Banks trying harder: More benefits, lower fees
“Banks attempted to be winners in the market with a combination of better benefits and reduced bank charges,” says Monica Mynhardt, researcher at the Solidarity Research Institute.
“In 2019, Capitec took back its title as the bank that offers the cheapest account to low-income users. Capitec is still the only bank that offers good interest rates on transactional accounts, which can help a user with a minimal balance in their bank account reduce their bank charges even more,” says Mynhardt.
Regarding banks’ flagship accounts, a combination of bank charges and rewards programmes is starting to become the predominant factor for users. Capitec remains the cheapest bank for users who have no need to participate in a rewards programme, the report found.
“For users seeking rewards programmes, FNB’s Gold Cheque account will offer excellent value, with users getting access to FNB’s rewards programme, eBucks. It is also the only account in this category, besides Capitec’s, which offers reduced bank fees from last year. As a result of this reduction, FNB’s Gold Cheque account just passed Standard Bank’s Elite Bundle account - the cheapest option with benefits of last year.”
Transaction accounts for upper middle class users are probably the most competitive. The types of benefits in this category are very similar across the spectrum of all the banks, and the difference in costs between the different banks are the smallest in this category.
“However, FNB Premier Cheque and Absa’s Premier account were the only two to offer a reduction in bank charges. Absa’s Premier account is also the most affordable account in this category - the cost hereof is comparable to the most expensive accounts in the previous categories. Despite FNB also offering a reduction in bank charges, Standard Bank’s Prestige Rebate account is the best option besides Absa’s,” says Mynhardt.
The five banks covered by the report this year are Absa, Capitec, FNB, Nedbank and Standard Bank.
Solidarity’s annual banking charges report analyses only ordinary transaction profiles - accounts that are available to any member of the public.
The transaction profiles are set out in the table. The user profiles have not been drawn up according to income levels, but according to the number of transactions for each profile. The number of transactions that each user makes in a given month, should agree with income levels: cheaper bank accounts should therefore be used with low transaction profiles and more expensive bank accounts with higher profiles.
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 the bank account.
Thereafter follows a comparison of the monthly bank charges of users with different user profiles, at various banks and with a transaction account that is most suitable for the profile. The accounts and options are divided into the following three categories:
1.Accounts that are marketed to people with a low income and fairly basic banking requirements (profiles with 12 and 17 transactions a month).
2.Accounts that are marketed to people with a middle-class income and sophisticated banking requirements (profiles with 25 transactions a month).
3.Accounts that are marketed to people with a higher middle-class income and sophisticated banking requirements (30 transactions a month).