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Rates Slashed

Capitec Bank has made big changes to the interest rates it offers on clients’ accounts and not everyone is happy.

As of February 2025, the interest rates on Capitec’s main transactional accounts have been slashed from around 7.25% last year to a flat 2.25%.

‘slashed from around 7.25% last year to a flat 2.25%’

Obviously, interest rates have dropped a bit recently (thank goodness) but this cut is much deeper than the 75 basis point drop in the repo rate over the past year, leaving many customers feeling confused and disappointed.

The Good Old Days

For years, Capitec was known for offering some of the highest interest rates on day-to-day accounts which was a major drawcard for clients.

Many customers used the main account not only for transactions but also to earn decent interest to help offset monthly bank fees or even grow small savings. Now, with rates slashed, that advantage is largely gone.

But all hope is not lost for those who want to stay loyal and not migrate to TymeBank or other competitors. Clients are being steered toward the bank’s dedicated savings products instead.

Capitec themselves says these changes are meant to encourage better saving habits cause they feel South Africans don’t save. But the real motivation in the face of loss of profitability and mounting pressure from competitors is also quite obvious.

‘the real motivation …is also quite obvious’

By encouraging customers to separate spending and savings, Capitec can manage funds more effectively — using clients savings deposits to support their own lending and other business activities.

Also, with lower rates on their incredibly popular transactional accounts, the bank reduces the cost of holding client funds, which could improve profits. Capitec have been under financial pressure from some time now and have to look at ways to be more profitable.

Please Save Something

Instead of keeping money in main accounts, Capitec wants customers to move their extra funds into savings plans, like the “Access Anytime” account, which now offers interest rates similar to what the main account used to.

The question is, will anyone?

Capitec argues that South Africans are not saving enough  with the country’s household savings rate sitting at -0.9%. They hope that clearer product names and some interest rate incentives will help motivate their clients.

Part of the shift involves renaming accounts to make them easier to understand for consumers.

What used to be called the combined “transactional/savings” account is now simply the “main account” while the old “flexible savings plan” is now the “Access Anytime savings plan.”

‘Part of the shift involves renaming accounts to make them easier to understand for consumers’

The bottom line is that Capitec are now paying a lot less interest on their most popular account type (but have given it a nice new name).

It remains to see who this benefits the most. Will it make Capitec a lot more money or will the move lose them even more clients to their competition?