Most banks have lowered their charges – Solidarity

Four of the five large commercial banks in South Africa have lowered the cost of virtually all their accounts over the past year, with Nedbank as the only exception, according to a new report from union, Solidarity.

Capitec, whose bank charges were already the lowest in 2010 and 2011, lowered its charges even further in 2012, according to findings in the Solidarity Research Institute’s (SRI’s) third annual report on bank charges.

The study compares the bank charges of various personal bank accounts of  Absa, FNB, Standard Bank, Nedbank and Capitec.

Paul Joubert, senior economics researcher at the SRI, notes that when the cheapest accounts of the banks are compared, Capitec’s Global One account is still the cheapest. This account’s average bank charges across eight different user profiles amount to R55,50 a month, which is a 15.9% decrease from R66 in 2011.

By contrast, Nedbank’s cheapest option is its Savvy Electronic account with average monthly bank charges more than double those of Capitec. In addition, this account’s charges have increased by 4.5%, from R107,79 to R112,61, between 2011 and 2012, Joubert said.

Each bank’s cheapest account in 2011 and 2012

(Charges calculated as an average of eight transaction profiles, the effect of interest or forgone interest excluded.)

Bank Cheapest account (2011)
Costs 2011
Costs 2012
Cheapest account (2012) Difference
Capitec Global One Account R66.00 R55.50 Global One Account -R10.50

-15.9%

FNB Smart – Unlimited R74.53 R60.95 Smart – Unlimited -R13.58

-18.2%

Absa Silver Package R148.14 R91.05 Silver Value Bundle -R57.09

-38.5%

Standard Bank Classic Cheque – fixed fee R134.89 R109.81 Achiever – Electronic -R25.08

-18.6%

Nedbank Savvy – Electronic R107.79 R112.61 Savvy – Electronic R4.82

+4.5%

The bank charges of Absa, FNB, Standard Bank and Capitec were not lowered for the abovementioned accounts only – the bank charges of almost all accounts of these banks have declined, Solidarity said.

The effect of Absa and Standard Bank’s efforts to make its bank charges more competitive are visible. Solidarity points out that while Absa and Standard Bank were the most expensive banks in 2010 and 2011, they now oprovide stiff competition to FNB, previously the clear market leader with the popular ‘bundle’ type accounts.

However, the union notes that Standard Bank is, as in previous years, still being handicapped by the fact that it levies an exceptionally high fee of R16 for creating or amending stop orders. “Many bank clients will, however, not be affected by this fee and without it, the Achiever Electronic account’s average costs would have been only R85,81 and not R109,81,” it said.

Moreover, each of the “Big Four” commercial banks is promoting a “low-cost” account: Absa’s Transact, FNB’s EasyPlan, Standard Bank’s AccessAccount and Nedbank’s Ke Yona. Standard Bank’s AccessAccount is the most expensive of these accounts across the board.

“As far as the “low-cost” accounts are concerned, the choice is really limited to Capitec’s Global One account, FNB’s EasyPlan account and Absa’s Transact account,” said Joubert.

The economics researcher says that lower charges and stronger competition make up the main theme of this year’s report. “It appears that consumers are more informed and are putting more pressure on their banks to offer better value for money. Judging by the decreases in four of the five large banks’ charges, it seems that this consumer pressure is starting to pay off,” Joubert said.

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Most banks have lowered their charges – Solidarity