FNB urges SA households to form themselves into savings clubs

In a bid to stimulate a culture of saving among South Africans, First National Bank (FNB) has appealed to local households to form saving clubs.

“We are calling upon South African families, colleagues, friends, and relatives to form themselves into small savings groupings. We believe such a move can contribute in lifting up household saving ratio from its doldrums,” says Line Wiid, CEO of FNB Mainstream Banking.

According to the SA Reserve Bank’s bulletin, the South African households saving rate is at the record low of -0.2% of disposable income.

FNB’s appeal comes at a time when the local households are under-pressure from the high interest rate environment.

Rate hikes have also shrunk household’s disposable income, thereby eliminating the ability to save.

Since June 2006, the Reserve Bank has hiked interest rates nine times in 50 basis point increments. Now, the repo rate is at 11.5%, whilst the bank’s prime lending rate sits at 15%.

Although rate hikes mean high debt servicing costs, Wiid says they also make returns on cash attractive. The cash asset class is now offering the best returns in the existing market.

She advised the new savings groups to consider putting their money on Stokvel savings accounts, pure savings accounts and on bank deposits.

FNB’s Stokvel Account is designed for groups of people who want to save together. A minimum opening balance of R100 is required for this account.

Interest is calculated daily on tiered interest rates and capitalised at the end of February every year.

The amount of interest a customer has earned up to a certain date is added onto the original amount. From that date forward, interest is paid on the new, larger amount.

FNB has zero rated some of the bank fees on the Stokvel Account. Consumers can now withdraw or deposit cash without paying any fees. If you hold an FNB transmission account, you can transfer money to your Stokvel Account free of charge, whether you use an ATM, Cellphone or Internet Banking.

FNB also offers Smart Save Account. This is a book-based savings account. A minimum balance of R50 is required to open the account.

Households can also choose to invest on FNB Growth Fund. The fund invests mainly in industrial, financial and resource stocks. A minimum scheduled payment of R40 per month or R500 lump sum is required.

Savings create a pool of capital, which helps government to fund its expansion and infrastructure programmes. This in turn impacts positively the country’s economic growth.