Banking: Who really is the cheapest?

2014-10-05 15:00

Maya Fisher-French and Neesa Moodley help you select the bank account package that best suits your needs

In a recent report by the Solidarity Research ­Institute, the Capitec Global One account consistently emerged as the most affordable bank ­account in three categories, yet it assumed that individuals would be maintaining a positive ­balance and did not take into account FNB’s ­Savings Pocket interest rates, which in some cases made it the cheaper account.

This made the figures very misleading. In fact, the figures almost appeared to be manipulated in favour of Capitec assuming positive balances, which would just push FNB out of the running.

We looked at four South Africans who use their bank accounts quite differently and then used the information in the Solidarity research report to see which bank ­account package suited them best.

1 The novice banker

Thandi is a 19-year-old student. She has no debit orders and does not do more than 12 transactions a month.

Her best options would be:

.?FNB’s Easy Account at R22.95 a month

.?Absa Transact Bundle at R23 a month

.?Capitec Global One at R31.50 a month

If Thandi maintained a balance of R2?000 in her Capitec Global One account, she would earn 4.4% interest (R7.19 a month), reducing her net fees to R24.31.

2 The newbie worker

Ben is 24 years old and has just started his first job, earning a salary of R15?000 a month. He ­carries out not more than 17 transactions a month.

His best options would be:

.?Absa Transact at R34.95 a month

.?FNB Easy Account at R36.50 a month

.?Capitec Global One at R46.40 a month

If he maintains a balance of R2?000, his Capitec fee would drop to R39.21 as it would be offset by the interest earned.

If he maintained a R10?000 balance in the Capitec account, the interest earned would reduce his banking costs to R9.65. If he banked with FNB and saved in the FNB Savings Pocket, he would earn 5.1% (R42), which would offset his FNB banking costs.

According to the study, the number of bank accounts available for this category has dwindled in recent years.

Accounts that fall into this category also limit you to a certain number of electronic transactions. For ­example, Absa’s Flexi Value Bundle only includes 11 transactions a month for a fee of R49. If you exceed 11 transactions, the monthly fee starts increasing quickly.

3 Up-and-coming professional

Siah is 30 years old and is working his way up the corporate ladder. He earns a monthly salary of R20?000 and carries out about 24 transactions a month on his account.

His best options would be as follows:

.?Absa Flexi Value at R52.75 a month (this has limited transactions)

.?FNB Smart Unlimited at R54.50 a month

.?Capitec Global One account at R64 a month

Siah could reduce his total cost of banking at Capitec if he maintained a balance of R10?000, at which point he would pay a net fee of R27.25 a month.

If you fall under this user profile or that of the established professional (see below), the bundle accounts are the cheapest banking option for you. However, the difference in the cost of the bank accounts was minimal and at this level or even the next (the established professional), you are more likely to be looking at additional benefits such as Standard Bank’s Take Me Home chauffeur service or FNB’s benefit of allowing you to buy smartphones and tablets at discounted prices over a two-year, no-interest repayment plan.

4 The established professional

Uhuru is 35 years old and already plays a senior role at her company. She earns R30?000 a month and there are about 29 transactions a month on her bank account. She is looking for a platinum account with all the benefits.

The FNB platinum cheque unlimited bank account is the cheapest option for her, based on her user profile, with a monthly fee of R151.60.

Questions to ask

When you are choosing a bank account or a banking package, there are several questions you need to ask to ensure that the fees you pay are appropriate for your banking use.

.?Look at your last three bank statements to determine an average number of transactions carried out on your bank account each month.

.?Make a comparison of different bank accounts, their monthly fees as well as the number of transactions you are allowed.

.?Check for bank accounts that offer you a rebate on fees if you maintain a minimum monthly balance. The minimum required balance will vary between accounts and could be as much as R10?000.

.?Consider the banking channels you use and then base the banking account or package you choose using that criteria. For example, if you only transact online, consider an account that charges you a flat fee for unlimited electronic transactions.

.?Accessibility. You are more than likely going to be charged higher fees if you use a different bank’s ATM to withdraw cash. Look at the ATM network around your office and your home, and bear this in mind when you make your choice.

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