How to choose the right deposit facility

A bank deposit is a beneficial storing facility for money you do not have an immediate use for. Interest rates on deposits are generally more favourable than what you would earn in a savings, transmission or cheque account. The downside is that access to your funds is generally limited, depending on the deposit option you decide on. There are three different deposit options - fixed, call and notice to choose from.

Money invested in a fixed deposit account cannot be accessed for a fixed length of time. This could stretch from 33 days to five years. You can decide on the date that the account should mature. You can also choose to receive the interest earned on this account at the end of the agreed time or regularly throughout the period, for example monthly, quarterly or annually. A fixed rate of interest will be paid on the amount you invested. The interest rate you will earn on the fixed deposit is the highest of the three deposit options. One of the other advantages of a fixed deposit account is that you can use it as security for a personal loan or mortgage.

Notice deposits also tie up your money and they will only be released after a fix period of time. Usually the money will only be released 32, 60 or 88 days after you have given notice. Interest on the money is calculated daily and a minimum balance is required. The interest earned on notice deposits is usually higher than call accounts.

A Call deposit facility allows you access to your money at any time, although a minimum balance is required. There is usually also a limit on the amounts that can be taken out of or deposited into the account. Usually banks will require a minimum amount of about R1 000 to be invested in a fixed, notice or call deposit.