Interest saved by parking cash in an access bond versus a savings account.
Access bond advantage
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Bond interest saved
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Savings interest (after tax)
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Your breakdown
Updates live as you type| Where the R150,000 sits | Benefit over the year |
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An access bond is a savings account that pays your bond rate
Most South African home loans come with an access facility, which lets you push extra money into the bond and pull it back out later. The financial trick is what that deposited money does while it sits there. Every rand parked against the bond reduces the balance the bank charges interest on, so it saves you interest at your full bond rate. A formal savings account does the opposite: it pays you a lower rate, and the interest it earns is taxable once you pass the annual exemption. This calculator pits the two against each other so you can see, in rand, how much further the same lump goes inside the bond.
The two forces at work: the rate gap and the tax gap
There are two reasons the bond usually wins, and it helps to keep them separate. The first is the rate gap. Bond rates have recently sat near 11.5 percent while a decent savings account might pay 7.5 percent, and money in the bond effectively earns the higher number. The second is the tax gap. Interest saved inside a bond is not income, so SARS does not tax it, whereas savings interest is taxable above the annual exemption, which is the figure this calculator applies for someone under 65. Confirm the current exemption with SARS, because it is adjusted from time to time. The important nuance, which many comparisons get wrong, is that on modest amounts the tax gap may not bite at all, and the whole advantage comes from the rate gap alone.
R150,000 parked for a year
Say you have R150,000 sitting idle and you park it for 12 months, with a bond at 11.5 percent and a savings account paying 7.5 percent. Here the savings interest of R11,250 stays under the R23,800 exemption, so no tax is actually due. The bond still wins, purely on the rate gap between the two accounts.
The R6,000 edge here is driven entirely by the four percentage point rate gap, not by tax. Push the amount or the savings rate higher and the interest climbs past the exemption, at which point the assumed marginal rate of 31 percent starts eroding the savings side and the bond pulls further ahead. As a rough guide, on a 7.5 percent account it takes a balance above roughly R317,000 before the year's interest breaches the exemption and tax begins to bite, so for many savers the comparison really is a pure rate contest, and the bond's higher rate decides it.
The catch is access, and the discipline trap
The number does not capture the real trade-off, which is liquidity and behaviour. A savings account is fully yours on demand. Money in an access bond depends on the bank approving the redraw, and some facilities are slower or have conditions, so it is a weaker emergency fund than cash you control. There is also a discipline trap: because the money is so easy to pull back, some people treat the bond as a current account and never actually leave the surplus there long enough to compound the saving. A sensible split is to keep a true emergency buffer liquid and park genuinely surplus cash in the bond. This tool assumes simple interest and a flat marginal rate, so treat its output as a clean comparison rather than a forecast to the rand.
Do I still pay the same bond instalment if I park extra cash?
Usually yes. Most banks keep your monthly instalment the same and let the extra balance shorten the loan or build available redraw, rather than reducing what you pay each month. The benefit shows up as less interest charged and a faster payoff, not a smaller debit order, unless you specifically ask the bank to re-advance and re-amortise.
Is the interest I save inside the bond ever taxable?
No. Reducing the interest you owe is not income, so there is nothing for SARS to tax. That is the structural advantage over a savings account, where the interest is income and becomes taxable once your total annual interest passes the exemption. It is one of the few genuinely tax-free returns available to an ordinary salaried borrower.