Earning interest from bond account

A Fin24 user wants to know if he would be earning interest if he put some money in his paid-up bond account. He writes:

My bond was paid up a few months ago. I am still paying a R57 service fee and R135 insurance premium since the account is not closed yet, since the interest rate was 9.25%.

What will happened now if I put some money in this account? Would I get that 9.25% interest per year?

I am just interested as this would be great if it’s the case. I am banking with Standard Bank SA.

READ: Putting extra money in bond, car or elsewhere

A spokesperson for Standard Bank responds:

It is an interesting question and there are multiple aspects that are to be considered.

Firstly, there is no interest earned by placing the bond in a credit balance position. Therefore, it would not be beneficial to see a credit balance on a loan as the best savings approach.

However, where there is an outstanding loan balance, there is benefit in pre-paying the capital, which in turn would reduce the interest cost.

If subsequent access to the prepaid funds is required, one can apply for a re-advance on your loan facility, or if you applied for an access bond before you prepaid additional money into your loan, you will be able to access it electronically, via internet banking.

READ: Interest on flexibond savings

On the contrary, one must also consider that keeping a bond open still requires the monthly service fee to be serviced and making certain the bricks and mortar remain insured.

Finally, in the event of deciding to cancel a settled bond account, there will be attorney fees payable to cancel the bond over the property with the deeds office.

ALSO READ: Using access bond to buy second property

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