Which savings accounts offer the best interest rates?

By Danielle van Wyk

In South Africa, where finances remain strained in the face of Covid-19, there is a dire need to instill a savings culture. While there are various savings vehicles you could investigate, opening a savings account is undoubtedly one of the simplest.

But which savings account offers you the best deal? And should you opt for an open or fixed savings option?

Tip: To save more consider opening a tax-free savings account. Here is all you need to know. 

JustMoney compared the basic savings account offerings from the big five banks, i.e. Absa, First National Bank (FNB), Standard Bank, Capitec, and Nedbank.

Here is a breakdown:

Open savings accounts

 

Account name

Minimum deposit

Nominal interest rate

Absa

TruSave

R50

0.45%

FNB

Savings account

Any amount

2.30% - 3.05%

Capitec

Global One

R25

2.25. % - 2.50 %

Standard

Pure Save

Any amount

2.20% - 2.50%

Nedbank

JustSave

R500

3.25%


Based on the comparison table above, the Nedbank JustSave account boasts the best interest-earning potential at 3.25%. This stands head and shoulders above the rest, with FNB’s range cap following at 3.05% and Capitec and Standard Bank at 2.50%. Absa came in at the other end of the scale, with its interest rates the lowest at 0.45%.

The FNB and Standard Bank accounts don’t have a minimum deposit amount, so you can deposit any amount you have. This is good for people who are testing out the waters or starting their savings journey. Some banks use a tiered interest rate system to encourage people to save more. This means that the bigger your account balance, the higher the interest you earn.

 READ MORE: Ready to start saving? Know your interest rates

Fixed savings accounts

 

Account name

Minimum deposit

Interest rate

Fixed period

Absa

Fixed deposit

R1000

3% - 7.20%

8 days – 60 months

FNB

Fixed deposit

R10 000

8.50%

7 days  – 60 months

Capitec

Fixed deposit

R10 000

3.6 - 8.46%

6 – 60 months

Standard

Fixed deposit

R1000

6.80%

33 days – 60 months

Nedbank

Fixed deposit

R1000

5.5% - 8.16%

1  – 60 months

Based on the fixed account comparison, FNB offers the best interest-earning potential at 8.50%. This is closely followed by Capitec at 8.46%, Nedbank at 8.16%, and Absa at 7.20%. What’s important to note is that the interest depends on the period you are fixing your money for.

The minimum deposit amounts start at R1,000 at Absa, Standard Bank, and Nedbank. Capitec and FNB offer fixed-deposit accounts at a minimum deposit of R10,000.  

What’s key to note is that the Capitec Global One account does have the added benefit of a fixed savings pocket, which does not require a minimum deposit of R10,000, but instead allows you to tailor the amount to your need.

When considering the minimum deposit fees across the open and fixed savings account options, we can conclude that fixed-term savings accounts offer the better interest rates.

The perks of a good savings account

Cowyk Fox, managing executive for transactional banking, unsecured lending, card and payments at Absa Group, notes that a good savings accounts offers specific benefits.

“It is easier to withdraw money from savings accounts than from stock, bonds, and certificates of deposits, which results in penalties,” he says.

Savings accounts will usually accrue interest over time. This means your money has more earning potential than if you had kept it in a safe at home.  

Himal Parbhoo, CEO of FNB Retail Cash Investments offers the following tips:

  • A savings account helps when the unexpected strikes. In case of an emergency, the rule of thumb is to have at least 3 months’ salary saved in a separate savings account, in case of unexpected expenses.
  • Savings accounts also help you save towards specific goals like holidays, car or home deposits, weddings, big birthdays, or anniversaries.
  • Fixed-term savings are great for keeping savings safe and growing. They can also supplement income as the interest can be paid out monthly.

What are the requirements to open a savings account?

If you don’t already have a savings account and are looking to open one, here are a few general requirements. 

  • Applicants must be 18 years of age and be earning an income.
  • Applicants must be able to produce a South African identification document (ID) or passport, as well as proof of address.
  • You must be able to produce the minimum opening deposit. This may vary from bank to bank and between accounts.

It is always advisable to do your research before opening an account at any financial institution in order to choose the best option for you and your pocket.

Recent Articles

Featured When to trade in your old car for a new one

You may have noticed that your car isn’t running as smoothly as it used to. This is particularly concerning if you’re hoping to sell it at a reasonable price, and buy yourself a modern alternative.

3 facts to consider when cancelling your contract

If you’ve ever had a relationship end in a bit of a mess, you’ll know that some people are more difficult to break up with than others. The pain, the push back, the back and forth – it can be a difficult process.

How long does debt reflect on your credit score?

If you’ve ever had debt that you didn’t manage well, you may have wondered how long the debt would remain, or be retained, on your credit score. This is known as a “retention period” and it is governed by the law.

Deals

Full Body Massage at Dembalicious Spa

Price: R99
When: Mondays to Sundays
Where: Johannesburg

Two-Course Asian Dining for Two

Price: R269
When: Mondays to Sundays
Where: Cape Town

One-Hour Yacht Cruise with Waterfront Charters

Price: R99
When: Mondays to Sundays
Where: Cape Town


Latest Guide

Guide to debt rehabilitation solutions