Banking fees compared: Capitec vs FNB vs Nedbank vs Absa vs Standard Bank

Union Solidarity has published its latest Banking Charges report, showing how pricing at South Africa’s biggest banks compares, based on different user profiles.

In compiling the report, Solidarity looked at bank charges at Capitec, Standard Bank, Nedbank, FNB and Absa, and how these differ when used by customers who fit low-, medium- and high-intensity transaction profiles.

According to the union, the banking profiles tend to align with income levels, and thus the accounts featured in each profile are based on how they are marketed to prospective banking clients.

The 12 and 17 transaction profiles are geared towards low-income earners, the 25 transaction profile aligns with middle-income clients, and the 30 transaction profile fits a middle-high income bracket.

Low income accounts

When few transactions are conducted, Absa’s Transact account is cheapest, Solidarity said, but the gap narrows as transactions increase.

“Although Capitec offers very few transactions free of charge, their immediate transaction costs are low,” Solidarity said. “Consumers therefore can get away at reasonably low cost when they have more transactions.”

Capitec is also the only bank covered by Solidarity in this segment paying interest on accounts in this category, offering an interest rate of 2.25% per annum on a positive balance. The bank markets this feature as being able to cover monthly fees with a positive cash balance, effectively making it the cheapest option.

“While a Capitec account with a balance of R5,000 would be the cheapest technically speaking, one should bear in mind that the R5,000 would be able to earn considerably more
interest elsewhere, such as in a fixed deposit account. It therefore has been included for information purposes only,” the group said.

Middle income accounts

This category contains banks’ flagship accounts – the accounts they market to the core customer base.

While Capitec is cheapest in this category, among bundled accounts Absa’s Gold account is the cheapest. The group cautioned, however, that the numbers are not as simple as they seem.

“FNB appears to encourage its customers to withdraw cash at points of sale rather than at ATMs. If the cost of withdrawing money at ATMs is replaced by the cost of transactions at points of sale at participating stores, the total bank charges for FNB’s Gold Unlimited account would be R111, making it the second cheapest account after Capitec’s.

“It therefore is very important for customers to make sure they get maximum benefit from their bundle accounts,” it said.

High income earners

Among ‘premier’ accounts, Absa again emerges as the cheapest option.

Solidarity pointed out that FNB’s ATM withdrawal fees again make the bank’s Premier account an outlier.

“In this transaction combination it constitutes R80 of the total amount, whereas in other accounts it is either free or cheap. FNB customers should acquire the habit of getting their cash together with their groceries,” the union said.

It added that this banking segment typically looks beyond transaction costs, and seeks out these accounts for their extra value and add-ons. This includes products such as life insurance included, linked credit cards and access to airport lounges.

“The products vary greatly from one bank to another, and users in this category would be well advised to talk to their banks about how to get the most from the extras included,” it said.

Read: The cheapest bank accounts in South Africa – how Spot Money compares to the rest