Of the “big five” banks in South Africa, Capitec convincingly leads the field when it comes to lowest transaction costs on bank accounts for lower and middle-income earners. But the traditional “big four” (Absa, First National Bank, Nedbank and Standard Bank) offer more to higher-end consumers in the way of “bells and whistles”, such as rewards programmes.
This is according to the 10th annual Bank Charges Report issued by Solidarity this week, which notes there is stiff competition among the banks, and some costs have come down. However, there are still worryingly high charges for certain types of transaction, such as withdrawing cash at another bank’s ATM.
“Banks attempted to be winners in the market with a combination of better benefits and reduced bank charges,” said Monica Mynhardt, researcher at the Solidarity Research Institute. “This year, 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.”
Capitec remains the cheapest bank for users who have no need to participate in a rewards programme. But for higher-end users, these programmes are an important part of the banking package.
“For users seeking rewards programmes, FNB’s Gold Cheque account offers excellent value, with users getting access to FNB’s 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,” Mynhardt said.
Transaction accounts for upper middle-class users are probably the most competitive. The types of benefits in this category are very similar across all the banks, and the difference in costs between the different banks are smallest.
“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 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.”
WITHDRAWALS AT OTHER BANK'S ATM
There is a huge difference between what Capitec charges you for withdrawing cash at another bank’s ATM (Saswitch) and what the other banks charge. For a withdrawal of R500, you pay R8 as a Capitec customer, but between R18 and R19 if you are with another bank. For a withdrawal of R2000, the difference is more pronounced: R16 (Capitec) versus R40.50 to R47.50 (other banks in the “big five”).
WHAT ARE YOU PAYING
As in the past, the survey identified three categories of users based less on their income than on their utilisation of banking services, with lower-income users typically performing fewer transactions and higher-income users performing a higher number of transactions in a month.
Accounts are categorised as pay-per-transaction (ppt) accounts, bundle accounts (you pay a fixed monthly fee for a bundle of transactions), or rebate accounts (a bundle account with a rebate on fees for maintaining a high minimum balance, which differs between banks but can be as high as R50 000 in the case of the Absa Premier account. The report says in such an instance, the reduction in fees would not compensate you for the interest you would earn on that amount in an investment account.)
While not listed below, if you have a Capitec account and keep a minimum balance of, say, R2 000, you can save 10% to 20% on your bank charges, because they are offset by the relatively high interest you earn.
* Low-income, basic banking (12 and 17 transactions). In the 12-transaction-a-month category, Capitec (ppt, zero minimum balance) was lowest, at R31.19 a month. Absa Transact (ppt), Standard Bank Access (ppt), FNB Easy (ppt) and Nedbank Payu (ppt) ranged between R36.10 and R40.70. The Nedbank Ke Yona and FNB Easy bundles were considerably more, at R70.20 and R70.80 respectively.
In the 17-transaction-a-month category, Capitec (ppt, zero minimum balance) was lowest, at R44 a month. Absa Transact (ppt), FNB Easy (ppt), Standard Bank Access (ppt) and Nedbank Payu (ppt) ranged from R51.65 to R59.25 a month. The two bundles, FNB Easy and Nedbank Ke Yona, were R71.20 and R97.60 respectively.
* Middle-income, sophisticated banking (25 transactions). Capitec (ppt) on a zero minimum balance, was lowest, at R80 a month. The bundles FNB Gold Cheque, Standard Bank Elite, Nedbank Savvy Plus and Absa Gold ranged from R111.00 to R136.25 a month. At the upper end were Standard Bank’s ppt and rebate accounts, at R228.65 and R247.23 respectively.
* Higher-middle-income, sophisticated banking (30 transactions). In this category, which excluded Capitec because it didn’t offer any “bells and whistles”, the pricing was within a much narrower range. The Standard Bank Prestige rebate account was lowest, at R199.98 a month, but the bank’s Prestige bundle was highest, at R246.40 a month. Absa Premium, Nedbank Savvy and FNB Premier Cheque bundles ranged between R219.50 and R237.80.