FNB has revealed its decision to protect nearly 30 000 senior customers who hold Fixed Deposit accounts against a potential interest erosion. This is after the Bank opted to maintain high interest rates on Fixed Deposits for this group of customers despite the successive decrease in the repo rate.
Since the beginning of this year, the South African Reserve Bank (SARB) has reduced interest rates by 3% to alleviate the pressure of a poorly performing economy and COVID-19. Whilst lower interest rates offer financial relief to consumers who are servicing debt that is linked to the movement of rates, those who hold cash savings often earn reduced interest.
Chief Executive of FNB Retail and Private Banking, Raj Makanjee says senior citizens, especially those who are already in retirement, are mostly vulnerable to lower interest rates because many rely on interest earned from fixed savings for monthly income. As a result, we are mindful that lower interest rates can inadvertently reduce the disposable income that our seniors or retiree customers generate on fixed savings. Our move will provide relief to this vulnerable group of customers by helping them to maintain interest earnings that are relatively higher.”
FNB Cash Investments CEO for Retail, Himal Parbhoo says many seniors choose fixed deposits to preserve their retirement lumpsum while earning interest for monthly expenses. Consequently, the structure of this savings solutions allows seniors peace of mind as their capital is guaranteed. Over the years, we have sought to support both seniors and other customers by offering competitive interest rates to boost customers’ savings goals. Our move to protect vulnerable customers during this time is also indicative of our focus on customer centricity, he says.
Currently, the top rate for seniors (with balances over R1m, is 7.60%, p.a. for 5 years). In addition to its favourable rates, the Bank recently adjusted its eBucks benefits to enable to them to earn more eBucks.
“The impact of a recessionary economic environment and COVID-19 has arguably encouraged consumers to pay much more attention to the way they manage their money. As a result, we are always looking for ways to provide meaningful value and help through our money management expertise and platform-based solutions. In these uncertain times, it is crucial for all customers to prioritise reasonable financial buffers in the form of emergency savings as well as long-term savings,” concludes Makanjee.