A 32-day notice account is a popular savings product in South Africa, offering a balance between accessibility and higher interest rates. Requiring a 32-day notice before fund withdrawal, they are suitable for those looking to save while earning better returns than a standard savings account. With various 32-day notice accounts available in South Africa, we will explore the different options you have available, compare fees, interest rates, and key features to help you make an informed decision.
What is a 32-Day Notice Account?
A 32-day notice account (also known as a notice deposit investment) is a type of savings account that requires you to give the bank a 32-day notice before withdrawing your funds. This notice period allows banks to offer higher interest rates compared to accounts that provide immediate access to funds.
Under the hood, this gives the bank more flexibility in sourcing money if there is a bank run, and therefore the bank offers higher returns. The longer the notice (or the fixed term), the more interest will be earned.
What is the difference between saving and investing?
Saving money is generally for short-term goals such as a holiday or a new cellphone. Investing tends to be long-term and could have more volatility and risk than saving. As a short-term savings account, 32-day notice accounts are ideal for medium-term savings goals where you don’t need instant access but still want to earn a decent return.
How Does a 32-Day Notice Account Work?
A 32-day notice account operates like a traditional savings account but with a crucial difference: the requirement to give 32 days’ notice before accessing your funds. This feature helps you avoid impulsive spending and allows your money to grow at a higher interest rate. You can easily transfer money into the account through online banking or your banking app, but daily transactions, such as payments or debit orders, are not possible.
When you need to withdraw funds, you submit a notice instruction specifying the amount and the account where the funds should be transferred. You can set up multiple notice instructions, allowing for planned withdrawals over time.
Benefits of a 32-Day Notice Account
- Higher Interest Rates: Since the funds are not immediately accessible, banks can offer more competitive interest rates compared to regular savings accounts.
- Capital Security: Your initial deposit is secure, and you earn a fixed interest rate, providing predictable returns.
- Flexibility: While you need to give notice before withdrawing funds, you still have access to your money, unlike fixed deposits where your funds are locked for a certain period.
- No Monthly Fees: Many 32-day notice accounts come with no monthly fees, ensuring that all your earned interest goes directly to growing your savings.
- Predictable Cash Flow: You can plan your cash flow effectively by setting up withdrawal instructions in advance, which is particularly useful for those with irregular income streams.
When Should You Use a 32-Day Notice Account?
A 32-day notice account is an excellent option for saving towards goals that don’t require immediate access to funds, such as:
- Emergency Funds: Some use these savings accounts for emergency fund. It’s recommended to chat with your bank and make sure about the penalty fees and if your money will be immediately available.
- Short- to Medium-Term Goals: Ideal for goals where you can predict when you’ll need the money, such as saving for a holiday or a large purchase.
- Income Management: Independent contractors or freelancers sometimes use these accounts to manage irregular income, effectively setting up a ‘self-paid salary’ by scheduling regular withdrawals.
- It is also a great place to store VAT or tax that will need to be paid after a set period longer than 32 days.
Comparison of 32Day Notice Accounts in South Africa
So, which bank offers the best interest on your 32 day notice account? Here is a comprehensive list below. Note that all accounts does not have a separate fee payable – it’s all included in the low interest rates.
| Bank | Interest Rate | Opening Deposit/Minimum Deposit | Key Features | Access To Funds |
|---|---|---|---|---|
| Investec | 8.75% (for R100,000+) | R100000 | High interest rate for larger deposits, suitable for substantial savings | 32-120 days |
| Sasfin | 8.30% (for R100,000+) | Competitive rates with lower entry point | ||
| Bidvest Bank | 8.7% (for R5,000+) | R5,000 | Accessible to wider audience with lower deposit requirement | 2-121 days |
| Access Bank | 8.55% (for R25,000+) | Midrange option balancing entry requirements with solid returns | ||
| Discovery Bank | 8.45% (for R1,000+) | Part of Discovery rewards ecosystem, low entry with broader benefits | ||
| FNB | Up to 8.79% (effective annual rate for large deposits) | R5000 | Tiered interest rate system, eBucks rewards, secure returns | |
| Absa | 8.28% (for R50,000+) | R1000 | Trusted banking services with moderate returns | |
| Nedbank | 6.95 – 8.80% (for R100,000+ | R250 | Solid option for significant savings, steady returns | 32 days |
| African Bank | 8.19% (for R500+) | R500 | Highly accessible, ideal for small savers | |
| Bank Zero | 8.25% (for R100,000+) | Digital-only bank, competitive rates for larger deposits | ||
| Standard Bank | 8.47% | R250 | 7 to 60 days |
Can I Make an Emergency Withdrawal from a 32 Day Notice Account?
Most banks will allow this in dire circumstances – but unfortunately, these terms and conditions are not defined well. It’s basically at the bank’s discretion. An undisclosed fee will also be charged if the bank approves. Nedbank explains the penalty fee calculation as follows:
…the difference between the interest earned on the investment as calculated at the interest rate originally quoted for the original period of the investment, and the interest calculated at our call investment interest rate applicable at the date of commencement of the investment over the actual period of the investment, plus the administration fee
– Nedbank Investment account terms and conditions
Can I use a 32 day notice account for my emergency fund? Yes, but you shouldn’t. Emergency funds should be accessible within 3 days. And without clear answers about accessiblility, you might be left in a difficult spot.
How to Choose the Right 32 Day Notice Account
When selecting a 32-day notice account, consider the following factors:
- Interest Rate: Look for the highest possible rate that matches your deposit amount.
- Minimum Deposit: Ensure that the minimum deposit requirement aligns with your savings capacity.
- Fees: Check for any hidden fees that might reduce your returns.
- Flexibility: Consider whether the account offers features like easy access to funds after the notice period or options to reinvest interest earned.
- Emergency Withdrawal Options: Understand the penalties involved in case you need to access your funds before the 32-day period.
Conclusion
Conclusion:
A 32-day notice account can be an excellent way to save in South Africa’s dynamic financial landscape, offering higher interest rates and some flexibility. The key is to choose an account that aligns with your financial needs and goals. Whether you have a large sum to deposit or are starting with a smaller amount, there’s likely a 32-day notice account that can help you grow your savings securely.
Personally, I don’t think this is the right vehicle for your emergency fund. The bank holds full control over the notice period and therefore most probably will only pay out after this period.
Happy investing!
