First National Bank's new transaction fees kicked in at the beginning of this month and our snap analysis shows that some fees have increased by 122 percent.
FNB says its latest annual price review has resulted in some sweeping changes because as of November 1, the bank has dropped all monthly subscription fees for internet, telephone and cell phone banking.
For years banks have been forcing you to use "electronic" channels to do your banking by penalising you with high transaction fees on transactions done in cash or at the bank's counters. Yet in order to make use of these electronic channels you were charged another monthly fee (other banks still do) in addition to the fees you were already paying on your account.
FNB has attempted to simplify the complicated "ad valorem" fee structure by introducing banded pricing. While the new method is easier to understand, Personal Finance believes that FNB and other banks still have a long way to go towards simplifying fees.
Under the new banded pricing structure FNB charges you R6 for a cheque of up to R500, R12 for a cheque of between R500 and R1 000, and R18 for cheques over R1 000. Previously you were charged R2.70 for the first R100 plus R1.40 for every additional R100 to a maximum of R22. The same fee structure applies to debit orders and to branch cash withdrawals.
What FNB has done under the new cheque fee structure is to substantially increase the fee on cheques of lower amounts and decrease the fee on higher amounts.
For instance, a cheque of R100 would have cost you R2.70 last month, whereas this month you are whacked with a R6 fee - an increase of 122 percent. On cheques for greater amounts, the maximum you could be charged was R22 and the maximum after the increase is R18 - an 18 percent decrease.
Minimum monthly fee
The minimum monthly fee on the basic cheque account package, called FirstCheque, has been increased by 25 percent from R18 to R22.50. If the total fees on your account in a month amount to less than R22.50, you are charged this minimum fee. If your total fees amount to more, you are charged whatever amount your fees add up to, if you are on the pay-as-you-use option. FNB also offers a fixed monthly fee option and a "free" banking option if you maintain a certain balance.
FNB's cash handling fee, which you pay for instance when you draw cash over the counter at a branch, has increased by 38 percent from R1.20 to R1.65.
Other fees
Cash withdrawals, balance inquiries, deposits and statements are probably the most common transactions made by account holders.
FNB has increased these fees by between two percent and 40 percent.
Mini statements from a BOB ATM are 40 percent up from R1.25 to R1.75.
Wendy Lucas-Bull, the chief executive of FNB Retail Bank, says comparisons are always difficult but an average basket of transactions should cost eight percent more.
For further details on the new charges introduced by FNB visit the bank's website at www.fnb.co.za
Fee comparisons
Please note that in the savings charges comparisons published in Personal Finance on October 26, the increases reflected for Nedbank and Permanent Bank included two annual increases instead of one.
TIPS FROM FNB ON HOW TO REDUCE YOUR BANKING COSTS
Interest
- First pay off your most expensive debts (ie those on which you pay the highest interest rates).
- Pay the full amount outstanding on your credit card each month to avoid interest charges on outstanding balances. Even one cent outstanding will result in you being charged the interest on the full amount outstanding from the date of each purchase until the date you make the payment.
- Never borrow money to cover your day-to-day living expenses.
- Pay more than the minimum instalment on any loans if you can afford to, as this will save interest charges.
Bank charges
- Use electronic bank channels. Automated Teller Machines (ATMs), internet and telephone banking offer you banking facilities that are cheaper to use than branches or cheques.
- Draw cash from an ATM rather than a branch.
- When using ATMs, use BOB ATMs wherever possible to avoid paying expensive Saswitch charges.
- Avoid penalty charges. For instance, depositing post-dated cheques in a cheque account will incur a penalty of R50.
- Avoid charges for denied ATM transactions by ensuring that you have sufficient money in your account to cover the amount of the transaction. The ATM declined transaction fee due to insufficient funds or exceeding your daily limit is R2 at the bank's own ATMs or R3.50 at a Saswitch ATM.
- Always remain within your account limit to avoid penalty fees. Dishonoured payments on a cheque or a savings account will cost you R110 every time a payment is dishonoured.
- Be aware of your credit limit and your available balance because if you exceed your limit you will be charged an over-the-limit fee. On an ordinary cheque account, the fee is R25.
- Pay the instalment on your credit card account by the due date. Late payments will be penalised with a late payment fee of R148 and you will end up paying additional interest.
- When paying your credit card account by cheque, make sure you have sufficient money in your cheque account and that the cheque is not post-dated as you will be charged an unpaid deposit fee of R148 for every unpaid or post-dated cheque deposited.
- Minimise cash related fees. Avoid cash deposit and cash handling fees by making use of alternative payment and deposit methods, such as transfers or electronic account payments.
Investigate charging structures
FNB offers three packages: a pay-as-you-use package, a fixed monthly fee and the Fee Saver package.
- With the pay-as-you-use option you are charged for each transaction as you make it. You will be charged for cheques, branch cash withdrawals, debit orders and account payments according to the banded fee structure for your cheque account package.
- With the fixed monthly option, you can pay a fixed monthly fee which covers the first 35 transactions, five of which may be branch cash withdrawals. After that, you will be charged for every transaction. The fixed monthly fee is R115 for Premier Accounts, R85 for Status Accounts and R70 for First Cheque Accounts.
- With the Fee Saver option, as long as you keep a balance of R6 000 or more in your account, you pay no service fees on the first 35 transactions (except for cheque books, cash deposits, mini-statements and Saswitch transactions, cash handling fees, special instruction fees, penalty fees and government duties).
The 35 free transactions include a maximum of five branch cash withdrawals and if your balance drops below R6 000 at any time during the month, you will be charged the full service fee at the pay-as-you-use rates. Bear in mind that you are not paid any interest on the credit balance in your account on this option.