Photographer: Lalinka Mahote. African News Agency/ (ANA)
Photographer: Lalinka Mahote. African News Agency/ (ANA)

Capitec clients benefit from only 50 basis points decrease in savings interest rates

By Supplied Time of article published Apr 17, 2020

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In response to the recent repo rate drop by a further 100 basis points, Capitec has announced that it will only decrease interest rates earned on transactional accounts and flexible savings plans by half of this. 

This decision will give approximately R150 million back to their clients in the next year, allowing them to continue to earn attractive interest rates on their savings. Francois Viviers, Executive of Marketing and Communications at Capitec explains, “This is one way we are helping our clients to live better in the current economic climate. We’re also one of the only banks to offer interest on transactional accounts, which saw our clients earn over R2.3 billion in the last year.”

The repo rate drop also means that households may benefit from extra disposable income, an opportunity that Viviers encourages consumers to use to relook and improve their money matters. “This cut is an ideal opportunity to review your financial goals given the current economic climate. If possible, begin by paying off debt faster, this can reduce the overall interest you pay and your disposable income will increase once paid off. It is also an important time to focus on savings. 

Our clients get access to 4 free savings plans, which can be named after their purpose such as emergency funds, education or home improvement. Save towards items that will help you live better and that your future self will thank you for.”

Viviers shares 4 of his top tips to take advantage of the repo rate drop: 

Pay off your debt faster. The decrease in repo rate means that your monthly instalments on credit with flexible interest rates will decrease. For instance someone with a R1 million home loan will now pay roughly R620 less per month. While it may be tempting to use this money to improve your lifestyle, rather continue to pay off your debt as if the interest rate change has not taken place. Paying off a loan faster means that you’ll save on the amount spent on interest.  Your future self will also thank you for those few less months of loan instalments, which can be used to invest in your future or for things you actually enjoy.

Start that much-needed emergency savings. One of the lessons to come out of the Covid-19 pandemic is that savings are important as life can present unexpected situations. Build enough savings to cover at least 3 month’s expenses. It protects you from dipping back into debt each time there is an unexpected expense. Also be sure that you your money is working for you by placing it in a savings plan that offers you the highest possible interest rate.

Pay it forward to your future self. Use your bank’s app to setup a recurring monthly payment into a savings plan. Once you’ve built up a sizeable nest egg, which will be earning interest each month, you can use this money to buy a new household appliance, to purchase a new computer or even kick start that side hustle you’ve been dreaming about.

Study further. A recent poll conducted shows that 21% of South Africans name furthering their education as a savings goal. Use the monthly saving towards studying further, which could earn you a promotion or the opportunity to apply for a new exciting job. 

PERSONAL FINANCE 

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