Portia wants a higher interest rate for her savings:
I have opened a credit card with Nedbank and I am saving R500 a month, but I receive a very low interest of 0,5%. I have opened that account because I don’t have funeral cover for my grandmother — it is so expensive for a person over 80 years of age. How can I save this R500 so that it can generate at least a reasonable interest rate.
First of all, it is important to know that most funeral covers do not insure people over the age of 65, so you are correct in realising that you will have to fund this expense yourself.
As you do not have a specific time period for this money it is best to keep it in cash investments like a bank account, but you can improve your interest rate:
- 1. JustSave account with Nedbank.
- 2. Capitec, which offers high rates even for low balances.
- 3. VirginMoney — you have mentioned that you have opened a credit card for your savings. If this is because you want to have access to emergency credit, then consider a VirginMoney credit card for their high interest on positive balances.
- Nedbank JustSave is a pure savings account, so you can only deposit and withdraw from the account, but there are no bank fees. Interest rates depend on the amount invested, but from R1 000 to R10 000 you will be paid 3,25% interest per year. If you bank with Nedbank and have an internal stop-order to pay the R500 into JustSave, Nedbank will credit the JustSave account with a further R2 per stop-order credit.
- Capitec currently pays 7% on balances up to R10 000 — that is the best in the market and you can earn an even higher interest rate if you are prepared to fix your deposit for six months or more.
- A VirginMoney credit card has no annual fees and currently pays 4,5% on positive balances. But avoid the temptation to use it for daily expenses if this is a savings plan.