Standard Bank and NBS are the banks of choice if you want to build up a savings nest egg, new research has found.
The research compared the interest rates, transaction costs and discounts on transaction costs of Absa, First National Bank (FNB), NBS, Nedbank and Standard Bank to see which bank gives you the most bang for your hard-earned rand.
The research was conducted by Infochoice, which provides comparative information about the banking and insurance sectors.
The research highlights the startling fact that, in certain instances, your capital can actually dwindle every month. This is especially true if you maintain a relatively low balance of R2 000, in which case withdrawal fees can erode your capital.
Even fees on cash deposits can erode your savings.
Natalie Abel, a research analyst at Infochoice, says Standard Bank stands out as the clear favourite if you can afford to maintain a balance of R6 000 or more in your savings account. But NBS is the better option if you can maintain a minimum balance of only R2 000.
The focus of the research was to ascertain how you can grow your money, taking into account the interest rates paid by banks on savings accounts every month and then subtracting transaction costs.
Importantly, it is the combination of the interest rates, the transaction fees and the rebates (or discounts) on transaction fees that determines which bank is the best bank at which to save. The most appropriate bank for you will depend on these factors as well as how much money you keep in your savings account each month and how many and what type of transactions you do.
The main findings of the research were:
When making withdrawals:
- You are able to save the most money at Standard Bank if you keep R15 000 in your account. The rebate offered by Standard will save you from paying any service fees in the following hypothetical cases: if you make four withdrawals from a Standard ATM; four withdrawals from a Saswitch ATM; and using both ATMs from which to make four withdrawals in a month. In each case, you will save the full interest due to you which is R43.15.
Standard offers a tiered rebate rate depending on the balance you keep in your account. The tiers are: balances from R6 000 to R14 999 qualify for a rebate of R70; balances of R15 000 to R24 999 - R110; and balances of over R25 000 - R180.
- At FNB, even with a balance of R15 000, you lose R6.90 on four Saswitch withdrawals.
- Standard Bank is also the worst bank for savings if you have only R2 000 in your account. In this case your interest and a portion of your capital would be eaten up by transaction fees. Interest less the transaction charge will leave you R29.53 poorer if you make four withdrawals from Standard Bank's own ATMs; R50.33 poorer if you make four withdrawals from Saswitch ATMs and R39.93 down if you make two withdrawals from a Standard ATM and two from Saswitch ATMs in a month.
- If you have only R2 000 in your account, NBS is the best of a bad lot, leaving you with R10.95 less (for four NBS ATM withdrawals), R19.05 less (for withdrawals from both ATMs) and R27.15 less (for four Saswitch withdrawals).
When making deposits:
For accounts with a minimum of R2 000 or R15 000 there are no differences in transaction fees because deposit fees at most banks are excluded from the rebate options.
- Standard is the only bank in which the rebate covers cash deposits and so cash deposits are free if you maintain R6 000 in your account. This means you will earn the full R43.15 interest every month.
- If you only keep R2 000 in your account, NBS is the best bank because it does not charge for deposits of less than R1 000, so no matter how you make your cash deposits, you will earn the full monthly interest of R2.05.
- Comparing banks that do not offer rebates on a minimum monthly balance of R15 000, FNB is the worst bank in two scenarios. This is when you make four deposits in a month over the counter (in which case your balance will be eroded by R26.10) as well as when you use a combination of over-the-counter deposits and own ATM deposits (making you R6.10 poorer).
- If you have a minimum monthly balance of R15 000 and make four deposits in a month from your bank's own ATMs, Nedbank will erode your savings by a whopping R37.53.
Interest rates, fees and discounts:
The comparison of interest rates on R2 000 shows that Standard Bank and Nedbank offer the highest rates across the banks, at 1.50 percent a year. Absa pays the lowest interest rate of 1.25 percent.
On a balance of R15 000, Standard Bank rewards account holders with the best interest rate of 3.50 percent, while NBS offers the lowest rate of 2.50 percent.
A comparison of withdrawal fees - based on an amount of R500 at a bank's own ATM - shows that Standard is the most expensive, charging you R8 for each withdrawal. NBS is the cheapest at R3.25.
Similarly, Standard is the most expensive on its Saswitch charges and NBS the cheapest. At Standard, you are charged R13.20 for a R500 withdrawal and NBS charges R7.30.
When it comes to making a R500 deposit at a bank's own ATM, Nedbank has the highest transaction charges. NBS has the lowest charges, because it only charges you if the cash deposit is more than R1 000.
For deposits made over the counter, FNB is the most expensive at R15 for a R500 deposit. Again, NBS is the cheapest because deposits up to R1 000 are free.
Research assumptions
The transaction charges that were taken into account for the purposes of the research were cash withdrawal fees and cash deposit fees.
Three different scenarios were assumed for cash withdrawals and three for cash deposits:
Calculations were done for four cash withdrawals of R500 in a month:
- From your bank's own ATMs;
- From a Saswitch ATM; and
- From both the bank's own ATMs (two withdrawals) as well from Saswitch ATMs (two withdrawals).
Similarly, calculations were done for four deposits in a month:
- From your bank's own ATM;
- Inside the branch (over the counter); and
- Using the bank's own ATMs (two deposits) as well as from over the counter (two deposits).-
For comparative information about bank charges and interest rates, visit Infochoice's website at www.bankmonitor.co.za
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