This bank is still the cheapest for personal transactions, Solidarity research shows

Johannesburg – Capitec bank still reigns supreme when it comes to bank charges related to personal transaction accounts, but competition is still tight, research revealed.

This is according to the Solidarity Research Institute’s (SRI) Bank Charges Report for 2017, which considers the major personal transactional accounts of the five major banks operating in South Africa.

“The Big Four banks have little room to increase fees at the lower end of the market, and this is owed to the sustained pressure from Capitec’s offer,” said Gerhard van Onselen, economics researcher at SRI.

“The banks also cannot allow the gap between the bundle accounts, marketed at middle income groups, and the cheaper accounts to get too big. Otherwise they run the risk that clients may shift to the cheaper options or simply move to competitors,” he said.

The research looks at account options across three categories.

Low income, basic banking needs

Competition remains tight in this segment, with banks ABSA and FNB closely following Capitec’s offering, the report stated. Standard Bank, Nedbank and Old Mutual have also similarly made offerings in this segment.

The difference between Capitec and its competitors is that it pays significant interest on any balance kept in the main transactional account. The other banks offer separate, linked accounts for savings with comparable interest rates to Capitec.

Only considering bank charges, ABSA, FNB and Nedbank are cheaper than Capitec. But given the interest Capitec pays (5.1%) on a positive balance of an account with an average of R2 000, the bank remains cheapest.

“However, when the interest paid by Capitec is taken into account, Capitec is still, but just barely, the cheapest account. With that being said, ABSA’s Transact account is now a truly compelling proposition for clients who rarely if ever hold more than R2 000 in their account,” Van Onselen said.

A client with low income who rarely holds more than R2 000 would bank more cheaply at ABSA than at Capitec. The difference in charges is between R5 ad R10, significant for someone with low income, the report read.

Middle class income, sophisticated banking needs

This includes flagship accounts offered to the core client base of banks. The research measures the cost of 25 transactions performed in a month.

Capitec’s Global One account offers higher interest the higher the balance of the account is, making it significantly cheaper than competitors.

Among the Big Four, Nedbank’s Savvy Plus account is marginally cheaper than the others and is a contender with Capitec. The remaining banks all have charges between R100 and R110 per month.

“After doing away with withdrawal fees for cash at retailers, Nedbank’s Savvy Plus account is competitive at this level this year for clients that do not wish to bank at Capitec for any reason,” said Van Onselen.

Further bundle accounts show a higher cost than the “fixed monthly fees” advertised because of third-party notification SMSs, the report explained.

Higher middle class income, sophisticated banking needs

These accounts include additional benefits for clients. Capitec and Old Mutual do not include any “extra” offerings and are not included in this assessment. These bundle accounts also carry a third-party notification SMS cost.

The research measures the cost of 30 transactions performed in a month.

ABSA leads in this category with its Platinum Value Bundle. With fees at R165, it is comparably cheaper than the other banks in the R180 to R200.

If someone had to choose another bank besides ABSA, it would purely be on the benefits or the service offered because ABSA is the cheapest in this category, the report indicated.


The report also looked at the cost of withdrawal from other banks for low income earners. Capitec and ABSA charged a flat fee R8.50. Old Mutual only charges R8.50 for the first four transactions in the month, thereafter the fee increases to R13. But because Old Mutual does not have ATMs, all withdrawals are via Saswitch, the report explained.

Nedbank’s PAYU account follows, thereafter Standard Bank’s AccessAccount. “FNB’s Easy Account still sits uncomfortably in the most expensive spot of all, as its fees for withdrawing cash at another bank’s ATM are the highest among all the other accounts compared,” the report read. This shows FNB wants to discourage its clients from withdrawing from another bank’s ATM.

For account offerings for higher income earners, the banks charge higher fees and are fairly close in terms of cost, with more than R30 per withdrawal. However Nedbank Savvy Bundle account has no fees for Saswitch withdrawals.

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