Capitec takes cake for cheapest but Big Four have more sprinkles – annual report
If you are one of those consumers who can either not be bothered to switch from a bank account you opened when you were a student or are not sure whether the newbies can compete with tradition and gravitas; Solidarity's tenth annual Bank Charges Report could change your thinking. Capitec comes out on top as the bank that offers the cheapest account to low-income users and "is still the only bank that offers good interest rates on transaction accounts." The bank is also the cheapest for the withdrawal of cash from another bank's ATM charging R16 for a R2,000 withdrawal compared to the R48 charged by Nedbank and the R40.50 by Absa. For people who have lived overseas, the high cost of withdrawing money from ATMs in South Africa always comes as a surprise as many major international banks waive withdrawal fees from ATMs. If you are in the higher, middle class income brackets and need more sophisticated banking requirements; the traditional banks do offer a reduction in charges for premium customers and other benefits such as international accounts that Capitec doesn't. The good news for consumers is, according to Monica Mynhard from the Solidarity Research Institute that the competition between banks is benefitting consumers and "banks attempted to be winners in the market with a combination of better benefits and reduced bank charges." Perhaps competition would entice them to drop those ATM or hole-in the wall withdrawal charges in line with international banks. – Linda van Tilburg
Tenth annual Bank Charges Report released
Issued by Solidarity
Banks continued with fierce competition in the market of personal transaction accounts in 2019. This is according to the tenth annual edition of the Bank Charges Report issued by Solidarity today.
"Banks attempted to be winners in the market with a combination of better benefits and reduced bank charges," explained Monica Mynhardt, Researcher at the Solidarity Research Institute (SRI).
"In 2019, Capitec took back its title as the bank who offers the cheapest account to low-income users. Capitec is still the only bank that offers good interest rates on transactional accounts, which can help a user with a minimal balance in their bank account reduce their bank charges even more," explained Mynhardt.
Regarding banks' flagship accounts, a combination of bank charges and rewards programmes is starting to become the predominant factor for users. Capitec remains the cheapest bank for users who have no need to participate in a rewards programme.
"For users seeking rewards programmes, FNB's Gold Cheque account will offer excellent value, with users getting access to FNB's rewards programme, eBucks. It is also the only account in this category, besides Capitec's, which offers reduced bank fees from last year. As a result of this reduction, FNB's Gold Cheque account just passed Standard bank's Elite Bundle account – the cheapest option with benefits of last year.
Transaction accounts for upper middleclass users are probably the most competitive. The types of benefits in this category are very similar across the spectrum of all the banks, and the difference in costs between the different banks are the smallest in this category.
"However, FNB Premier Cheque and ABSA's Premier account were the only two to offer a reduction in bank charges. ABSA's Premier account is also the most affordable account in this category – the cost hereof is comparable to the most expensive accounts in the previous categories. Despite FNB also offering a reduction in bank charges, Standard Bank's Prestige Rebate account is the best option besides ABSA's," Mynhardt pointed out.
"This year's report includes an analysis of international accounts and foreign exchange. This is included amid local uncertainty and an often, volatile Rand. The goal is to expose users to options to diversify by investing in foreign currency. These accounts are typically, accounts that can be linked to an existing transaction account with no cost or minimum balance that allow users to purchase foreign currency. ABSA, FNB, Standard Bank and Nedbank all offer such an option, while Capitec is the only bank that does not offer this option," concluded Mynhardt.