A combination of high interest rates and a desire by South African banks to increase the amount of cash in their vaults means there is now a wealth of savings deals on the market. But with economic turmoil stoking uncertainty over future interest rate cuts many South Africans would probably be better off using any spare cash to slash their debt repayments.

"The crisis on the global financial markets means that stock-market investments for new investors are probably too high-risk at the moment, but there are still plenty of good deals around for people with money to save whether it is R50 or R50 000," says Paul Beadle, managing director of www.justmoney.co.za.

"Unlike the US and Europe where there is a real worry about the future of many financial institutions, and therefore the client cash they hold, South African banks are fairly safe because they have not been caught up in much of the sub-prime crisis and subsequent credit crunch."

But Beadle warns that consumers should not put all their money in savings if they are still repaying off short-term debts. "The debit interest consumers pay on a credit card debt could be as high as 25 to 27 percent whilst a store card debt could be 35 percent or more. The maximum the biggest balance could earn from a high street savings product is around 13 percent so, for most people, paying off your debts first will actually put more money in your pocket than any savings account."

Pay off your short term debts

For most of us, the interest rate we pay on debts like credit cards and store cards will be much higher than anything you could earn in a normal high-street savings or investment account. So, slash your debts and have more money in your pocket, which you could then put into a regular savings account.

Potential returns:

• Paying off a R5000 debt on a store card charging 35 percent debit interest will save you R1750 a year.

• Clearing a R10 000 balance on a credit card with a debit interest rate of 25 percent will put R2500 a year back into your pocket.

Choose a bank account that pays interest

Most bank accounts pay little or no credit interest on your cash so consider a current account that will earn interest on a positive balance. Alternatively, check out a rebate banking account that will repay some or all of your monthly bank charges if you maintain a minimum monthly balance. Depending on how you use your bank account, the money you would save on bank charges could be more than you’d earn in interest — but the minimum balance is usually quite high at around R10 000.

Potential returns:

• The Sanlam Liquid Account pays interest of around 12.29 percent which returns R102.42 a month on a R10 000 balance — but you need a minimum balance of R500 and there’s a R25 monthly fee.

• The Capitec Global Bank Account pays 10 percent on all balances up to R10 000 so you would earn an extra R41.67 on a R5000 balance — the monthly fee is only R3.75 and it probably has the cheapest fees around.

• Both Standard Bank and Absa offer rebate banking options, so use the www.justmoney.co.za bank charges calculator to work out if they are the most cost-effective options for you.

Save, save, save

There are some great savings deals around at the moment whether you want to lock your money away for a fixed period of six or 12 months, for example, or if you are looking for an account that pays a good return on your money, but gives you easy access to your cash.

Potential returns:

• Nedbank Park-It pays 11 percent interest on the minimum balance of R10 000 — up to a maximum of 11.55 percent on bigger deposits — so your R10 000 will grow by R1100 over 12 months. You can access your cash at any time after 14 days, so long as you maintain the minimum balance.

• The FNB Restart account gives you 11.25 percent on all balances over R10 000 if you leave your money untouched for 13 months. This equals growth of R1125 on R10 000, which is the minimum balance required.

• The Absa Linked Rate is linked to prime so you currently get 12.40 percent for a 12 month fixed deposit, earning you R620 a year on R5000. The minimum balance is R1000 and you must leave your money for 12 or six months, with the shorter term paying a lower interest rate.

• With Nedbank JustSave you can earn R412.50 a year in interest at 8.25 percent on a R5000 balance. You only need a minimum balance of R50 to open the account although a lower rate is paid for balances under R1000, rising to 10.4 percent for balances over R100 000.

• The Absa Money Builder pays R420 annually on a balance of R5000 at a rate of 8.4 percent. You can open an account with R20, earning 7.9 percent on balances under R1000. The rate increases the more you save, topping out at 10.4 percent for balances over R25 000.

Which credit cards pays the most for a positive balance? How much can you save by paying more into your mortgage? Find the answers on page two...