Johannesburg - Most bank clients can keep their banking costs to less than R100 a month if they take the trouble to become resourceful.
This will require an analysis of all one's banking transactions, the manner in which they are done and how many are done.
Based on these factors the four major commercial banks have various options to suit a client's needs.
Heated debates about banking costs have developed over the past week after the publication of the annual survey of banking costs by Finweek (September 4 issue), Sake24's sister publication.
"Bank is a four-letter word," screamed Finweek's cover - and most clients agreed.
"No, no, no," the banks fired back in unison.
Banking costs in South Africa are among the highest in the world and our banking system among the most sophisticated.
But this does not help a client who has to part with hundreds of rands every month.
But, intones the banking chorus, clients can help themselves if they take responsibility for their bank charges, and become smart.
Exaggerate
"Ask the average client what he is paying in bank charges a month and he has no idea. But when he speaks about it, he claims it's too much," a bank official points out.
From research conducted among its clients by Standard Bank, it seems that 80% are under the impression that their bank charges are higher than they really are.
These days most banks offer the option of a basket of transactions for which a single amount is charged. Clients can even choose a basket best suited to their monthly transactions. By selecting the right option they can reduce charges by 25% to 56% compared with the traditional practice of pay-per-transaction (PPT).
The four major commercial banks have this year increased PPT fees between 8% and 21%. Fees on the baskets have also been hiked, but these vary from basket to basket.
The most important thing that clients can do to lower their bank charges is to use electronic banking services (internet, cellphone, ATMs or debit cards) as much as possible.
Transactions at a bank branch - whether withdrawal, cash deposit or a request for a bank statement - are expensive.
"As soon as bank officials become involved, it's costly," explains James Fowle, pricing executive at FNB Core Banking Solutions.
Fowle said by substituting electronic payments for cheque transactions and sticking with the bank's own ATMs, clients can cut the cost of their banking by up to 65%.
It's also cheaper for clients to use their debit cards to draw money at pay points than using an ATM.
To reduce the cost of cash withdrawals it's better to draw larger amounts at longer intervals than to make frequent small withdrawals.
For instance, it is cheaper to draw R1 000 once a week than to draw R500 twice a week.
Bryan McLachlan, head of transactional products at Nedbank, said it makes a great difference to banking costs if clients stick to the ATM of the bank that issued the card. If the relevant bank's ATM is out of order, it's better to draw money at a pay point or use a debit card than it is to use another bank's ATM.
A R1 000 debit card transaction will cost R10.80, while a cash withdrawal from an issuer's ATM will cost R13.80. Withdrawing the same amount from a branch will cost R32.
Cancel unused credit
Sugendhree Reddy, director of transaction products at Standard Bank, said banking costs can be contained by cancelling unused overdraft facilities.
Clients pay for the privilege of having such facilities. If they are not used they can save costs. Overdraft facilities up to R300 are not charged for.
She said clients can save on their bank charges by converting their stop orders to debit orders. Stop orders have a fixed fee, while fees on a debit order vary according to the amount. This calculation is done by the bank.
Reddy said in the case of stop orders even 1c can make a difference because of administration costs.
It's also cheaper to use a savings account than a cheque account. The basic costs associated with the two are the same, but the savings account earns interest.
All payments from a savings account can be done electronically and replace expensive cheque payments.
Keith McIvor, general manager of products and prices at Absa, said clients can also save on banking charges if they use vehicle and asset finance from the same bank. It's cheaper to have a debit order in favour of one bank.
Clients also receive discounts on the costs of debit orders if the services of the same bank are used.
- Sake24.com
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