GM Gareth Mountain said last week South Africans continued their “love affair” with the big banks even though research by ThinkMoney.co.za showed that up to R1500 a year could be saved by switching bank accounts. But people were reluctant to switch bank accounts because of the complexity of changing debit orders and account payments.
A way to reduce bank charges by 60%, without switching debit orders and account payments, was to open a dual low-cost, high-interest account in tandem with the existing account. Then set up a debit order to transfer all remaining funds after salary and debit order payments into this new account, and use it as a day-to-day account. The two best-price current accounts in SA, according to ThinkMoney.co.za, are Capitec Bank's Global One Gold and Bidvest Bank's BidSave account.
Mountain said the Capitec account was well balanced, matching low fees with a very high savings rate, while the Bidvest account had lower fees and a lower interest rate. He cautioned, however, that the dual account strategy would not work for all bank accounts.
“This strategy will provide a further 50% (or more) saving for most of the popular South African accounts ... however, if you bank with FNB (First National Bank) your savings will not be as great, and if you have a Nedbank Everyday account, this strategy will actually cost you more,” he said.
FirstRand in June increased retail bank charges an average 7% and Standard Bank increased its charges by about the same percentage at the beginning of the year.
Nedbank increased its bank charges an average 8.5% this year from 1 March and another price review was not expected until January 1 next year.
Absa announced an average 5% price increase for retail bank customers who opted to do transactions the traditional way from May this year, effective from 1 June, although choosing the right products to complement specific banking needs could result in savings on bank charges, said Absa managing executive for products and pricing Keith McIvor.
Households have sharply cut back on credit usage as shown by the sharp moderation in consumer credit growth in the year to date. Consumer credit slowed to 2.2% year on year in June from 21.6% year on year last year.
Source: Business Day
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