When trying to save money and maximise your returns, it’s important to consider your options and to compare various accounts.
The reality is that ordinary transactional savings accounts are not a great choice in terms of the returns they offer.
According to financial journalist Maya Fisher-French:
“Capitec has the best rate for a current account, paying 5.3% on your funds in your transactional account.”
“The bank’s flexible savings account offers the same rate (5.35%) for balances under R25 000 and 5.65% for balances between R25 000 and R99 999.”
You’ll earn much better interest rates for savings by choosing different options.
There are 3 basic types of savings accounts:
Call Accounts
With these accounts, your money is “on call”. You get easy access to your money whenever you need it.
Notice Deposits
With these accounts, investments are made for indefinite periods, but you can’t get access to your funds until a specified “notice period” has been served. The best interest rates for savings in terms of 32 day notice accounts in South Africa are about 7.35% per annum.
Fixed deposits
These savings accounts tie up the investor’s money for a term specified in advance.
A recent Think Money survey shows that most consumers are looking for the best interest rate when comparing savings products.
Warren Ingram, a financial planner, says that when choosing a savings vehicle, your criteria should be your time frame and your unique tolerance for risk.
You need to do your research and compare to be able to find the best interest rates for savings.
The first step would be identifying how you will be using the funds. Will you need frequent access? Or do you aim to save for a certain term without accessing the funds?
This will guide your decision.