A fixed deposit account is meant to give you substantial interest on your investment than an ordinary Savings Account. Absa has three categories of fixed deposit accounts, the Dynamic Fixed Deposit, Islamic Term Deposit, and the ordinary Fixed Deposit Account.
ABSA Fixed Deposit Account Summary
Absa Fixed Deposit Accounts are designed for investors looking to save money and collect income over a period of up to five years. To open the account, a minimum investment of R1,000.00 is required. Rates of interest are fixed for the duration of the investment. Interest can be paid monthly, quarterly, bi-annually, or annually, depending on the client’s demands. Pensioners and individuals over the age of 55 who invest R100,000 for 12 months earn extra interest.
Savings Plans Accounts
Savings Plans accounts are there to help customers save for a specific goal. These accounts have different features and target different consumers. The accounts range from normal savings accounts to Islamic accounts and are of low-risk investment
Islamic TargetSave Account
The Islamic TargetSave Account is a savings account that adheres to the laws of the Quran, it is one of ABSA Fixed Deposit Accounts. The account’s returns are based on the Mudarabah principle which emphasizes that profit should be shared. Islamic TargetSave account is managed independently from other Absa funds. The account doesn’t come with any monthly fees.
Islamic TargetSave Account requires a monthly deposit of at least R100.00 to use. The account is a notice account meaning account holders can access their money within 32 days’ notice. There are only 4 allowable withdrawals on the TargetSave account.
Future Plan Account
Absa Future Plan account is a savings account that requires an opening deposit of R100.00. On the anniversary of the account, clients can get up to 3.5% bonus interest from Absa. The bonus interest is only limited to R1,000.00 in bonus payout. The account requires a recurring R250.00 deposit over the contracted period.
Balances of less than R100.00 don’t earn interest on the Future Plan account. The account is a notice account and only 4 withdrawals are available on the account. The account is a 32-day notice account.
Notice Select Account
Absa Notice Select Account is one of many ABSA Fixed Deposit Accounts and a savings account that allows customers to set the notice period and choose how much they want to invest. The minimum deposit on the Notice Select Account is R1,000.00. Interest is determined by customer investment and the term of the investment.
Interest can be paid on the date of choice to a customer, it can be monthly, quarterly, bi-annually, or yearly. Should there not be any withdrawals, interest earned is capitalized on the savings account to take advantage of the compounding effect.
Absa Bank offers two savings accounts that provide tax benefits to users. Available accounts include a Tax-Free Savings Account and the Tax-Free Investment Account. We discuss them below.
Tax-Free Savings Account
The Absa Tax-Free Savings Account is one of the most used of ABSA Fixed Deposit Accounts, it provides tax benefits to account holders. Account-holders do not need to pay tax on earnings from this account. The account requires a minimum deposit of R1,000.00. Deposits on the account are limited to R36,000.00 per annum. Life-time deposits are capped at R500,000.00.
Failure to adhere to the maximum lifetime contributions will result in penalties of 40% taxation. Interest rates on the account are tiered and will depend on how much one deposits and for how long. Cash is accessed immediately whenever needed.
Tax-Free Investment Account
Absa Tax-Free Investment Account is a savings account that comes with benefits and requires a minimum Opening deposit of R10,000.00. The account allows customers to save up to R36,000.00 per year tax-free. Lifetime contributions to the account are R500,000.00.
A penalty of 40% is payable to SARS should customers fail to follow the tax-free savings account rules. The account has the same features as the Tax-Free Savings Account, however, the Tax-Free Investment Account invests money in Exchange Traded Funds (ETFs), wrap portfolios, and unit trusts.
Term Deposit Accounts
Term deposit accounts are those accounts that prioritize long-term earnings. The accounts range from normal Absa fixed deposit accounts to Islamic Absa fixed deposit accounts. Term deposit accounts are discussed below.
ABSA Dynamic Fixed Deposit Account
Features of the Dynamic Fixed Deposit Account
- Like other ABSA fixed deposit accounts, your capital is guaranteed
- There are no monthly fees
- Opening deposit amount should be above R1 000
- You choose between a fixed interest rate or get an interest rate linked to prime
- 8 days to 60 months term of investment
- You can even access up to 50% of your investment
- If you do not want to receive your interest on maturity, the bank can pay you monthly, quarterly, half yearly or annually
Features of the Dynamic Fixed Upfront Interest Deposit Account
- The initial investment should be R100 000,01 or more
- It also does not incur monthly fees and has guaranteed return of your capital
- The investment term can be at least 2 months and maximum of 12 months
- You can not get your capital before the maturity date
- You can choose to receive all your interest upfront or monthly in advance
Islamic Term Deposit Account
This is a Halal-compliant investment option that is based on the Mudarabah principle. The account offers returns that vary according to the investment period you select, the investment period can be from 8 days to 5 years.
Features of the Islamic Term Deposit Account
- Minimum opening deposit of not less than R1 000
- You can not withdraw from the account at any point during the term, however, you may make a withdrawal under special circumstances in which you are forfeiting your share of the proceedings
- In this account you will not receive any interest, instead, you get a share of the profits or losses made from the investment
- There are no monthly, hidden or admin fees
- The account can be for both individuals and companies
- Investment term can be from 8 days to 5 years
The Mudarabah principle
Basically, the mudarabah principle states that you as an investor are entrusting Absa with your capital and the bank is expected to further invest the funds for profit. The proceeds from the funds invested are then shared according to the predetermined profit sharing ratio initially agreed upon with the bank.
So, unlike other ABSA fixed deposit accounts where the interest rates can be agreed upon, in this investment you agree on the profit sharing ratio instead. How much you get depends on the success of the investment made by the bank, it can be positive or negative.
Easy Access Accounts
Easy access accounts are ABSA fixed deposit accounts that allow customers to save their money and allow them to have immediate access to money. Money can be used for anything and doesn’t need any notice for withdrawals.
Investor Plus Account
Absa Investor Plus account Is a savings account that allows access to investment capital within 24 hours. The minimum investment required on the Investor Plus account is R250,000.00. Investments of R250,000.00 – R10,000,000.00 earn an annual interest rate of 3.9%. Investments of R25,000,000.00 or more earn a 3.91% interest rate and this interest is the highest that Absa offers for the Investor Plus account.
There are no management fees attached to the Investor Plus account. Money in this account can be used as collateral when taking out a loan. Early withdrawal fees apply to the account and transactional fees are applicable. Client capital is guaranteed.
Depositor Plus Account
Absa Deposit Plus Account is a savings account that allows immediate access to cash and requires a minimum investment of R15,000.00. Investments of R15,000.00 – R24,999.99 earn an annual interest rate of 2.20%. Deposits of R10,000,000.00 earn the highest interest rate of 3.5%.
Money in the Depositor Plus Account can be used as collateral when taking out a loan. Customers can invest any amount into the Deposit Plus account but the amount must not be less than R15,000.00. Amounts less than R15,000.00 earn 0% interest.
Absa TruSave account is a savings account that can be used to set future financial goals through savings. The account requires a minimum deposit of R50.00 to get started. Any amount that is less than R50.00 earns 0% interest. The account uses a tier system to calculate interest on deposits. The account comes with a 0.45% interest rate on deposits of R50.00 – R1,000,000.00.
Customers can add up to their savings whenever they want to, therefore, the account allows recurring deposits to the account. There are no administration fees on the TruSave account. Money can be accessed immediately.
Share Trading and Investing Account
The account in this category offers a low-cost alternative to actively managed funds. Funds are traded by qualified fund managers with investments being local and offshore.
Absa Stockbrokers and Portfolio Management Account
Absa Stockbrokers and Portfolio Management Account is an investment account that helps customers to invest and trade in the local and offshore markets. The account comes with a Brokerage fee of 0.20%. With the world trader platform, customer funds can be traded in over 30 000 shares and exchange-traded funds. Money is kept in the currency specified by a client.
There is no minimum requirement to start, however, a minimum debit order of R250.00 is required. Clients can invest in the tax-free savings account for local and offshore exposure while taking advantage of the tax benefits available.
Retirement accounts are there to help customers save enough for their retirement. With the retirement accounts people can save before or during retirement, it all depends on the account that is used.
Core Retirement Annuity Account
Absa Core Retirement Annuity is a savings account that is ideal for those that do not have a pension fund or a Provident fund. The account requires a lump-sum deposit of R10,000.00 to get started. Customers get a tax benefit by choosing this account, they can deduct up to 27.5% of their taxable income contributions to retirement funds per tax year.
The money that is deposited into the Core Retirement Annuity account is invested in shares. Therefore, this account is of low risk and has the ability to yield high returns over time. Investment costs are low because the portfolio is made up of low-cost passive investments such as ETFs and notes.
Living Annuity Account
Absa living annuity is an account that allows customers to save for retirement. The minimum investment for the living annuity account is R50,000.00. The aim of the living annuity account is to allow customers to withdraw money at a predetermined rate during retirement.
Withdrawals are based on client specifications, however, monthly withdrawals are favorable for this account. Furthermore, withdrawals have tax implications so tax will be charged on payments that are received. Account-holders get to choose the portfolio and income requirements that suit their needs.
Preservation Fund Account
Absa Preservation Fund is one of ABSA Fixed Deposit Accounts, it is an investment account that is available to those that are employed. The account allows the customer to have control over their pension fund benefits before retirement. Therefore when moving from one employer to another, retirement savings will be preserved. The minimum investment into the Preservation Fund is R25,000.00. Customers get various death and disability benefits.
Retirement Annuity Account
Absa Retirement Annuity Account is an investment account that is good as a top-up to a pension fund. A minimum investment of R10,000.00 is required to get started on this account. Monthly contributions of R250.00 to the retirement fund can be made. There are no penalties related to the minimum investment term or minimum monthly contributions.
ABSA Fixed Deposit Accounts interest rates
|>8 days||1-6 months||7-11 months||12 months||>13 months||18 months||>19 months|
|R1 000 – R100 000||3%||3.1%-3.9%||3.95%||4.15%||4.2%||4.75%||4.4%-6.7%|
|R100 001 – R999 999.99||3%||3.3%-4.05%||4.1%||4.75%||4.7%||5.25%||4.9%-7.2%|
How To Open Your Own Account
- The Absa fixed deposit accounts are meant for their existing clients, hence to open one for yourself, you must first have an Absa current or even a savings account.
- Applicants need to bring their IDs or passports and a proof of address that is not older than 3 months
- The account can be applied for along with another applicant
Competitive advantages of opening of Absa Fixed Deposit Accounts
- All Absa Fixed Deposit accounts are part of their low risk investments category, almost all of the accounts guarantee your capital
- The Dynamic Fixed Deposit Account gives you a choice of receiving either a fixed interest for guaranteed returns or an interest rate linked to prime
- Clients can have their accounts in any of the 5 different currencies, including SCR, GBP, EUR and USD
- Pensioners (above 55 years) enjoy additional interest and profit returns
- The Dynamic Fixed Deposit allows you upfront access to your interest or to up to 50% of your investment
- Absa gives you the opportunity to start saving with as little as a R1 000
Competitive disadvantages of Absa Fixed Deposit Accounts
- With the fixed deposit account, interest earned is flat using a flat interest rate, meaning Investors can sometimes earn less than the inflation rate
- Absa may charge penalties on withdrawals made before the investment maturity
Absa Fixed Deposit Accounts are some of the most diverse in South Africa offering services for retirees, working-class, and students. Islamic Banking is also included in the company’s product offering. What matters most when choosing a fixed deposit account from Absa, is the purpose of the account. Therefore, you need to know exactly what you want to achieve when taking out a fixed deposit account. That way, you will be able to self-help or get fast assistance from consultants.
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