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All You Need to Know Before Opening the Absa Digital Savings Account
All You Need to Know Before Opening the Absa Digital Savings Account
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All You Need to Know Before Opening the Absa Digital Savings Account

Money254 Partners Team
March 15, 2023

EDITOR’S NOTE: This article is part of our Money254 Partner series produced in partnership with Absa Bank Kenya to celebrate the launch of their new digital savings account. For more on Absa’s new digital savings account, read here

It’s March 2022 already and like most people, as research suggests, chances are you are not quite on track with at least some of your New Year resolutions.

Research indicates that about 80% of people will have ditched their resolutions by the second month of setting them - that is February. One of the biggest reasons identified for this staggering failure is that many people set goals without an accountability plan.

For instance, if one of your goals this year was to save up more, save more consistently, save a specific amount by mid-year or December, save for a specific goal such as buying land or anything to do with savings; congratulations!

It’s simple. If you do not deliberately make putting away money for the future a priority, you will never really get to do it. And when the “future” comes and you need that money, it will not be there.

So, with two months in - you have already received two paychecks if you are employed and if you are in business, you have gone through a few payment cycles, but how good have you been at putting aside some money?

Most people have a plan to save, but not everyone is actually able to save as much as they would want.

Having the right accountability system could be the difference between abandoning your savings goal in February and holding up till December and enjoying both the interest earned on your savings and the joy of actualising the objective you were saving for.

When it comes to savings, one such accountability system can be as simple as saving in the right place. A digital savings account is one such great option that can allow you to monitor your progress, save instantly from the comfort of your phone and never ever need to visit a bank branch.

And if the digital savings account comes with a bonus interest rate for account holders who keep their withdrawals minimal, then you can see how opening a digital savings account may be helpful for your 2023 saving goals.

A good example is the Absa Digital Savings Account and in this article, we take you through all you need to know about this newly-launched digital savings account to help you figure out if it is indeed the account to power your savings goals this year and beyond.

But first, let’s start with understanding digital savings.

How Does a Digital Savings Account Work?

A digital savings account is a type of bank savings account that can be opened and operated fully digitally without ever needing to step into a bank branch for paperwork.

It can be accessed through an array of devices over the internet, including through a smartphone application, mobile browser, via the web on a laptop or even via USSD.

Like the traditional savings account, savings in a digital savings account earn an interest as determined by the bank, may have some limitations on withdrawals and could also have minimum balance requirements.

Once you create a digital savings account online, you get an account number like any other bank account and you can start making instructions to your employer, bank, and customers to deposit specific amounts directly into your digital savings account.

You can access statements of your account history online, analyse your withdrawal history to identify the trends you can learn from, and it may be possible to make payments from the account depending on the bank.

The convenience offered by a digital savings account is one of the major advantages in supporting someone’s savings goals.

If you are considering opening a digital savings account, the Absa Digital Savings Account is one of the pioneer digital savings options available in the Kenyan market today and it is worth your consideration.

Below, we discuss some of the major highlights about the Absa Digital Savings Account that you need to know as you consider this option.

7 Things to Know Before Opening Your Absa Digital Savings Account

1. It’s 100% Fully Digital

Where are you keeping your savings today? A good number of Kenyans admit to using their current accounts/salary accounts as their savings accounts. They say whatever is left at the end of the month is what is saved - which becomes problematic since this money is easily available to withdraw and it may be difficult to actually track what is saved.

You would wonder why it is so difficult for someone doing this to simply open a separate savings account. Well, as you may well know, visiting the bank and queuing up on a working day may not always be the most enjoyable experience and many keep postponing this important decision.

Now, are you one of those people who is waiting for that perfect day to open a savings account and two months into 2023, you have not opened one? It could even be that you need a completely different account to save for a very specific goal e.g., your December vacation.

With the Absa Digital Savings Account, you enjoy the convenience of being able to open your savings account from anywhere using your phone or computer.

All you need to do is visit the Absa website here and;

·         Upload a copy of your National ID/Passport

·         Upload a signature specimen; and

·         Provide your KRA PIN Number.

These can be uploaded in JPEG, JPG, PNG or PDF formats. For the signature specimen, you have to make sure it is signed on a white piece of paper.

There are no requirements to travel to a branch, no lengthy paperwork, and no long queues whenever you need to track your progress.

Through the Absa app, you can set and cancel standing orders, review your savings history, and monitor in real time, deposits from others into your account including from your employer.

2. No Minimum Balance

The Absa Digital Savings Account does not have a minimum balance requirement. You do not need to retain any amount of money in the account to keep it active.

Also, there is no minimum interest-earning balance, meaning that any amount you save will earn you interest.

This is great for anyone getting started on their savings journey and are still figuring out how much they need to be saving as well as anyone with irregular income and may need to withdraw from time to time.

The fact that there is no minimum balance requirement is particularly great for emergencies or any unexpected expenditures since you are not penalised for withdrawing your own money as some bank savings account types in Kenya would.

You can save the amount you are comfortable with and grow gradually without worrying about meeting a minimum balance requirement and still enjoy interest.

The second reason identified for why many people drop their New Year resolutions by February is due to goals that are not actionable - that is a goal too vaguely ambitious that it may be hard to implement.

Opening a savings account that allows you to save at your own pace may be great for your consistency.

3. Competitive Interest Rates

One reason to keep your money in a savings account, as opposed to a current account, is to earn interest against your savings.

With the interest rates offered by banks on savings accounts in Kenya ranging from between 1.5% to 7%, the Absa Digital Savings Account offers a maximum interest rate of 7%, making it among the highest rates of return for savings accounts offered by banks in Kenya.

4. Tiered Interest Structure

It is important to note that the Absa Digital Savings Account accommodates both savers who may have a need to frequently draw from their savings as well as those focused on keeping their withdrawals minimal, if at all.

If you have irregular income, are in business or anticipate some urgent expenditures that may not be covered by your main income stream, you may have to withdraw from your savings account more than once a quarter. If you withdraw more than once in every three months, the minimum interest rate offered by the Absa Digital Savings Account is 3.5%.

This means that despite withdrawing a number of times from your account in three months, you still earn an interest rate higher than the minimum offered by commercial banks in Kenya for savings accounts.

If you can save and not withdraw more than once every quarter from your Absa Digital Savings Account, you are rewarded with a bonus of 3.5%, giving you the maximum interest rate for the account of 7% per annum.

Download the Absa Digital Savings Account Interest Calculator Here

The account is essentially encouraging saving towards goals, whatever that may be for you, with very minimal withdrawals. But it is also acknowledging the fact that sometimes you may have no option other than to draw from your savings and thus it still offers an interest.

Building a savings habit is not an easy task, especially if you are in the early stages of your career. You may often need someone to keep you in check and offer you a pat in the back when you are doing well. The Absa Digital Savings Account may be that someone.

5. Interest Compounds Quarterly

Unlike some savings accounts that pay out the interest only once in a year, with the Absa Digital Savings Account, interest is paid out four times in a year allowing your savings to grow more through compound interest.

For example, if you had started saving in January, the interest earned by your savings up to the end of March is added to your savings and itself (that interest) will also earn you interest in the next three-month period.

Not only will your actual monthly contributions earn you money, but also, the interest that you earn every three months will earn interest for the subsequent three months and so on.

This applies whether you withdraw more than once a quarter (3.5% interest) or at the maximum rate of 7% p.a. if you stay within the withdrawal limit.

Download the Absa Digital Savings Account Interest Calculator Here

6. Limits

As discussed, the Absa Digital Savings Account has a quarterly limit of only one withdrawal. This means you are only allowed to withdraw once every three months if you want to enjoy the maximum interest rate.

If you exceed the withdrawal limit, the interest rate applied is 3.5%, while if you withdraw only once a quarter, you enjoy the bonus that takes your interest rate to 7%.

7. Fees

Operating the Absa Digital Savings Account is free of charge. There are no account maintenance fees or ledger fees.

Neither are there any withdrawal fees as some traditional savings accounts would have. You are not charged for even withdrawing all your savings when you have reached your savings goal or need the money for whatever reason.

This makes it a great option for anyone who would be discouraged from saving by fees that eat into your savings.

For example, apart from some other bank savings accounts that have fees, money market funds (MMFs) charge a “management fee” of roughly 2% and a withdrawal fee.

If the MMF is offering near-similar returns and still has a 48-hour wait before you can access your funds, some people may find it to be more beneficial to open the Absa Digital Savings Account - all this depending on your reasons for saving.

How to Open the Absa Digital Savings Account

As already mentioned, the Absa Digital Savings Account is one of the pioneer digital savings accounts in Kenya and does not require you to physically visit a branch to open an account.

It can be opened on the Absa website, after uploading basic KYC documents, including copies of your ID, KRA pin and a signature specimen. The process takes just about 10 minutes.

If you are keen on increasing efficiency and convenience with your personal finances, you may find this account very useful. This unique account is also particularly convenient if you are a Kenyan living or working in the diaspora and wish to operate a savings account in Kenya.

If you opt to open the Absa Digital Savings Account by physically visiting the branch, it is also a straightforward process and requires you to carry copies of your ID and KRA PIN, as well as a passport-size photo.

To access the account via the Absa App or through internet banking, you will need to make a one-time visit to an Absa branch near you to set this up.

4 Success Tips in Your Digital Savings Journey

Inspired enough to get back on track with your savings resolutions this year via a digital savings account? They say good intentions count for nothing if they are not followed up with the appropriate action.

To wrap up this article, we explore some useful tips to help you stay focused on your savings goals so that you can achieve what you are looking to achieve this year.

1. Save With a Goal

A great motivation for saving is having to accomplish a clearly defined goal. If you go a little further than simply saying “I want to save more” and be more specific like “I want to save for a car down payment by August 2023”, you get even more focus and a purpose to realise the visualised goal.

It could be the goal of buying a piece of land to build your home, a business machine, a household electronic, a holiday and so on. Having a goal makes the savings journey more worthwhile since you know the reward that awaits you.

Beyond having the goal, set a realistic timeline for yourself, this will keep you on the straight and narrow - and increase your chances of success.

2. Automate Your Savings

Automating your savings is one of the greatest strides you can make in solidifying your savings habit. As human beings, we are prone to procrastination, and impulses which can affect our saving consistency - even when we are committed.

Some of the ways to automate your savings include setting a standing order to your Absa Digital Savings Account from your salary account, asking your employer to directly deposit part of your monthly paycheck into this account and setting up a direct debit from your customers etc. who pay you on regular intervals.

3. Limit Withdrawals

If you are saving towards a well-defined goal, then withdrawals are not going to be that exciting since it means your goal will take longer to achieve.

Even from the structure of the Absa Digital Savings Account, you can see that if you do not withdraw more than once a quarter, you get a 3.5% bonus that raises your interest rate to 7%.

If you are just getting started on savings, frequent withdrawals from your savings account will mean you may take much longer to fully form a solid savings habit - and as many will tell you, this may amount to actually robbing your future self.

Above all, limiting your withdrawals can motivate you to save more from the joy of seeing your savings grow.

4. Track Savings and Expenses

What is the happiest moment in a saver’s journey? The best guess has got to be when they achieve what they were saving for.

The happiest day is probably when you withdraw to pay for that car down payment, to buy that plot in Juja or to book that hotel for your special vacation.

And this is not going to happen any time soon if you are not tracking your progress, not just in the savings account but also, and especially, your budget.

Expenses, especially discretionary ones, are the biggest obstacles that stand between you and your saving objectives. It is important to create a tracker for all your expenses to help you identify areas to cut down and increase the amount you save monthly which brings you a step closer to your goals.

One way of doing this is having a dedicated excel sheet or a notepad on your phone that keeps tabs on all your expenses - both the big and the small. You can also download a free expense tracker app.

The Absa Digital Savings Account, all digitally, allows you to track your savings progress even years back into your journey, you can identify cancelled standing orders, those about to stop etc. and adjust accordingly.

What do you think, is it time to get yourself a digital savings account? Let us know in the comments. 

This Article is part of our Money254 Partner Series. Our partners may suggest topics they would like readers to know about but do not influence what/how we write about it. Money254 remains committed to providing objective information to our audience. For more on Money254’s editorial policy, read here.

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