Business Maverick

PERSONAL FINANCE

Watch those fees: Where to get the most bank for your buck

Watch those fees: Where to get the most bank for your buck
(Photo: Waldo Swiegers / Bloomberg via Getty Images)

According to the World Bank, 85% of South Africans had a bank account by July last 2022. As the world becomes more digital, this move towards an increasingly banked population is to be welcomed. However, bank fees are notorious for eating away at your bank balance.

While Absa, Standard Bank, Discovery Bank and Nedbank have new fees that kick in from this month, other banks are introducing 2023 fee increases later this year. Capitec clients will have new fees from March, and FNB’s new fees start in July this year.

Yatin Narsai, chief executive of the newest bank on the block, Bank Zero, points out that a zero monthly bank fee is not the same as a free bank account. He advises bank clients to take the time to look for EFT (electronic fund transaction) and other transaction charges that may apply, as these can add up on a monthly basis. 

Chairman of Bank Zero, Michael Jordaan, says the fee structure of South African banks is simply far too high.

“An analyst report by UBS calculates that savings of up to R300 per month are attainable by individuals. Savings for businesses are much higher, at around R1,000 per month. The potential savings for the 376,000 businesses registered in South Africa are R4.5-billion a year.  

“And if the 40 million South Africans who have bank accounts can save a mere R50 per month, there’s another R24-billion of relief that is possible,” he says.

Cowyk Fox, managing executive: everyday banking at Absa Retail and Business bank, points out that when it comes to banking, minor behavioural changes can go a long way in putting money back in your pocket.

“Banking through digital channels is significantly cheaper than branch transactions, and depending on your transactional package, it may even be free.

“Most importantly, transacting electronically allows you to track your spending — your bank statement can be a helpful tool in identifying unnecessary expenses,” he says. 

Another tip Fox offers is that many banks offer substantial discounts on transactional accounts if you maintain a positive balance throughout the month.

Both TymeBank and Bank Zero offer one basic bank account, with no monthly fees, and your bank fees don’t change when your income increases.  

However, if you are in a middle-to-higher income bracket and want to go with a more traditional bank, FNB seems to be your best bet. 

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The 2022 Solidarity Bank Charges report notes that most consumers in the middle and higher-income categories leverage bank loyalty programmes to get better value. 

The report points out that competition is quite keen for these two categories and you are advised to run your numbers to ensure that the added value you get out of the bank’s loyalty programme justifies any additional costs. 

When it comes to typical bank transactions such as withdrawals and electronic transactions, the bank fees all seem to offer much the same. However, you need to pay attention if you happen to be stuck somewhere remote and have to make a cash withdrawal from a rival bank’s ATM. 

The traditional banks tend to penalise customers for using rival bank infrastructure by charging you a Saswitch fee. Interesting to note that Standard Bank continues to charge no Saswitch fees while FNB is charging as much as R135 for a R1,000 withdrawal at another bank’s ATM. 

This did seem to be the only area where FNB fell short.

Newcomers TymeBank and Bank Zero, both of which don’t have their own ATM networks — instead relying on other banks’ existing ATM infrastructure — don’t charge a Saswitch fee for obvious reasons.

The other sticky point seems to be the fee for instant payments. 

Co-founder of Zero Bank, Lezanne Human, points out that as long as you instruct your bank to make the payment before the interbank clearing window closes, that money will be in the recipient’s Bank Zero account that same evening, typically around 6pm.

Bank Zero compromised on the timing to be able to offer the “instant payment” option at zero fees.

In addition to this, the bank recognises that these transactions are sometimes a stress point for customers and offers a “track-and-trace view” — the same way you can track a parcel shipment.

Innovative indeed. DM168

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