Is financial jargon a barrier to saving?

With another recession now in full swing, it’s more important than ever for debt-riddled South Africans to start saving. But is financial jargon proving to be a barrier to more responsible household finances in the Rainbow Nation?

When consecutive financial quarters saw drops in GDP in Q4 2016 and Q1 2017, South Africa once again entered economic recession. But the need for savvier, shrewder consumer spending pre-dates the current financial contraction by many years.

From pleas from high ups in the National Treasury, to efforts by financial services like Wonga’s Money Academy and charitable initiatives such as Operation HOPE, many people and organizations have been striving to get financial education on the agenda and to help boost financial literacy in South Africa.

Report after report has found that South Africa is seriously lagging other developed nations – and many other African nations – when it comes to financial literacy. Saving is one of the country’s weak points. South Africans are prone to borrowing heavily (the nation has repeatedly topped the charts of personally indebted states) and do not have a strong culture of saving or budgeting to help safeguard their lifestyles or ensure their futures.

A recent survey by Columinate uncovered fresh statistics on South African saving. According to the fresh research, 55% of South Africans don’t track what they spend their money on, Just 32% set financial goals for themselves and only 47% have a fair understanding of their personal finances.

A dearth of state-delivered financial education (both in and outside of schools) is a major factor behind his problem. So too is the deteriorating performance of South Africa’s students in mathematics (the pass grade has recently – and controversially – been lowered). But these issues aren’t the only obstructions to a more money-savvy population. Exclusionary financial jargon could be making it difficult for the everyman and everywoman to get to grips with a more considered approach to personal finance.

To help cut through the jargon and finance-speak, we’ve defined some key savings-related financial terms for South African consumers to familiarise themselves with…


Annual Equivalent Rate or AER is a figure which shows you what interest rate your savings would earn if interest was paid and added to your savings every year.

Call account

A savings account in which your money is effectively “on call”. This means you have easy access to it should emergency expenses arise. Though convenient, these savings accounts typically offer uncompetitive, low interest rates (around 2%).

Fixed deposit

A savings account which does not allow access to your money during an agreed-upon term. This may be a month or several years. Over this period, your savings will accrue a set level of interest, agreed before the beginning of the fixed term (typically 4.6-5.8%(.. Some contemporary fixed deposits are now available with “linked deposits” which accrue interest based on the market performance, not on a pre-agreed interest rate.

Notice deposit

A savings account which allows you to invest, then withdraw your funds with a period of notice, giving you access to your money once again. Notice periods vary very widely, from 21-61 days, as do interest rates which usually increase for longer notice periods.

Could you define all of the savings terminology we just shared? Do you have any savings jargon you’d like to see busted? Tell us below.

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