Posted on January 3, 2021 by Staff Writer
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There is a lot to benefit from a savings account other than merely earning interest from the savings.
Best savings account in South Africa for 2021
| Ranking | Savings Account | Minimum Deposit | Interest Rate |
|---|---|---|---|
| 1 | ABSA TruSave | R50.00 | 4% |
| 3 | African Bank MyWorld Account | R0.00 | 5.5% |
| 3 | Capitec Fixed Term Savings | R10000.00 | 8.50% |
| 4 | FNB Savings Account | R10000.00 | 3.8% |
| 5 | Investec Prime Saver | R100000.00 | Prime Linked |
Saving money will help you build up funds to cover both planned and unexpected expenses in the future.
Whether you are saving towards a set goal or you are saving for a rainy day, there are three savings needs and requirements to consider;
- The interest rate you are offered (is it a fixed or variable rate)
- The pattern of deposits to your savings account
- Easy access savings accounts
Prior to listing out the best savings accounts in South Africa, we want to fill you with parameters to consider in choosing an account that best suits you.
The interest rate offered
Financial institutions always charge you interest when you take out a loan, similarly, you also earn interest on the money you save.
You can be offered a fixed or variable interest rate; the best choice depends on your circumstances/ preferences.
Variable interest rate
A variable interest rate is subject to change over time since it’s influenced by the repo rate (set by the South African Reserve Bank).
Taking a savings account with a variable interest rate means you earn more interest when the country interest rates go up and earn less when the rate is low.
This means, interest being earned on savings accounts is currently low; also interest being paid on loans is low.
Therefore if you have a savings account with a variable interest rate, you’ll earn more interest if the interest rate goes up, and less if it goes down.
Fixed interest rate
A fixed interest rate doesn’t change at any point in your savings because it is not affected by the repo rate.
The interest rate you are offered when signing the savings agreement does not change at any point.
In a case where the repo rate goes up, you don’t get any relative increase on your earnings just as you will not earn less when the repo rate goes down.
Even though you might miss out when the repo rate goes up, a fixed interest rate is less risky.
Mostly savings accounts have compounding interest, which makes you earn more interest as the time goes on.
With the compound interest, earning is accumulated on the original amount you saved plus the interest already accumulated.
While simple interest accumulates money only on the original amount you saved, therefore it is not as good as earning compound interest.
Deposits to your savings account
After opening a savings account, the way you are going to deposit money in it utterly depends on your circumstance.
There are two options to fund your savings account; regular deposits or once-off deposits with a lump sum.
Regular deposits
Most people opt to fund their savings accounts with regular deposits by making monthly debit orders.
This is a manageable option since you don’t need more to start saving.
Once off deposits
This is the best option because you fund your savings account with a lump sum amount and immediately start earning interest from it.
Rather than depositing monthly small amounts that will take long to grow.
However most South Africans end up opting for the regular deposits because they can’t afford investing large amounts of money at one go.
Easy access savings accounts
These are accounts that pay interest and allow you to withdraw money whenever you need it.
If you are saving for a rainy day, you might prefer a savings account that will allow you to withdraw funds in the shortest time possible whenever the need arises.
Remember rainy days come without anticipation and to address some of them you need to get cash in the shortest time possible.
Therefore if your funds are meant for rainy days, then a savings account that allows anytime withdrawals might be a good option.
Shortlisted 5 best savings accounts in South Africa
The South African banking sector has very competitive savings account products. In this article, we discuss only 5 which are currently at the top of our list from the research we conducted.
ABSA Bank
Account type: TruSave
Minimum deposit: R50
Interest rate: variable interest rate, determined by market condition and the bank’s prime rate
The ABSA TruSave savings account is an easy way to start saving, with a minimum of R50 you can start saving up some money.
From this account, each month you get:
- 2 free ABSA ATM cash deposits
- 2 free ABSA ATM mini statements
- Two free balance inquiries
There are also 2 free cash withdrawals every year.
The interest is calculated daily on your investment balance and paid to you every month.
To continue earning interest your account should have the minimum balance, meaning you will not earn interest if your account balance is less than R50.
Eligibility:
- Your South African ID
- Proof of residence (not older than three months)
African Bank
Account type: MyWorld Savings Pocket
Minimum deposit: R0
Interest rate: 5.5% per annum
The African Bank MyWorld Account comes with the savings pocket and the power pocket.
Your MyWorld account has its own account number (the primary account) then the savings pocket gets its own separate account with a unique account number.
With the MyWorld savings pocket you enjoy immediate access to your funds. It is also an ideal way to save money as a group because up to 10 members can be added to view the account.
Eligibility:
- Your South African ID
- Proof of residence (not older than three months)
Capitec Bank
Account type: Fixed-term Savings Plan
Minimum deposit: R10 000
Interest rate: up to 8.50% nominal interest rate
The Capitec Fixed term savings plan has 2 options, the single deposit option and multiple deposits.
In our summary, we introduce you to the single deposit option.
How it works:
- From 6 to 60 months savings period.
- Withdrawal is made on the maturity date
- The agreed Interest rate will be fixed for the full term
- Deposit amounts from R10 000 to R20 million
The Capitec Fixed Term savings account is ideal if you have a lump sum you want to grow toward a set goal.
FNB Bank
Account type: FNB Savings Account
Minimum deposit: R10 000
Interest rate: 3.8% based on your balances (the higher the balance the higher the interest)
The FNB Savings Account is available to exclusively cheque account holders. It is very flexible in the number of deposits and withdrawals you can make.
How it works:
- you get immediate access to your money whenever the need arises
- can access your savings account through FNB online banking services
- The FNB Bank Your Change allows you to save money as you spend. You can save R2, R5, R10, R20 or R50 into your savings account every time you swipe your FNB credit card. This feature rounds up every transactional account card purchase value up to the nearest rand and transfers the difference into your savings account.
- There are no monthly fees
With this account you are guaranteed of your original deposit and the quoted returns are 100% sure.
Investec
Account type: Investec Prime Saver
Minimum deposit: R100 000
Interest rate: Prime-Linked Interest Rate
PrimeSaver is the most popular savings account offered by Investec. There are no monthly fees needed to maintain the account and you have full access to all of your savings (in 24 – 48 hours).
Investec customers also benefit from online banking access and dedicated customer service.
Conclusion
From the savings accounts, provided by the different Banks listed above, you can choose the one that suits you and the one you perceive as the most convenient.
According to you, which one would be the most suitable for savings account you can signup for?
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