Bank charges - to fix or not to fix?
While consumers have received respite in terms of lowered interest rate charges, it is still prudent to manage finances appropriately and cut down on expenses. One such way would be to review your banking behaviour and choose the most appropriate option to suit your needs.
"Over the last few years, most South African banks have introduced bundled product offerings, which are aimed at providing bank customers with a bundle of transactions at a fixed monthly fee," says Bryan McLachlan, Head of Transactional Products at Nedbank.
With the fixed fee option, clients pay a fixed monthly fee for a pre-determined number of transactions, with various options available that are designed to cater to different client behaviour.
While there are various fixed fee options available that are designed to cater to different banking behaviour, most are likely to include the following transactions in the monthly fee:
- All digital banking such as Internet banking, Telephone Banking, Cellphone Banking and self-service terminals
- Inter-account transfers, third-party payments, balance enquiries, payments and statements via all self-service channels
- Unlimited debit orders and stop orders
- Annual Cheque card, garage and debit card fees
- Unlimited Cheque or debit card purchases at till points
- Unlimited fuel transactions
- Four Free cash withdrawals at Nedbank ATM's
Exclusions would typically include:
- Dishonoured payment fees
- Cheque service fees
- Fees for using another bank's ATMs
"The bundled option is most appropriate for when you want to be able to budget for your fixed monthly fees to gain better control over your finances.
"It is also appropriate for when you tend to use certain type of transactions frequently or and will get better value from only transacting within the bundle," adds McLachlan.
In contrast to the fixed fee option, with the Pay-as-you-Transact pricing mechanism, you are charged a specific fee for every transaction you perform. This fee structure would better suit clients who prefer to pay for what they use or clients who don't need to budget a specific amount for bank fees every month.
"As different products are designed to cater for different needs, you need to consider how many transactions you perform in a month and your preferred means of transacting, for example, through the branch or self-service banking.
"It is worthwhile to consult with a banker or a bank fees specialist to undergo a needs analysis which will provide the best priced product to suit your individual transacting needs. There are also online tools where you can choose the best product for your requirements, calculate your estimated monthly charges and compare the fees to competitor offerings. (For example, Nedbank's bank fees calculator can be accessed by visiting www.nedbank.co.za and clicking on ‘Rates and fees'.)", says McLachlan.
He says customers who prefer to use electronic channels would benefit from a packaged account such as Nedbank's new Savvy current account at R65 per month, which rewards customers for using electronic channels to bank. A premium of R10 is charged for branch or cheque transactions, of which a portion is donated to the Green Trust.
"However, someone who prefers to make withdrawals or deposits in branch will find better value in a traditional bundled product," he concludes.