Picking the right bank account can help your savings grow faster

SA is in an interest rate hiking cycle, and experts expect interest rates to continue to rise well into 2023. This is not just a local phenomenon, with the US Federal Reserve, along with central banks in the UK and Europe, also increasing interest rates to counter rising inflation.

In such a climate, notice deposit accounts provide unique benefits like higher interest rates compared to short-term savings, and their rates flex with market rates so clients can take advantage of rising interest rates, as opposed to fixed deposit accounts where the rate is fixed. 

“At Discovery Bank we also recognise the behavioural element of notice deposit accounts — because the funds are not immediately accessible, it helps clients be more disciplined and not withdraw funds without careful thought,” says Akash Dowra, head of client insights at Discovery Bank. 

Whether you're saving for emergencies or towards a medium-term or long-term goal, choosing the right account can help your savings grow faster. Adding to its savings accounts range, Discovery Bank has introduced two brand-new notice savings accounts — a 60- and 90-day Notice Savings Account, bringing clients the best notice savings account interest rates in SA. 

Having enough savings is one of the most important behaviours that determine financial health. SA’s net household savings rate, at 0.70% of household disposable income, ranks well below many other Organisation for Economic Co-operation and Development (OECD) countries.

“To get into a regular savings habit, it is highly recommended to keep your money in a dedicated savings account separate from your transactional bank account. It helps you to stay disciplined for longer because you see the money as separate, not extra. And your savings account should give you something in return, such as higher interest rates, other rewards, tax benefits or time horizon flexibility,” Dowra adds.

Discovery Bank research shows that people who are in the habit of saving regularly at the start of every month tend to have larger emergency savings balances; are better able to cope with the financial challenges of unforeseen life events; and have a higher financial health score than individuals who save what is left over at the end of every month.

In response to the recent hike in interest rates, Discovery Bank has increased the interest rates on selected accounts in its wide range of savings accounts by 0.5%. This means that the bank’s demand savings accounts now give clients interest rates 40% better than the market average. 

Three reasons why a notice savings account is a smart choice right now:

1. They offer higher interest rates when compared to short-term savings.
2. Unlike fixed deposit accounts, their rates adjust with market rates, so you can take advantage of rising interest rates in the future.
3. Because the funds are not immediately accessible, it helps you be more disciplined and not withdraw your money without careful thought.

This article was paid for by Discovery Bank.