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.
1. ABSA Dynamic Fixed Deposit Account
Features of the Dynamic Fixed Deposit Account
Like other 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
2. Islamic Term Deposit Account
This is a Halal compliant investment option which 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 fixed deposit accounts where interest rate can be agreed upon, in this investment you agree on the profit sharing ratio instead. How much you get depends on the success on the investment made by the bank, it can be positive or negative.
3. The Fixed Deposit Account
This is basically the par fixed deposit account offered by Absa, it offers a fixed interest rate for the entire term of investment and guarantees your capital.
Features of the Fixed Deposit Account
Minimum opening deposit of R1 000
You get to choose your own investment term between 8 days to 5 years
Investors aged over 55 are given a bonus interest if they invest amounts up to R100 000 for 12 months or longer Interest can be paid either on maturity, monthly, quarterly, annually or semi annually
Account holders are able to use their accounts to secure a loan from Absa
Fixed Deposits interest rates
R1 000 – R100 000
R100 001 – R999 999.99
ABSA 2021 Fixed rates for the Fixed Deposit Accounts
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 Absa Fixed Deposit Account
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 Account
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
Getting a fixed deposit account is a low risk investment since it guarantees your initial investment and returns back. It is a type of investment that won’t give you sleepless nights even when the economy is not doing well. However, getting fixed interest returns will mean that if the inflation is skyrocketing your returns remain of the same amount not value.
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