South Africa has different types of banking institutions. These include locally controlled mutual companies, cooperatives, international banks and foreign banks. South African banks hold deposits totaling around R6 trillion. Therefore, it is important to understand the different types of bank accounts in South Africa in order to get the most out of the banking industry.
Different types of bank accounts serve different needs. Therefore, it is wise to put your money in the account type that best suits your financial goals so that you have access to the right spending and savings tools. This allows you to maximize your banking returns, minimize fees and manage your money conveniently.
Before opening a bank account, it is important to understand the types of bank accounts so that you can choose the benefits and services that suit your daily needs. Here is a detailed guide on the different bank account types in South Africa.
Checking Accounts
A checking account is one of the most common bank accounts used for day-to-day banking in South Africa. With this type, you can withdraw money from any branch or ATM and transfer money online. You can get started right away for a low monthly fee, but you'll have to pay extra to make withdrawals and other transactions. You can use the overdraft system. Some of the main features to note are:
No minimum balance required for setup or maintenance
Direct deposit
Online banking via website
Savings and investment
A savings account is one of the best bank account types in Africa. As the name suggests, it saves you money you don't currently need to spend right away. It has moderate interest rate but is a convenient type of bank account for those who want to:
Better budget
Helps you build saving muscle
Save extra cash
Some of the key features to look for in a savings and investment account are:
No monthly maintenance fee
Online access and reviews
Competitive interest rates
3. Money Market Account (MMA)
A money market account (MMA) is one of many types of bank accounts commonly used by South Africans. It combines the characteristics of save and check types. One of the best options if you want to keep emergency funds for 3-6 months. Money is always nearby when you need it, but it's not a daily check. This type provides:
Interest on balances
Writing checks
Accessing debit cards
Certificate of Deposit Account Basics (CD)
CD is one of the least used bank accounts in South Africa. It acts as a savings account where you keep your money for a set period of time, from 3 months to 5 years. To get the maximum interest from your savings, you must commit to holding onto your money until an agreed-upon date.
This type of bank is great for saving towards a financial goal with a planned end date. If you want to withdraw money before the deadline, you will be charged a penalty. In most cases, the penalty can wipe out everything you have accumulated. In other cases, the penalty can even eat up the amount originally deposited.
Here Are The Four Best Accounts for children and Teenagers
1. FNBy Account for Children Under 18
This account is available to children between the ages of 0 and 18 and can be opened with the help of a parent or legal guardian. The account offers rewards designed specifically for kids, including a data and audio minute bonuses and discounted rates on Netflix and Spotify. There are also no monthly service fees and account holders can open a savings account at no additional cost.
2. (sum) 1 Banking Account by Standard Bank
The account is available to those under the age of 16 and is provided by Standard Bank, which encourages young people to bank and manage their own finances. The account offers benefits such as free ATM cash deposits and withdrawals, free electronic debit transactions, unlimited checkout cycles, free bank cards and transaction notifications. However, it can only be used by parents or legal guardians who have regular bank accounts.
3. Absa MegaU Youth Account
The Absa MegaU Youth Account is available for those under the age of 20 and has no monthly account fees. Each month, the account holder is entitled to receive 100MB of data and R20 dining vouchers to be used at select restaurants. To qualify, the monthly balance of the account must be his R300 or the account holder must have at least 4 bank transactions in his month, including 2 prepaid transactions . This account also offers discounts on various products and services.
4. Capitec Bank Global One Account
The Capitec Bank Global One account is available to persons under the age of 18 and there are no monthly account fees. It offers free cash deposits at ATMs and unlimited free card swipes at checkout points. It also includes a free Global One card that can be used for free transactions at merchants that accept Mastercard. To be eligible for this account, the applicant must have a valid South African ID card or passport and residency proof.
The Best Accounts For Business
One of the most affordable and flexible accounts for entry-level South African businesses and entrepreneurs is the Pay-As-You-Use (PAYU) business account.
This type of account offers a flexible and affordable solution for small businesses. Several South African banks offer PAYU business accounts and the benefits of these accounts include:
Low or no monthly fees – PAYU accounts typically have low or no monthly fees, making them a cost-effective option for small businesses.
Pay only for what you use - Businesses only pay for services they use, such as transactions, debit card usage, and online banking.
No Minimum Deposit Requirement – Unlike traditional business accounts, PAYU accounts have no minimum deposit requirements, making it easier for small businesses to manage their finances. Improved Cash Flow Management - Businesses can track cash flow and manage expenses more efficiently.
Easy to open – PAYU accounts are typically easy to open and require minimal documentation, making them a convenient option for small businesses.
Digital accounts
South Africa has three major banks, Bank Zero, Discovery Bank and Time Bank, which offer digitally focused services without physical branches. This is where the Glow app account will fit in. A Glow account will allows you to connect your cash and digital worlds with Glow app. Supercharge how you interact with money with all the tools in your hand. Join the waitlist and be part of the hundred South Africans who cannot wait to get their hands on our new app. The app is going to simplify the way you bank.
When it comes to sheer numbers, TymeBank is by far the most popular option, with over 5 million customers in the country as of June 2022.
TymeBank's significant growth can be attributed to very low barriers to entry in terms of pricing, eligibility and sign-up process. There are no monthly fees and most transactions are free. Only a handful of transactions generate R3.00, R7.00, or R10.00 charges.
Additionally, customers don't require a minimum monthly income and can sign up for an account through their website or mobile app. At this time, new clients can have a maximum balance of R40,000 in their account. Then you can go to the TymeBank Kiosk to check the details. ID, fingerprints and home address are required. The maximum potential balance increases to R1.4 million.
Conclusion
Overall, people who want to open a bank account in South Africa have several options. Each account has its own benefits and entitlements, so it's important for people to consider which account best suits their needs.