Paying a Deposit to a Tradie in NZ: How to Do It Safely

Almost every larger job starts with the same request: "I'll need a deposit to get started." For most tradies this is completely legitimate. Materials cost money, and a deposit shows the customer is serious. But for the person paying, handing over cash before any work has been done is the single riskiest moment of the whole job.

So how do you tell a fair deposit from a warning sign, and how do you protect the money either way? Here's what you need to know.

Why tradies ask for deposits

A deposit isn't automatically a red flag. There are good reasons a tradie might ask for one:

• Materials. For jobs with significant supplies (a bathroom fit-out, a fence, a deck), the tradie may need to buy materials before they start.
• Commitment. A deposit filters out time-wasters and confirms you're ready to go ahead.
• Cash flow. Sole traders and small operators can't always float thousands of dollars in materials for weeks before they get paid.

The problem isn't deposits themselves. The problem is that a traditional deposit, paid by bank transfer or cash, is gone the moment you send it. If the tradie disappears, does poor work, or simply never comes back, getting that money back is difficult and stressful.

How much deposit is reasonable?

There's no law setting a fixed amount, but here are sensible guidelines for New Zealand:

• 10–20% is common for medium-sized jobs and is generally reasonable.
• Up to around one-third can be justified when expensive materials need to be bought upfront.
• 50% or more upfront should make you cautious. It's not always a scam, but you should ask exactly what the money is for and what you get if the job falls through.
• 100% upfront is almost never acceptable for work that hasn't been done. Walk away, or insist on protected payment.

A trustworthy tradie will happily explain what a deposit covers. Vagueness or pressure to "just transfer it today" is a warning sign.

The risks of paying a deposit the old way

When you pay a deposit by direct bank transfer, you're relying entirely on trust. Once the money lands in their account:

• There's no automatic way to get it back if the work isn't done.
• Bank transfers can't be reversed like a card chargeback.
• If there's a dispute, your only real option is the Disputes Tribunal, which takes time and effort.

You're effectively giving an interest-free loan to someone you may have only just met, and hoping it works out. Usually it does. But when it doesn't, the loss falls entirely on you.

A safer way: hold the deposit in escrow

Escrow flips the deposit problem on its head. Instead of paying the money directly to the tradie, you pay it into a secure, neutral trust account where it's held until the work is done.

Here's how it works with CASHBOX Task:

1. You and the tradie agree on a price.
2. You fund the job into a protected NZD trust account. The tradie can see the money is committed, which gives them the same confidence a deposit would, without the risk to you.
3. The tradie does the work.
4. When you approve it, the funds are released to their bank account.

The tradie gets the certainty they need to start and buy materials. You get the certainty that your money can't vanish. If something goes wrong, the funds are still sitting safely in trust rather than in someone else's spent account.

For larger projects, you can break payment into milestones so money is released stage by stage as the work is completed, rather than in one lump at the end.

What to check before you pay anything

Whether or not you use escrow, run through this checklist before parting with money:

• Get the quote in writing, with the deposit amount and what it covers clearly stated.
• Confirm who you're dealing with — a business name, GST number, and a real physical or online presence.
• Read reviews or ask for references from recent jobs.
• Never feel rushed. Pressure to pay immediately is the oldest trick there is.
• Know the going rate. Our free cost estimator tells you the typical price range for your job, so an inflated deposit stands out.

The bottom line

Paying a deposit to a tradie is normal, and often necessary. The danger isn't the deposit — it's paying it in a way that offers you zero protection. A reasonable deposit is usually 10–20%, capped at around a third for materials-heavy jobs, and you should be cautious about anything higher.

The safest approach is to skip the direct transfer entirely and hold the money in escrow, where it protects both sides. Post your job on CASHBOX, agree a price, and fund it into trust so your deposit is only ever released when the work is actually done.