Compare interest rates for TFSA cash deposits

Colin Anthony
By Colin Anthony February 1, 2019 12:53

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
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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

 

Colin Anthony
By Colin Anthony February 1, 2019 12:53

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