Absa fixed deposit - 13% interest

Magandroid said:
Today's article on Moneyweb and ABSA's responses.
https://www.moneyweb.co.za/investin...188786069&mc_cid=19e77ec18e&mc_eid=b47abae8fe
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ABSA's response is quite strange. They say that they advertised 13% to help people...

For advertising purposes, we had options of whether to position 10.05% or 13% per annum,” says Cowyk Fox, Absa’s managing executive for unsecured lending at its retail and business bank. “We deliberately chose 13% to provide maximum benefits to customers who are able to be resilient to afford a 60 month investment period.”
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In the current economic environment, where pensioners are battling to make ends meet and where they are frightened by the noise about market risk, 13% is such a drawcard,” notes independent financial advisor John Bustin. “Regrettably, many pensioners are going to end up locked into an inappropriate investment.

If it were expressed as 10.05%, many of these folk would apply their normal caution when assessing this offering,” he adds. “But when pensioners are between a rock and a hard place when it comes to their dwindling income, this 13% is so attractive that human nature tends to switch off the normal caution that is applied when deciding whether to restructure your retirement capital.”
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Our fixed deposit campaign is a deliberate endeavour to forge lasting relationships between us and our customers by creating an optimal mutual benefit for both,” Fox argues. “We also believe that customers are generally reasonable enough to detect any attempt to mislead them. We believe that the Advertising Standard Authority of South African would have already approached us had we been seen as misleading our customers.”
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What really got me is the following statement:

"A locked-in rate of even 10.05% might sound good now, but is still going to be that attractive if the South African Reserve Bank (Sarb) lifts rates by 2.5%?

Absa’s response is that, actually, the Sarb’s last change was to lower the interest rate. It also encourages potential customers to get advice, even though this isn’t required."

So they are basing the MPC decision for the next 5-years purely on a single statement such as the above?
13% Risk Free is a great rate but ABSA knows the MPC will start their hiking cycle very soon based on the $/ZAR, inflation and global EM sentiment.
 
At the end of the day it's about advertising and getting people to commit/buy/use to their product. Even if ABSA is not very truthful about their product, it is still probably one of the better fixed account products compared to what all the other banks have to offer.
 
Magandroid said:
At the end of the day it's about advertising and getting people to commit/buy/use to their product. Even if ABSA is not very truthful about their product, it is still probably one of the better fixed account products compared to what all the other banks have to offer.
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Not truthful but also not a lie and it does not contravene anything.
 
I would think this is exactly why we need invest the time in ourselves and become more financially educated, what ABSA did isn't really that much different than how other financial companies advertise their products. They highlight the attractive part of the product in the advert, what you didn't know or didn't ask, you will find out eventually. But in all honesty, the rates being offered even as simple interest doesn't seem so bad when compared to how the UT or ETF are performing currently, fixing it for a short period of time like 12 months doesn't really seem like that bad of an idea?
 
I was really excited about this until I read all the comments - thank you for the useful feedback.
 
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