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How to slash your bank charges

Dec 19 2016 19:32

Cape Town - After an unhappy Fin24 user complained about high banking fees, FNB offered the following advice on how clients can avoid unnecessary banking expenses.

Fin24 contacted FNB, who offered 3 tips on cutting down on cash withdrawals and advised customers on the ins and outs of banking fees.

Customers are still withdrawing money unnecessarily, said Ryan Prozesky, CEO of FNB Value Banking Solutions.

Cash is expensive as it needs to be printed, guarded, insured, manually handled and transported.  This means that unnecessary withdrawals will cost customers more in terms of banking fees.

Cutting down on fees associated with cash withdrawals is fairly easy to do.
“Paying fees for cash is something that is almost always entirely avoidable,” said Prozesky. “However it does require a bit of planning and discipline.”
Take note of your account type

“If you have a bundled account, you will usually be allocated a certain number of withdrawals at your bank’s ATM,” said Prozesky. “Make sure you are aware of how many you have and when you are reaching the limit.”

Also beware of withdrawing at another bank’s ATM, no matter what account type you hold, as there is always an additional cost involved due to a charge levied between the banks.  

Swipe or tap rather than using cash

Consider swiping your card rather than using cash. “There are some instances where a merchant or service provider will only accept cash, but in the vast majority of cases merchants will have a point-of-sale machine, and in this case the best option is to swipe,” said Prozesky.

Recently FNB introduced Contactless cards and FNB Pay, a payment solution which allows customers to purchase goods by simply tapping their Contactless card or smartphone on a contactless enabled point of sale terminal. For security reason the terminal might ask for a pin from time to time or even ask for the card to be inserted on a Contactless card.

Swiping or tapping will also attract rewards, opposed to using cash.

Use alternative cash withdrawal solutions

“The best option is swiping your card. If you need cash, then do it when buying groceries by simply withdrawing at till,” said Prozesky. “Not only is it convenient, but it is also significantly cheaper and has no minimum withdrawal amounts.”

Withdrawing at till point is a win-win situation as the retailers benefit from channelling cash back to the consumer and stemming the high cost of cash-deposit fees as well as the costs of handling cash.
FNB customers drew R750m in September 2016 from retailers such as Shoprite, Checkers and Spar across SA.
“There are ways of getting cash without high fees”, said Prozesky. “This small change in banking behaviour can save you money at the end of the month, as every cent counts.”

The ins and outs of banking fees

Prozesky also explained that one of the most important things for consumers to consider when reviewing their bank account fees is whether they have the right account for the way that they transact.

“A bank account should be considered a partner, and choosing the right partner for your lifestyle will go a long way in avoiding frustration, unnecessary costs and wasting time.”

Monthly account fees

When reviewing the fees you pay on your bank account, the focus should not be solely on the actual monthly account fee but rather what you can do for that fee and the inclusive value offered.

“If you have basic banking requirements, then a bank account with a very low monthly account fee and a pay-as-you-use structure, such as FNB’s Easy Account from R4.95, will probably be the most cost effective,” said Prozesky.

However, if you use your account more frequently it is wise to choose an account that offers a transaction bundle to best suit your transactional needs. A bundle option on your account will allow you to perform multiple or unlimited transactions, without incurring extra costs.

High fee transactions to avoid

Cash is expensive due to the transport costs, additional security and associated insurance costs. The best thing to do with your cash is to deposit it at an ATM that allows deposits or even better is to get the funds deposited electronically into your account. Some of FNB’s accounts offer free deposits up to a certain amount on a monthly basis.

“A good alternative to using cash is to swipe your debit card. Not only is swiping a safer option than carrying cash; but often does not attract any transaction fees,” noted Prozesky.
Benefit of electronic banking

Banking electronically is more convenient, cheaper and can be done anywhere at anytime.

Apps, in particular, have become an essential as they allow you to bank using your smartphone or other electronic devices. Using electronic platforms is cheaper for a bank to administer which means that the bank can pass on the saving to the customer.

The vast majority of transactions can now be done on these electronic channels, such as looking up balances, drawing a mini statement, pre-paid transactions and making payments.

Savings accounts

A savings account is a valuable tool to help make your money grow. This type of account generally has a good interest rate with no monthly fee, and should ideally be separate to your transactional account. This eliminates the temptation to spend savings while making daily transactions.

There are various savings accounts to choose from and the deciding factors on which type will be what you need your savings account for. There is no such thing as small change; every cent counts.
Rewards on bank accounts

Most bank accounts come with some type of value add or reward. These rewards are used by banks to incentivise and reward customers to continue banking with them, as well as to bank in a cost effective manner. Looking into and taking full advantage of these benefits is worth your while.

There are different rewards structures as well. Some accounts will reward you in loyalty points which are accumulated and can be used to purchase goods, while others will give you cash.

Make sure that the rewards system and value-adds really work for you and your lifestyle. If you understand the rewards programme and if you use your bank account efficiently you will be able to not just save money, but could actually get back more than you pay in bank fees.
Finally, aside from the actual banking fees, it is also worth looking at how your bank account can fit into your lifestyle. Such as, do you need access to credit such as home financing or start up a business one day or access to a mobile money service to send money to someone without a bank account?

“In the end, your bank account should fit comfortably into your lifestyle and offer you services that add value and are cost effective,” concluded Prozesky.

Disclaimer: All letters and comments published in Fin24 have been independently written by members of the Fin24 community. The views are therefore their own and do not necessarily represent those of Fin24.

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