How to earn more from fixed deposits

South Africa’s financial institutions have continued to record an increased number of customers seeking to open fixed deposit accounts. A fixed deposit account which is also known as a time deposit account is a low risk investment option which allows depositors to earn lump sum interest on a deposited sum of money. Here are some ways in which you can earn more from fixed deposits.


Researching among different banks for the highest rates should be your first step. It’s also important to bear in mind that most banks offer a choice between fixed deposit and recurring deposit. In a fixed deposit, you deposit all your money at once. In recurring deposit, you deposit your money in installments. Each one comes with a slightly different interest rate.

Reinvest interest income

With a fixed deposit account, you are given two options: either withdraw the interest income or reinvest it. If you opt for the withdrawal option your savings account will be credited with your interest income. The interest will be higher than the previous year if you go for the reinvestment option. Instead, if you withdraw the interest you will get the same amount of interest every year till the maturity.

Split Fixed Deposit

Tax deductible as source (TDS) applicable on fixed deposit interest is deducted by the bank at the rate of 10% in case the amount to be paid or already paid is more than R10,000. The limit stands at R10, 000 per branch of the bank, per individual. If you want to avoid TDS, you can split your fixed deposits, that is, instead of opening one fixed deposit account you can open fixed deposit accounts in different branches of the bank and divide the amount among these. TDS can also be avoided by opening fixed deposits in different banks. Splitting your fixed deposit has another advantage. In case you need money urgently, you do not have to break all your fixed deposits. You can withdraw the amount by breaking only one or two of them and leave the accounts intact until you earn the predetermined interest.

Pick a company fixed deposit

Company fixed deposits are offered by many financial institutions. Company fixed deposits often offer higher interest rates and offer a suite of different benefits. A company fixed account should be the preferred account especially if you have a business enterprise.

The ways suggested above should assist you to maximise interest earned on fixed deposits.

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