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ABSA Fixed Deposit Accounts Review 2021

Posted on May 4, 2021 by Staff Writer

Rateweb | South Africa

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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

>8 days1-6 months7-11 months12 months>13 months18 months>19 months
R1 000 – R100 0003%3.1%-3.9%3.95%4.15%4.2%4.75%4.4%-6.7%
R100 001 – R999 999.993%3.3%-4.05%4.1%4.75%4.7%5.25%4.9%-7.2%
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

Conclusion

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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