Do you know what type of bank account is best suited for your current goals and needs? Be it daily transactional needs, business banking, long term savings goals, short term goals, emergency funds, etc. It may seem overwhelming but let’s just start by looking at what a 32 day notice account is and see how it works and why you would consider using one.
In partnership with Nedbank
What is a 32 day notice account?
A 32 day notice account (also called a notice deposit investment) is a special type of bank account where you can make multiple and frequent deposits, and generally earn a better interest rate than other savings accounts. But, you can’t withdraw the money on a whim; you need to give 32 days notice. Your money is not quickly accessible.
This really means is that your money is locked away from daily temptations, but you can access it in 32 days’ time.
The requirements for 32 day notice account is the same as for any other bank account. It’s the standard FICA documentation. If you already have an existing bank account, you may not be required to provide additional info to open a 32 day notice account. This will depend on how recent your info on file is.
How does a 32 day notice account work?
A 32 day notice account is a bank account much like any other. You can access it via online banking or your banking app, and you can easily transfer money to it. You can’t however do your common daily banking transactions such as making payments or having debit orders. This is purely a savings account. When you need the money though, you simply give notice on the account. This is easily done with a few clicks on your banking app or via the online banking site.
When giving notice you will need to specify where the money should be paid to, and this would normally be your main transactional account from which you can then make payments or transfer the money as needed.
Note that you can give multiple “notice instructions” at any time, provided of course you have the funds. You may want to withdraw R1,000 in 5 weeks’ time and then R3,000 the following week. You can put in two notice instructions upfront and plan your cash flow requirements.
Opening a Nedbank Electronic 32 Day Notice account is super easy via the app and you can find the Nedbank 32 day notice account interest rates on their site.
- No monthly fees or commissions.
- Minimum investment amount of R250.
- Interest rates are tiered, so the higher your balance, the higher your rate.
- Choose to have your interest paid out monthly or capitalised.
There aren’t really special features for 32 day notice account other than what is mentioned above.
Advantages and disadvantages of a 32 day notice account
Let’s take a closer look at the advantages of a 32 day notice account:
- your money is safe from spur-of-the-moment spending,
- you earn good interest based on the balance,
- no restrictions on deposits and growing your investment,
- easy to access your funds after 32 days notice,
- your capital is protected,
- a great way to save for short- to medium-term goals.
Some of the disadvantages of a 32 day notice account however are:
- no immediate access to funds,
- there is no bank card linked to the account,
- you can’t withdraw cash from ATMs or stores,
- no adhoc payments can be made from your account.
When should I use a 32 day notice account?
As you see from the above, the notice deposit account is a great savings account for goals that don’t require immediate access to funds. This could be any type of savings goal where you can predict when you’ll need the money. You only really need to know 32 days in advance, so you don’t need that much planning.
Some people use their notice deposit account for their Emergency Fund. This can work provided you have access to immediate funds via another methods. You could use your credit card to fund the emergency and then put in a notice instruction to withdraw funds in 32 days’ time, or perhaps you have another avenue.
I have also heard of a clever strategy which some independent contractors use. They deposit all income into their notice account and then set up withdrawal instructions for the end of each month and thereby “pay” themselves a set salary. This requires some admin to check one’s cash flow and account balance to ensure that it continues working, but a good idea none-the-less. You can earn good interest while creating a stable cash flow.
This type of account is also a good place to simply stash your cash while you’re deciding what to do. Rather earn a decent interest rate while finalising your plans.
Can I make an emergency withdrawal from 32 day account?
Yes, in most cases you can withdraw early from notice accounts. You will however incur a penalty cost. Best to contact your bank to discuss your situation and get a clear understanding of the costs and implications. Each bank will have their own T’s & C’s and associated fees, so best check it out. An FNB 32 days notice early withdrawal penalty be a slightly different process to say the Nedbank 32 day notice account penalty.
If you have some funds spare which aren’t growing, then you should certainly consider a 32 day notice account. You don’t necessarily need to know what your specific savings goal is right now, but don’t let your money sit idle.
This type of account allows you to stash away money, earn good interest, and easily access it after a short notice period. And better still, if you open a no fees account such as the Nedbank one, you’ll be making your money work for you while you decide on your next step.
Consider whether you need a 32 day account like this as part of your overall financial plan. And if you need to speak to a financial planner, Terence is my guy. (I recommend an independent financial planner who works for a consultation fee as opposed to someone who sells your products to earn a commission.)
Other types of bank accounts
Watch my quick video on what the Nedbank OptimumPlus Account is all about.