Struggle. I am a TymeBank client. But I have struggled to understand their offer. I have spoken to their call centre. Although helpful, I did not get a straight answer to my questions. I asked annoying questions on Twitter and browsed through online forums. A reader of this newsletter shared his own and useful TymeBank calculations. (Thank you!)
My Twitter poll. Like me, seems majority does not know.
In this article, I share all my findings. I dig into TymeBank's GoalSave offering. What is it? How does it compare to other savings accounts? How is interest calculated - and specifically the GoalSave bonus? I built my own small TymeBank interest calculator. I share it below. I finish off with some of TymeBank GoalSaves limitations.
It is information I wish I had when I started looking into TymeBank. I hope you will find it useful...
Table of Contents
- What the heck is TymeBank's GoalSave?
- How much interest can I earn with TymeBank?
- How do TymeBank's GoalSave interest rates compare to other saving accounts?
- What is this GoalSave bonus. How is it calculated? Is it worth it?
- What do I need to know before I invest? Give me some bad news.
What is TymeBank's GoalSave?
TymeBank ↗ and their GoalSave offer the best interest rates on savings accounts in South Africa. TymeBank starts off paying a 4% interest and increases that to 5% by day 31 and 6% by day 91. All with immediate access to my money. That is 3x the interest rate I can get for an "average savings account". Great interest rates combined with really low banking fees makes this my favourite savings account in South Africa.
Example of a Tymebank ad
It does get better...if you can wait 10 days. TymeBank makes a lot of noise about paying up to 8% interest if you move your salary to them. If you have not moved your salary then an interest rate up to 7% applies. This is a unique offering - as far as I am aware in SA - and it is called the TymeBank GoalSave bonus. You qualify for the bonus if you give TymeBank 10 days' notice. It took me a while to understand this offering. Specifically the calculation. It is not as straight forward as I would like. More on that later.
Signing up to TymeBank and setting up your GoalSaves
Did someone say smooooooth? TymeBank is a digital bank. And I have to say they absolutely nailed it when it comes to signing up. It is super smooth. And quick. TymeBank is a digital bank, which means no physical branches. You may have seen the small TymeBank kiosks at Pick'n Pay or Foschini. But that's about as close as you will get to an actual branch. Signing up, paying for stuff and getting your questions answered is all done online. When it comes to signing up, I was done within five minutes.
Example of a TymeBank ATM at Pick'n Pay. Image source: Mybroadband.co.za
Once you have set up an EveryDay account on TymeBank, you are able to create up to ten GoalSaves. You can give these names. "Emergency", "Travel" or "Car Savings" are typical goals. Or you can be super specific. "Our ❤ Paris Trip", "Diamond Ring 💎", "DJ set 2000 🎧". It is up to you. Giving goals a personal touch can be motivating. So think a bit about your saving goals.
Here is what mine looks like.
My Tymebank goals
In my case, I have set up ten goals. This is the maximum amount of goals I am allowed to set up on TymeBank. But I have only funded two of them. A "Beach holiday" goal and a "Get kicking" goal. The other eight are all a mere R1. Why? When you pay out a goal save, you need to pay out all of it. I cannot pay out a partial amount of money from my Beach holiday account. Once paid out, the Goal is closed. However, I know I will save towards my next Beach holiday come January. Setting up an entirely new account would mean starting at 4% all over again. Except, that I have already set up a "Some future dream" with R1. Which is already earning 6%! Next January, I will use this account for next years beach holiday. And guess what...I start earning 6% immediately. Ka-ching. And yay to a more luxurious holiday 🍾
I first came across the tip of setting up multiple R1 goals on the FatWallet Facebook group. It was shared by one of the members. If you are on Facebook and looking for a great group to join, I strongly recommend this one.
How much interest do you earn with TymeBank GoalSave?
You start earning 4% interest rate from day 1, but you will start to earn more if you do not cash out. TymeBank pays 5% from day 31 and 6 % from day 91. A GoalSave bonus comes into play if you give TymeBank a 10 days notice before cashing out.
How is GoalSave Interest calculated?
- "GoalSave interest is earned in steps over the life of the account, with the 4% per annum rate applied for the first 30 days, 5% applied for the next 60 days, and a rate of 6% is applied from then on." Source: TymeBank website
|Days 1 - 30||4%|
|Days 31 - 90||5% 😍|
|From day 91 onwards||6% 🤑|
- "Interest is calculated daily, based on end-of-day balances. It is accrued during the month and all accrued interest is capitalised on the 1st day of the new month. This means that the interest is added to the account balance, and from then on, the daily interest is calculated based on this new, higher balance." Source: TymeBank website
🌟 Interest is capitalised on the first of every month. This is good news. All the daily interest earned for the month is added to your end-of-day balance. This means you will start to earn more as interest is applied against a higher balance. Compounding at work.
This is an important distinction to e.g. AfricanBank's Accumulator, where interest is not capitalised.
You can change this 👆
🌟 : Interest is capitalised on the first of every month. This is good
news. All the daily interest earned for the month is added to your
end-of-day balance. This means you will start to earn more as interest
is applied against a higher balance. Compounding at work.
😍: from day 31 you start earning 5%
🤑: from day 91 you start earning 6%
How does TymeBank's GoalSave compare to other savings accounts in the market?
Here is how TymeBank's interest rates compare to other saving accounts. AfricanBank's Accumulator account is the only bank with similar interest rates. The others do not come close. Even Capitec - which typically has great offers - will not match TymeBank or AfricaBank's interest rates on savings account. Banks like Absa, FNB or Standard Bank will all pay in the region 0-2.5% on savings accounts, where you have immediate access to money.
This is a constant changing environment. If you have come across a savings account which pays good interest rates & is not featured here, please send me an email: email@example.com. This will allow me to share it with readers.
|TymeBank GoalSave ↗||4%-6% (7%/8%)|
|AfricanBank's Access Accumulator ↗||4.8%-8.25%*|
|Capitec Flexible Savings ↗||2.25%-2.5%|
|Absa TruSave ↗||0-2.35%|
The TymeBank GoalSave offering is unique. The "give 10 days' notice and then receive bonus interest" is a unique TymeBank offering. However, there are other savings accounts in the market. AfricanBank's Access Accumulator ↗ is the only one which offers similar rates to TymeBank. Other banks simply do not come close to the interest rates paid by TymeBank. Just as TymeBank has unique features, so does AfricanBank's Access Accumulator ↗. The AfricanBank's Access Accumulator ↗ starts off with a 4.8% interest rate & then increases that interest rate on offer by 0.15% every month for 24 months. Ending at 8.25% in the final month. Sounds like AfricanBank could give me a better interest rate. Small little hickup though. AfricanBank does not capitalise the interest on a monthly basis. Unlike TymeBank the interest which accrues is not added until payout or expiry. So, let us see how this plays out against TymeBank with the TymeBank vs African Bank comparison interest calculator.
You can change this 👆
- AfricanBank does not allow for multiple deposits ❌. TymeBank does ✔.
- TymeBank does not allow for partial payouts ❌. AfricanBank does ✔.
- Monthly interest earned is capitalised at TymeBank ✔. AfricanBank interest is not ❌.
PS I am not taking into account the TymeBank GoalSave bonus. In certain cases, TymeBank then beats AfricanBank.
How safe is AfricanBank? In my view, it is one of the safest banks in South Africa. They are the most well capitalised bank in SA. Their capital adequacy ratios - which sit at 42% - are far above the minimum recommended ratios as put forward by Basel's minimum 8% (Source: 30 June 2021 financial report). And way above the average Bank's capital adequacy ratio - which typically sit around 15%. Leverage and liquidity coverage ratio are very healthy. In fact, they are the healthiest amongst all the SA banks. So is it possible that AfricanBank will fail again? It would be stupid to dismiss the probability of failure entirely. Any bank can fail. But, if I look at the capitalisation ratios coupled with a keen interest by the Reserve Bank to make AfricanBank a success; I come to the conclusion that it is a safe bank. Personally, I am comfortable putting my hard earned money here.
Whilst each of these savings accounts may have some distinct characteristics, they all share a common trait. All of these savings account offer immediate access to my money without penalties. This is an important distinction to fixed deposits. Yet despite offering quick access to money, the interest rate is high at TymeBank. Both TymeBank and AfricanBank's interest rate are more than double what other banks pay on their savings account.
PS If you are happy with fixing your money for a given time period - for example 12 months or even 60 months - banks are willing to pay more. In that case, look at my Fixed Deposit rankings to find out what interest rates you can get.
The TymeBank GoalSave Bonus
You can get a bonus - on top of the interest you have earned - when cashing out your goal save. This bonus can take the interest earned over the entire period up to 7%. A salary kicker bonus comes into play when your salary is moved to TymeBank. This takes the interest rate earned up to a potential 8%. I want to point out the "up to 7%". And "up to 8%". In large majority of cases, the interest rate will not be 7%. Or 8%. But it actually gets kinda close to this number. (See How is the bonus calculated?)
When & how do I get the GoalSave Bonus?
You are given two options when cashing out a bonus. Pay Now. Or Wait 10 days. If you choose Wait 10 days, you qualify for a bonus. The bonus + additional interest earned over the last 10 days will be shown to you. Here is what that looks like.
In my case, I wanted to cash out My Beach Holiday goal. When I click cash out, I am given two options.Now or Wait 10 days. The wait 10 days gives me an extra R260. The R260 is the GoalSave bonus + interest earned over 10 days.
How is the bonus calculated?
The magical, but confusing, multiplier. TymeBank applies a multiplier to the total interest earned on your GoalSave. The bonus you receive thus depends on how much interest you have earned to date. The additional bonus can take your interest up to 7%. Or 8% per annum - if you move your salary to TymeBank - and you choose to give 10 days notice.
Here is the multiplier they use.
"Customers are eligible for the “GoalSave Bonus” when 10 days’ notice is given on a GoalSave withdrawal. The Bonus amount is calculated as [all interest earned over life of GoalSave] x [7% / 6% -1]. This incremental payment results in the maximum interest paid during the life of the GoalSave increasing from 6% to 7%." Source: TymeBank website
This is the way TymeBank will calculate your bonus. Take the entire amount of interest earned over period x [7% / 6% -1]. If this takes interest rate to more than 7% (or 8%) over the life of the goal, then limit the interest rate to 7% - or 8% - respectively. So TymeBank will cap the bonus in certain scenarios to a max 7% (or 8% in case of salary).
Here is the multiplier in action.
👇 PS change the numbers below.
The bonus is equal to the total interest [R1,316] x [7%/6% -1] =
The salary kicker bonus is equal to the total interest [R1,316] x [8%/7% -1] = R188
* salary is not paid into account, ** salary is paid into your TymeBank account
It actually is as easy as that. But, what about the actual interest rate earned.
Question. "If I do take out a bonus, what is the calculated interest rate over the entire period?"
Conclusion. The longer time my money lies at TymeBank, the closer the interest rate will get to 7%. But, it is unlikely you will get to 7%.
Is the bonus worth it?
It will be dependant on why I am cashing out. And the urgency attached to it. If I need my money now - like in the case of a hospital emergency - I may simply not be able to wait 10 days before cashing out. However, if I can plan 10 days ahead like in the case of cashing out money for my beach holiday, then - yes, it can absolutely be worth it.
Give me the bad news about TymeBank. What do I need to know?
Firstly. Interest rates can change. There is no doubt that these kind of interest rates are there to attract customers. When TymeBank came to the market, they were offering interest rates up to 10%. Obviously that is unsustainable. But it worked in getting attention and importantly getting customers. Interest rates offered by TymeBank have already decreased. But, they are still really good relative to other banks. However, there is no doubt that these will decrease in future. Once they do, I will reassess which banks give me the best rates on my savings account.
Secondly. There are limits. TymeBank will only allow you to deposit up to R100 000. This is a clever play here. Whilst we do not have depositor insurance in South Africa, the Reserve Bank has stepped in and bailed out retail clients up to R100 000. This is somewhat of the "magical number" you will likely get back if a bank fails. Whilst not guaranteed, there is just a tiny bit of comfort there. (Source: Link to TymeBank article )
Thirdly. It is a new entrant in the market. I do not know enough about TymeBank's financial standing. However, given that they have focused on securing deposits first is a really good strategy. They have not (yet) gone into the unsecured lending side, which undid a lot of banks in the past. That will be a space to watch how they tackle that space. There is nothing that indicates they they will do this recklessly. The TymeBank team has been really impressive. I am hoping they do the same on the lending side. If they do not, I will not hesitate to withdraw my money.
But for now, TymeBank is my favourite savings account in South Africa.