Compare interest rates for TFSA cash deposits

Story Highlights

• Compare TFSA cash deposit interest rates
• banks tax-free rates
• Absa
• Capitec
• FNB
• Nedbank
• Standard Bank
• Investec
• lump sum
• fees
• access to funds

The Intellidex team | 1 February 2019

Cash-based tax-free savings accounts (TFSAs) offered by banks, the majority of which are call accounts, are proving the most popular with investors, research by Intellidex (owners of savetaxfree.co.za) has shown.

With interest rates as diverse as the institutions offering them, choosing which bank to go with can be tricky, especially with so much marketing material to wade through. While one bank may offer the best interest rate, the other terms might not be suitable for all investors. To cut through the clutter we sifted through every cash product on offer to get a better sense of what’s available out there and compare the interest rates.

African Bank is offering the best interest of 8.67% for a 12-month fixed deposit with a minimum deposit of R500.

For those looking to investing smaller sums, Capitec offers 4.85 % for deposits starting from as little as R1, followed by Standard Bank with its offering of 5.90% for a minimum deposit of R250.

Nedbank’s maximum rate of 5.50% is the least competitive. Absa and Standard Bank offer instant access through their branches, while Nedbank requires 24 hours’ notice and FNB clients have to give seven days’ notice.

Capitec and Investec charge a R300 penalty fee for early withdrawals but the money is available immediately, while Investec requires seven days’ notice.

Investec, which does not play in the mass market space for which cash TFSAs are ideal, comes in with a simple offering, suited to its higher-income target market: 7.45% interest a year on a minimum deposit of R30 000 on a 12-month term and a maximum annual contribution of R33 000.

 

Interest rates on cash TFSAs (per year)
	R0 – 249	R250 – R1 000	R1 000 – R4 999	R5 000 – R9 999	R10 000 – R14 999	R15 000 – R19 999	R20 000 – R24 999	R25 000 – R33 000
Absa	3.50%	3.50%	3.50%	3.50%	3.50%	5.50%	5.50%	5.50%
African Bank	NA	8.67%	8.67%	8.67%	8.67%	8.67%	8.67%	8.67%
Capitec*	4.85%	4.85%	4.85%	4.85%	6.44%	6.44%	6.44%	6.59%
FNB	NA	NA	6.25%	6.25%	6.25%	6.25%	6.75%	6.75%
Mercantile Bank*	5.75%	5.75%	5.75%	5.75%	6.25%	6.25%	7.25%	7.25%
Nedbank	3.75%	3.75%	3.75%	5,00%	5,00%	5,00%	5,00%	5,50%
Rand Merchant Bank (RMB)	N/A	N/A	6.50%	6.50%	6.50%	6.50%	6.75%	6.75%
Standard Bank	NA	5.90%	5.90%	6.05%	6.20%	6.20%	6.35%	6.35%
Investec**	NA	NA	NA	NA	NA	NA	NA	7.45%**

Source: Intellidex Research

*Accounts may merge as Capitec has acquired Mercantile Bank
**R30 000 minimum                                                    

No management fees are charged on TFSA accounts and all fees are – for the most part – minimal. FNB, Absa and RMB require a minimum lump sum of R1,000 but no further investment is required.

Standard Bank and Nedbank have structured their TFSAs to target recurring investments with low monthly sums, with clients ideally instituting a monthly stop order from their regular accounts. Standard requires a minimum of R250 and Nedbank requires a minimum opening deposit of R500.

Bank	Min lump sum	Min monthly amount	Term	Fees	Access to funds
Absa	R1 000	0	Any	0	Instant
African Bank	R500	0	12 Months	0	Up to 10% for early access, or else 12 months
Capitec	0	0	12-24 months	0	R300 for early access, or else 12 months
FNB	R1 000	0	12 months	0	7 days
Mercantile Bank	R1 000	0	Any	0	R300 for early access, or else 7 days’ notice
Nedbank	R500	R50	Any	0	24 hours
Rand Merchant Bank (RMB)	R1000	0	Any	0	32 days
Standard Bank	R250	R250	Any	0	Instant, with cheque fee on withdrawal
Investec	R30 000	0	12 months	0	R300 for seven days’ notice, or else 12 months