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Fixed deposits are now a hot asset class to invest into, says FNB

10 June 2008 FNB

The persistent move by the SA Reserve Bank to hike interest rates has made returns on First National Bank’s (FNB) fixed term deposits to be more attractive.

“We are well aware of the negative impact that the cumulative impact of interest rate hikes is having on local consumers. But, the rate increases have also seen returns on our fixed term investments rise over this period,” says Gillian Fitzgerald, marketing manager of FNB Savings and Investments.

Take Restart Fixed Deposit for instance. For this week, the prevailing interest rate on the Restart Fixed Deposit is 12.50%.

By investing R10 000 over 13 months on Restart customers could earn up to R1 350 over the period.

Restart Fixed Deposit also provides customers with the option to reset the term once without penalties.

“It is the only 13 month fixed deposit in the market that gives investors the opportunity to restart their fixed deposit at a higher rate should rates have increased. Other fixed deposits pay you one rate for the term,” she said.

The governor has intimated that he plans to hike rates on June 12 when the MPC meeting is convened. The move will further push up the interest rate on the FNB’s Restart Fixed Deposit. This will be a boost for those that invest on Restart, said Fitzgerald.

The Reserve Bank has hiked rates nine times since June 2006. This has pushed the repo rate.The repo rate now stands at 11, 5%, while the bank’s prime lending rates sits at 15%.

The investment term is 13 months only. A minimum investment of R10 000 is required. And there is no maximum balance.

Interest can be paid monthly, quarterly, half-yearly or on maturity. Accrued interest will be paid out at restart, but can be also be reinvested. This is likely to give customers the benefit of compound growth.

Customers can make additional deposits at the time of restart only. No withdrawals are allowed until maturity.

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