Most consumers believe they are paying too much for bank charges. A quick tally of the cost of the standard transactions most bank clients make, soon shows how these charges add up.
While it is practically impossible to estimate what the average account holder spends on charges every month, because there are so many factors involved, Personal Finance created an "average" customer for the purposes of comparing charges at the different banks.
The factors that determine bank charges include how you do your banking - via ATM, the internet or inside the bank - what transactions you make, the number of transactions you make, and the type of account.
We have assumed the customer has a basic cheque account and therefore does not qualify for a middle- or top-of-the-range cheque account package, which offers discounted bank charges.
The results show that of the four big banks, Nedbank and Permanent Bank are the most expensive at R118.80 a month.
For the same set of transactions, FNB charges R102.20 and Standard Bank R101.40. Absa works out to be the cheapest at R92.38.
Monthly costs have been based on: one cash deposit of R1 000; five cash withdrawals of R300 from an ATM; four balance inquiries from an ATM; two statements from an ATM; four account payments of R300 made at an ATM; five debit orders (1 x R2 800, 1 x R750, 2 x R300 and 1 x R100) and two stop orders (1 x R150 and 1 x R500).
The monthly costs calculated for each bank assume that you make use of ATMs only to do your transactions.
Less-expensive channels
Banks have stressed that if you come into the branch to do your business, it costs the bank more than if you use an ATM, and in an effort to keep you out of the banking halls, the charges for teller transactions are much higher.
For instance, it costs between R5.48 (at Nedcor) and R5.95 (at Standard) to make a cash withdrawal of R500 from an ATM. The fee is based on a sliding scale and increases, depending on the amount involved in the transaction. Standard charges R2.35 for the first R100 and R0.90 for every R100 or part after that, while Nedcor charges R2.28 for the first R100 and R0.80 for every subsequent R100 or part thereof.
But, if you make a cash withdrawal at a teller inside the bank, for a R500 cash withdrawal, you will be whacked with a fee of between R10 and R22, depending on the bank.
Absa customers in particular are hit hard by drawing money from a teller - an ATM transaction costs only R5.80, but a teller transaction will set you back R22 in charges for a cash withdrawal of R500. A R500 cash withdrawal from a teller at Nedcor will cost you R22.30; at FNB R10.30; and at Standard Bank R11.85.
Responsible banking
Another factor that influences what you will pay in bank charges every month is whether you use your account in a responsible manner. For instance, if you are careless about issuing cheques, without keeping tabs on your account balance, and the cheque is returned due to insufficient funds in your account, you will be charged R100 by Nedcor and FNB, R90 by Standard Bank, and R77 by Absa. The same applies if you do not leave enough money in your account for debit orders.
Avoid going into overdraft without authorisation from your bank, or overstepping your overdraft limit. Such actions will cost you R25 for every item that goes off your account at Standard Bank, and R37 at Nedcor, while other banks will charge you penalty interest up to the maximum allowed under the Usury Act. Currently, the maximum is 24 percent a year for amounts below R10 000 and 21 percent for amounts over R10 000.
If possible, you should not stop payments. If you issue a cheque and then instruct your bank to stop paying it, you can expect to pay R16 for every item at Nedcor, Standard Bank and FNB, and R18.30 at Absa.
Cheaper banking
Make sure you are informed about cheaper alternatives. You may qualify for discounts or less-expensive fees by opting for the following:
- Use ATMs, the telephone or the internet to do your transactions;
- Use the ATM network of your own bank. Using other ATMs costs considerably more;
- Choose a bundled cheque account package (which gives you certain common transactions for a fixed monthly charge). The bundled option at Standard Bank costs R55 and at FNB it is R66 a month. These packages give you a number of free transactions a month, although it is important to find out exactly what is included in the package and what is not. For instance, under Standard Bank's bundled option you are limited to eight cash withdrawals a month;
- Get a rebate (or discount) on charges if you maintain a certain balance in your account. At FNB you get free banking if you maintain a balance of R5 000 in your account at all times, and at Absa you need to keep R4 500 in your account to get a rebate on charges such as Absa ATM cash withdrawals and cheque service fees.
With Standard Bank, you get a rebate of R70 for balances between R6 000 and R14 999. Rebates of R110 and R180 are available on higher balances. Nedcor does not offer rebates.