Union Solidarity has published its annual banking charges report, revealing the cheapest and most expensive bank accounts in the country among the big five institutions in South Africa.
The report is based on the charges of select transactions, compiled into four different monthly transaction profiles, from light bank users (12 or 17 transactions), mid-tier users (25 transactions) and heavy users (30 transactions).
The transaction accounts are drawn up based on guidelines that agree with the savings guidelines supplied by banks on their websites as promotional material. These guidelines include:
- Few cash withdrawals, no cash deposits and no cheques;
- Little cash with ATMs;
- No physical visits to a branch – rather internet banking services;
- The use of SMS notifications regarding activity on bank account.
These profiles are not necessarily split among income levels, but rather usage patterns. However, it does tend to be that low-income customers are lighter users, while high-income customers, who have more debit orders and other transactions, are heavier users.
Solidarity’s report only looks at the accounts of the so-called ‘legacy banks’, which includes Capitec, Nedbank, FNB, Standard Bank and Absa. New digital entrants like Discovery Bank and TymeBank, and other accounts such as Old Mutual Money, African Bank MyWORLD, FinBond FinSave and Bidvest Bank GROW, are not covered in the report.
The report also does not include accounts for children, students, older people or pensioners. Most banks have accounts that are available only to these groups and which are normally cheaper. Younger and older people should therefore take the trouble to enquire about products that have been specifically designed for them.
It should also be noted that Absa, Standard Bank and Nedbank have updated their fee structures for 2020 – the fees below are for 2019, and thus serve a comparative purpose only.
Among the light users, Capitec emerges as the most affordable bank among South Africa’s ‘big five’, with its rebates cutting out most of the costs associated with the transaction profile (customers earn interest on positive balances). Even if the rebate is not calculated in, it still emerges as the most affordable option in this profile.
Conversely, Nedbank’s Ke Yona bundle and FNB’s Easy bundle come out as the most expensive.
This is true for both the 12 and 17 transaction profiles.
For slightly heavier users, Capitec again emerges as the most affordable bank account – though this comes with the caveat that the bank does not offer a rewards programme, which users in this profile may be seeking out.
If mid-tier customers are looking for the most affordable bank account with a rewards programme attached, FNB’s Gold Cheque account comes out as the best option among the big five banks.
Standard Bank’s accounts are the most expensive, by comparison.
In this category, there are two accounts that offer a reduction in bank charges – FNB Premier Cheque and Absa Premium, Solidarity noted.
Absa’s Premier account is the cheapest in this category (excluding rebates) – its costs are comparable to the most expensive accounts in the previous category.
For this account, Absa also offers a discount option. Consumers have the opportunity to get 50% discount on their bank charges provided they maintain a minimum balance of R50,000. The interest that they could earn should they invest the R50,000 in an account with good positive interest, is however close on R200 a month.
“Here the choice of bank will far rather be about the benefits that a bank offers in other aspects than transaction accounts as well as with personal taste. The possible benefits of rewards programmes will also be a main consideration, Solidarity said.