The good news on bank charges: for most South Africans, banking has become cheaper.
According to Solidarity's Bank Charges Report, issued late in 2017, bank charges on most accounts are less in real terms than they were seven years ago. "Overall, South Africans can now bank for less, in most cases significantly less, in real terms than they could in 2010," Solidarity said.
The better news: you could be saving even more. Here's what some experts advise.
1. Choose the right account for you
Ryan Prozesky, CEO of FNB Consumer Core Banking, says although it's tempting to choose a banking account based on its monthly cost, you should also take into account your own personal transacting needs so that you don't incur additional charges. "For example, on a pay-as-you-use structured account, you may be charged extra every time you make a transaction, while on a bundle offering you are able to perform multiple or unlimited transactions without incurring additional charges," he says. Choose a pay-as-you-use account if you don't perform many transactions, or a bundle if you transact often.
2. Don't use other banks' ATMs
If in doubt, compare the charges of native withdrawals and external withdrawals on the 2018 fee schedules of these major banks. (ABSA, Standard Bank, Capitec, Nedbank – in some cases the charges nearly double!)
3. Go digital
Use digital and electronic channels wherever possible, says Prozesky. "These are usually free or attract lower costs compared to using a bank branch." The convenience also saves time and money. Furthermore, he says, ask for bank statements to be emailed rather than posted.
First prize is for using banking apps, says Francois Viviers, Executive of Marketing and Communications at Capitec Bank. "[Apps] have become the most convenient way to bank – they save both time and money." Capitec's app is zero data rated, so don’t pay for the data. Inter-account transfers are free and other transactions cost R1.60, he says.
4. Home loan, sweet home loan
If you have a home loan, use it to save. Bruce Swain, MD of Leapfrog Property Group, advises consumers to use interest on home loans to their advantage. "If a buyer purchases a property for R1.2m, with a deposit of 20%, with a repayment rate of 11% over twenty years, it will cost the buyer R9 819 per month (excluding interest and municipal rate fluctuations).
"However, if the buyer increases their repayment by R500 per month the term reduces by three years, with a saving in interest of R251 484. Increasing the repayments by R1 000 per month reduces the term by 5 years, saving the buyer R409 140," he says.
"By depositing your savings into your bond you’ll be receiving the interest your bank charges on your home loan as positive interest on the monies you’re investing."
5. Avoid penalties and overdrafts
Ensure there is money in your account to cover your expenses, says Prozesky. While an overdraft helps to meet unexpected cash flow shortfalls or avoid penalty fees, some banks charge a monthly fee whether clients use it or not. And, if you don't have an overdraft, you can incur penalty charges if transactions fail.
Moreover, says Viviers, this could damage your credit record.
6. Swipe right
Don't withdraw cash unnecessarily, Prozesky says. Rather swipe your card – it's safer than carrying cash, and some banks offer unlimited card swipes at no additional charge. Moreover, many loyalty programmes offer customer rewards for swiping.
He and Viviers both advise withdrawing cash from till points if you really need it.
7. Use it, don't lose it
Replacing bank cards is expensive, so hang onto them!
8. The devil's in the details
Don't ignore communication from your bank, says Prozesky. Moreover, take note of monthly caps for transactions on whatever package you have chosen. On certain bundles, your bank may offer you a limited number of ATM withdrawals or stop orders before you incur additional charges.
Moreover, says Viviers, don’t only look at the minimum account fee but scrutinise the cost of all your typical transactions, as these are sure to change monthly.
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