Tymebank has great rates, but is my money safe?

By Lizelle Steyn

21 July 2023

Photo credit: Kelly Orozco

As someone now living from her life savings, I hold a cash portion in my portfolio as a stable base from which to settle my bills over the next couple of years. Earning the highest possible interest rate on this allocation is important to me. As usual, I check in with Walter’s RateCompare to find the best options and over the past year Tymebank’s 12-month deposit at 11% has been rewarding. That rate recently dropped to 10% - still competitive. But how safe is an online-only bank like Tymebank?

These are the questions to ask before investing with a new bank:

Who are the owners of the bank?

The majority of Tymebank is owned by African Rainbow Capital. The biggest name here is Patrice Motsepe, one of the wealthiest men on the African continent. He has made his fortune and proven himself an astute business man. There is no motivation for him to start a fraudulent or incompetent bank and risk hurting his reputation and track record. Also, African Rainbow Capital (ARC) is the main BEE partner of Sanlam, another reputable company which would have done their homework before partnering with ARC.

Can the Regulator protect my money?

That said, should mismanagement lead to the failure of the bank, how bad can it get? There’s always been the unwritten understanding that the Reserve Bank would protect deposits up to R100 000, as happened with Saambou and African Bank. Now it’s formalised. Since 2024, the Corporation for Deposit Insurance, a Reserve Bank subsidiary, will protect individuals for balances up to R100 000 – with access to their money within 20 days. If you don’t yet feel comfortable that a bank’s completely trustworthy, maybe stay within this limit.

Can this bank fulfil all my banking needs?

New banks normally limit their service and product offerings, particularly on the credit card side. Should your card get stolen while overseas, for example, you might battle to get a new credit card delivered to you in a foreign country. Having accounts with two banks are handy and I wouldn’t let go of my “walk-in branch” bank account of the past 20 years. That said, my traditional bank account did fail me last year when the current account “de-linked” from my online profile overnight. No one at the branch or the call centre could figure out why this happened and I couldn’t pay bills or transfer money for a week. Fortunately, my other bank, Tymebank, could be used as a backup to make EFT payments.

If I choose this bank, will I sleep well at night?

Logic aside, if you still have an uneasy feeling about a bank, rather stay away. The rates on offer by the older, more established banks on 12-month fixed deposits are not that much less than Tymebank right now. And peace of mind is always important with every investment decision you make.