How To Save More From The Interest In Your Bank Account

You may have wondered whether it’s worth adding a large lump sum to your bank account towards the end of the month. Would this add to the interest accrued, and if so, to what extent?

We find out what would happen in this situation, and we consider how you can make the most of the interest you receive from your bank.

How is your interest calculated?

According to Sbusiso Kumalo, chief marketing officer at African Bank, interest is calculated on your daily balance and paid into your account once a month.   

By way of example, if the balance in your interest-yielding bank account is R5,000, and you add R1,000 the day before interest is due, the interest calculation will be based on R6,000 for a single day, and on R5,000 for the remainder of the month.

“The common rule of thumb is that if the money resides with the bank, the customer will earn interest,” says Kumalo.

How to make the most of your interest

You may want to increase or utilize the interest you receive from your general bank account. There are a couple of ways in which you can do this.

Firstly, you should make sure you leave your money in a bank account that has a reasonable interest rate. Explore the options that are available and find out whether you could earn more interest by transferring your savings or emergency fund to a different account.

“Generally, it would be better to move your money into a higher-yielding account. Often day-to-day bank accounts don’t pay interest,” says Kumalo.

If you’ve already split your savings among accounts, consider moving all of your funds into the account that offers the highest interest rate.

You can keep a separate ledger to monitor how each portion grows over time, but at the same time benefit from receiving larger interest payments.

Finally, it’s always best to leave the accrued interest in the account in which it was earned. This will ensure that your savings will compound, and you will continue to maximise your earnings each month.  

Have you considered investing your money in a secure fund? See what’s available to you.