Cashing in on higher interest rates

South Africans are adopting a more cautious approach to their finances amid the uncertainty of the current economic environment.

The cost-of-living crisis has prompted a behaviour shift in the spending and savings habits of consumers as people are concerned about having enough to make it through the month and having a buffer in case of another potential financial storm or shock event.

While rising inflation has resulted in a relentless cycle of interest rate hikes that has placed significant pressure on South Africans with debt obligations, higher interest rates have worked in favour of savers, especially those with bigger savings pots.

Thopi Mhloli, Head, Savings & Investments at Standard Bank, says that people who can save and invest are in a fortunate position as interest rates are helping to accelerate the growth of their savings. As it stands, most interest-bearing accounts are offering more than 7% interest on money invested.

Mhloli adds that, for those who are in the fortunate position to save, there is an opportunity to cash in on higher interest rates by opening a retail savings or investment account such as Standard Bank’s MoneyMarket Select account - the account pays interest based on current interest rates in the money markets, with monthly interest compounded on the balance.

Providing the best rate in the market at up to 8.7% growth, the MoneyMarket Select investment account has no account fees, offers access to your money anytime, protection from the risk of market fluctuation, and the option to transfer the interest earned to any other account.

“The higher interest rates the country is experiencing are pushing the yield on these kinds of accounts higher, enabling people to build their savings faster over a shorter time. We know saving is hard, especially in trying economic times, but clients can put money away and get so much more bang for their buck with these accounts. It’s beneficial for those looking to meet both long- and short-term financial goals, whether that’s building an emergency fund or saving for retirement,” Mhloli explains.

Financial service providers need to understand that their clients are concerned about their financial futures as a result of the mounting pressures on the local and global economy. That is why banks must continue to assist clients with opportunities that can help them mitigate the impact of the depressed environment on their financial positions, while supporting their ability to meet their life goals.