Updated 27.07.2021

Top 6 Banks with Best Interest Rates for Fixed Deposits

Which bank has the highest interest rate for fixed deposits?

BankNominal Interest Rate %Terms
First National Bank (FNB)8.50%60 Months
African Bank8.45%60 Months
Capitec Bank8.15%49 – 60 Months
Discovery Bank7.00%60 Months
Nedbank6.60 – 8.15% (depending on account)60 Months

Until recently, the search for best interest rates for fixed deposits wasn’t as important as it is today. Understandably so, because the need to save money wasn’t as apparent as it is now. Covid-19 changed how everyone thinks about money and spending.

These money lessons have been more profound in 2021. The year has been tough for most South Africans because of the economic challenges caused by the COVID-19 pandemic. On the flip side, the pandemic has taught South African’s financial lessons and encouraged the need to practice the saving culture regardless of the amount you earn. When the virus first struck the globe, only people who had long-term savings could survive best without depending on government aid and high-interest loans.

South Africans are poor savers and that is why the government has collaborated with major banks to encourage its citizens to save more. There are many ways of saving money but today our focus is on fixed deposit savings with banks offering the best interest rates in South Africa.

Fixed deposit savings allows you to save your money for long-term goals. This is where you lock up your money for from one month to five years without withdrawing and your money earns a competitive interest rate. Fixed deposit accounts attract zero monthly fees but bring you exceptional returns. Remember the interest rate your money earns in a fixed deposit account gets defined and locked in until the end of the chosen time. Below are the top six banks with the best interest rates for fixed deposits in South Africa in 2021.

African Bank

As long as you have R500, you can open a fixed deposit account with the African bank. The application is easy and only takes a few minutes. This bank offers you the best fixed deposit interest rates in South Africa and also allows you to withdraw your money instantly upon maturity. What makes the African Bank stand out in fixed deposits is because it offers customers guaranteed returns with the fixed interest rates throughout the investment duration. It also gives you the chance to choose the duration of your interest payouts that range from 6 to 12 months or at maturity.

Note that different term lengths and pay outs attract different predetermined interest rates. For example, 3 months- 4.5% interest, 6 months- 5%, 12 months- 5.75%, 24 months- 6.7%, 36 months- 7.15% and 60 months- 8.45% interest.

African bank fixed deposit investment works for a fixed amount. That means you cannot add on to your fixed deposit amount. Wait until maturity for you to withdraw the amount and maybe restart again with a new and higher fixed amount.

If you wish to withdraw your whole money or part of it before the maturity period, you will incur some penalty and not achieve your primary saving goal. So, the choice to withdraw lies in you and if that is the case, you can contact the customer care center and provide reasons for early withdrawal. The bank will also require you to submit your original certificates such as medical or death certificates that support your reason for withdrawal.

ABSA

ABSA South Africa boasts three fixed deposit accounts that offer customers high-interest rates on their investment. The bank allows you to have accounts in five different currencies that include USD, SCR, GBP and EUROs. The accounts include

Dynamic fixed deposit: The dynamic fixed deposit account attracts a minimum of R 1000. It attracts zero monthly fees and allows you to choose between a fixed interest rate or a prime-linked interest rate. The investment runs from 8 days to 5 years which you can access up to 50% of your money. This account attracts daily interest, which is capitalized monthly.

Islamic term deposit: Islamic term deposit account comprises a halal investment that is based on the Mudarabah doctrine. It offers variable returns that depend on the selected investment period, which runs from 8 days to 60 months. The Account requires a minimum deposit of a minimum of R1000. Once you make a fixed deposit in this account, you cannot withdraw your money until it reaches maturity. However, the bank allows you to withdraw money under special circumstances, although you have to give up your share proceedings.

The difference between the Islamic term deposit and the other deposits is that your money does not earn any interest. Instead, your account gets credited with the profit or losses the banks make from your investment.

Ordinary fixed deposit account: This is an ordinary fixed deposit account that offers a fixed interest rate for the whole investment term. It requires a minimum deposit of R 1000.

This account allows you to choose your preferred investment term between 8 days to 5 years. The good thing is that it favours old people in that if you are over 55 years, the bank awards you with bonus interest if you invest R 100 000 for one year. With this offer, you can withdraw your money either monthly, annually, quarterly or at maturity. You can also use your account to gain a loan from the bank.

Capitec Fixed Deposits

Another bank with a fixed deposit with amazing interest rates is Capitec Bank. The bank allows you to invest a minimum of R 10000 and a maximum of R 20 million for 6 months to 5 years. All the money that you invest with the bank earns an interest rate of 8%. Further, it uses the nominal interest rate to calculate your daily interest earnings. Capitec only pays you your money plus interest earned at the end of the maturity period. The good thing is that you can reinvest the interest or transfer it to your savings account.

FNB

FNB Bank offers fixed deposits with competitive interest rates from 3 to 36 months with a minimum deposit of R 10,000. The bank also boasts different fixed deposit classes of people below 55 years and beyond 55 years. The higher you invest, the higher your interest earnings and the longer your investment period, the higher the interest earnings. Like other banks, FNB fixed deposit accounts are flexible and allow depositors to add money into their existing fixed deposits at maturity. So, after maturity, you can choose to reinvest your interest or entire capital.

Discovery Bank Fixed Deposit

Discovery Bank South Africa is an upcoming bank that boasts fixed deposit accounts with high interest ranging from 4% to 7%. The bank allows you to open a fixed deposit account online and make your first minimum deposit of R 100,000 for 3- 60 months once the account is active.

The bank has three different fixed deposit accounts, which include:

Tax-free savings account: This is the account that allows you to save money into a fixed account with no tax obligations imposed on your interest earned. However, the account requires you to deposit a maximum of R 36,000 annually. If you choose a lifetime deposit, then you need to deposit a maximum of R 500,000.

Notice savings account: This kind of account requires you to notify the bank before you make any withdrawals from your fixed deposit account. The earlier the notice, the higher the interest rate earned.

Demand savings account: This account allows you to withdraw your money. It resembles a cheque account which you can access whenever you want with no notice.

Nedbank Fixed Deposit

Nedbank offers its members competitive fixed deposit accounts with a minimum of R 5000. The account boasts investment periods that range from 1 month to 60 months with favourable interest rates payable monthly, annually and at maturity. The bank has a variety of fixed deposit accounts that include:

My Pocket: This is the fixed deposit account that is linked directly to your transactional account for easy access to your money. The account requires you to deposit at least R 10 000 which attracts a nominal interest of 3%.

Exclusive online account: The account gives you online access where you can check your interest rates and money and make transactions online. 

Tax-free fixed deposit: The account attracts zero tax on interest earned for investments made for 12 months. However, deposit a maximum of R100,000 in this account.

Electronic Optimum Plus: This is an online fixed deposit account for clients above 55 years.

Platinum Invest: Fixed deposit account only for professional banking and small business services customers.

Platinum fixed deposit: This is a fixed deposit account set aside for professional bankers only. The fixed deposit period runs from 1 month to 5 years.

Easy Access Deposit: This allows you to make a 12-month deposit and still access 505 of your capital before maturity without getting penalized.

Advantages of Fixed Deposits

Low-Risk Investments: This is the only investment that allows you to keep a certain amount of money for a specific time and guarantees your money back with some interest on top after maturity. It is a great investment where you don’t want to risk losing any capital.

Interest tax threshold: Your interest earned money attracts zero tax provided it is within the SARS threshold of R 100000. Banks have no obligation to deduct tax on your money and this comforts you if you have a small fixed deposit account.

Flexible tenure: fixed deposits tenure is flexible and varies with the deposit holder. The six banks listed above have different tenures and rules, but the account holder makes the final decision. You can either decide to extend the tenure or redeem it.

Disadvantages of Fixed Deposit Account

Once you put your money in a fixed account, you can’t withdraw it, and if you do, the bank penalizes you.

Given that they are low-risk investments, you get lower returns on your investment in the long run compared to other riskier investments such as shares and bonds.

Saving for your future projects and emergencies is wise, and that is why the six banks in South Africa provide you with fixed deposits with the best interest rates. You can either opt to deposit with ABSA, FNB, Discovery Bank and African Bank. Fixed deposit bank accounts allow you to save money for a specific time without withdrawing until it reaches maturity.

Comments limited to 400 characters.