Absa fixed deposit - 13% interest

lucifir

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Mar 17, 2004
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#1
I heard this on the radio and it seems a little unbelievable, as other banks are offering rates around half that.
According to the website its a limited special offer.
Does that mean you only earn that rate for a set period or does it apply to the lifespan of the account?

Anyone have any more info on this?
 

Mista_Mobsta

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Jan 22, 2015
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#2
As far as I can understand, it's 13% at the maturity of the deposit: IE around 10.50% at the start of the fixed deposit for a 5-year fixed term with interest re-invested @ 10.50% annually
 

thechamp

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Feb 26, 2011
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14,046
#6
I heard this on the radio and it seems a little unbelievable, as other banks are offering rates around half that.
According to the website its a limited special offer.
Does that mean you only earn that rate for a set period or does it apply to the lifespan of the account?

Anyone have any more info on this?
I saw it, it's only 13% when the investment is fixed for five years, it is lower for shorter periods.
 

Mista_Mobsta

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Jan 22, 2015
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#7
I'll wait for the next rate hike in SA, November, before committing to any 5-year deposits though...ABSA trying to troll people to gather some dosh before the rate hikes start coming in!
 

MirageF1

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Jun 29, 2018
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998
#8
I wouldn't give them R1 as fixed deposit personally...whatever their "promises"

Projecting forward 5 years into the future in SA at this juncture ,is a like tying to imagine Victory Day on Sept. 1st 1939....
 

SaiyanZ

Executive Member
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#9
I'm going to go to the bank tomorrow to check it out. I already have an ABSA savings account etc. so it makes sense to move some cash there if it is legit 13% p.a. compounded for 5 years. That will be hard to beat vs the risk.
 

Magnum

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Mar 12, 2013
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#10
Need some Guru's in here. How does this compare to a Capitec savings account with the same balance, compounded monthly?
 

SaiyanZ

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#11
What is the Capitec interest rate?

At 13% p.a., if you put in R200k, you get back R368k after 5 years.
 

lucifir

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Mar 17, 2004
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#13
I'll wait for the next rate hike in SA, November, before committing to any 5-year deposits though...ABSA trying to troll people to gather some dosh before the rate hikes start coming in!
I highly doubt rates would go high enough for a 13% return to be an issue.
Granted we do have the ANC in government, so who really knows :sick::confused:
 

Muks

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Sep 20, 2006
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176
#14
Need some Guru's in here. How does this compare to a Capitec savings account with the same balance, compounded monthly?
Depends on the balance and duration.

If you invest R100 001 in a fixed deposit as a single deposit for 60 months with interest re-invested and no account fee:

Capitec: R159 708 (as per their calculator =9.8% p.a.)
ABSA: +-R165 000 (assuming it's 13% p.a. simple interest i.e. 10.5% p.a)
 

Zukat

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Oct 11, 2010
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557
#15
I'm going to go to the bank tomorrow to check it out. I already have an ABSA savings account etc. so it makes sense to move some cash there if it is legit 13% p.a. compounded for 5 years. That will be hard to beat vs the risk.
13% is not compounded interest rate, that rate is at maturity aka 5 years term
 

SaiyanZ

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#16
13% is not compounded interest rate, that rate is at maturity aka 5 years term
Seems like you're right. 10.05% p.a. compounded monthly works out to exactly 65% total return over 5 years. So 13% simple interest p.a. which is just marketing showing high numbers.. That's not that great then when you can get instant access accounts that give around 7% p.a. Only 3% higher but locked up for 5 years.
 

johandb

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Sep 26, 2017
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#17
Remember the interest are shown in your tax as income in year 5. The total of it. Not per year ! So less 43% tax ,on 10.50% =........ ? Or am I wrong ?
 

lucifir

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#18
13% is not compounded interest rate, that rate is at maturity aka 5 years term
They emailed back to say it is 13% p.a. but only available at maturity.
So does 13% p.a. not equate to compound interest?

Nvm, they responded to say its simple interest.
What a scam, banks should not be allowed to do this, or at least be very clear about the implications as most people will not understand the difference in interest
 
Last edited:

Gbo

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Jan 15, 2018
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#19
Remember the interest are shown in your tax as income in year 5. The total of it. Not per year ! So less 43% tax ,on 10.50% =........ ? Or am I wrong ?
The interest should accrue yearly and be included in your tax return on a yearly basis.

You will however be granted an exemption for interest to the amount of R23 k each year.
 

SaiyanZ

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#20
They emailed back to say it is 13% p.a. but only available at maturity.
So does 13% p.a. not equate to compound interest?

Nvm, they responded to say its simple interest.
What a scam, banks should not be allowed to do this, or at least be very clear about the implications as most people will not understand the difference in interest
Yeah it's simple interest. Who in this day and age uses simple interest... It gets worse for longer terms. Say there was some hypothetical 20 year fixed deposit at the same interest rate. ABSA would be marketing it as 32% p.a.

The real rate is actually around 10.5% p.a. If you were to take out a 12 month fixed deposit at 10.5% and reinvest it every 12 months for 5 years you'd end up with the same result.
 
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