your guide to savings accounts

Introduction:

We all know that saving is important but with so many savings accounts on the market, it can often be confusing. It’s important that you make saving a habit from a young age – even if you put away a small amount every month, this could make a difference to your life one day.

Here we take a look at the different types of savings accounts available so that it’s easy for you to choose a savings account that’s right for your needs.

You can open a basic savings account with as little as R10 – and savings accounts are generally good for saving for short-term financial goals like purchasing a vehicle, going on holiday or buying expensive appliances.

Having a mixed bunch of savings accounts and investments is a good way to ensure that you are covered not only in the short term but in the long term too. You should review your savings and investment options every couple of years and compare accounts to find the option that is best suitable to your needs.

Below is a short break down of the three main savings accounts available on the market.

Fixed deposit savings account:

A fixed deposit savings account is an account where you dump a lump sum into for a set period of time. The time frame ranges from three months to one year. The interest rate is generally a bit higher than a ‘normal’ day-to-day saving account. Usually, the longer the fixed term is – the better your interest rate will be. This is, however, not always the case which is why you should compare accounts in order to make sure you get the best return on your investment.

32 Day notice account:

This is an account where you have to give the bank 32 day notice prior to withdrawing your funds. The minimum amount that you need to invest will vary from bank to bank but it’s usually anything from R100 – R1000 and in some cases you need to make a set deposit into the savings account every month.  Should you wish to withdraw the cash in this account earlier than the 32 day notice period, you  will end up paying hefty penalty fees. This is a good way of saving if you want to set up a debit order to your transactional account – and deduct a set amount off your account each month and forget about it until you have saved up a reasonable amount. This larger sum of money can then be transferred into either a fixed term deposit account or, if you are feeling brave, you can start looking at unit trust options.

Money market account


A money market account is a bit more complicated than the standard savings accounts. With this option, your money is invested in a mixed back of short-term debt instruments like Treasury bills, bankers’ acceptances, negotiable certificates of deposit and savings products. These options offer good returns because the pay the participants the full earnings of the fund less a fee. With a money market account there is usually a minimum investment amount of around R25 000