money up.
"When the term deposit rates across the market are pretty low the benefit you have from locking money away for every bit of interest versus having the money on call when you need it I think drives a lot of people to leave it on call.
"A lot of people don't see the benefit in locking it away for pretty low rates."