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Banks keep hiking cost of credit cards

Fees for some accounts are up over 60% in three years …

While South Africa’s four large full-service banks – Absa, FNB, Nedbank and Standard Bank – have kept fee increases modest (or frozen) for cheque accounts in recent years, charges for standalone credit cards are up, typically by anywhere from 20% to 75% since 2016.

A Moneyweb analysis of pricing over the past three years shows increases across the board. The steepest increases have been on Nedbank’s Classic and Gold credit cards, as well as Standard Bank’s Titanium and Platinum ones, with jumps of between 56% and 75% since 2016.

 

2016

2019

Change

Absa

     

Transact

R30

R42

40%

Gold

R40

R50

25%

Premium (neé Platinum)

R65

R80

23%

       

Standard Bank

     

Blue and Access

R49

R54

10%

Gold

R35

R54

54%

Titanium

R42

R69

64%

Platinum

R57

R89

56%

       

Nedbank

     

Classic

R24

R42

75%

Gold

R30

R49

63%

Platinum

R58

R73

26%

       

FNB*

     

Gold

R40

R48

20%

Premier (neé Platinum)

R69

R87

26%

* FNB adjusts its prices annually in July; above comparison from July 1, 2015 to 30 June 30, 2019. 

Note: This analysis excludes Private Banking cards.

All four banks now charge the equivalent of an account fee and a credit facility fee. This ‘unbundling’ of fees started around three years ago and banks now have two levers to adjust.

Absa describes the former as a fee relating “to the cost charged monthly for the administration and maintenance of the value-added features on your credit card account. This fee enables the ‘more than just credit’ features on your card”, while the latter “relates to the cost charged monthly for the routine administration of maintaining your credit card facility. This fee enables the everyday use of your credit card and the credit granted.”

Standard Bank, however, charges a larger monthly service fee to cover the cost of providing credit, while the lower card fee covers value-adds. Some banks, like Nedbank, reserve the right to charge a “credit facility service fee” of up to R45, “depending on your risk profile”.

It must be noted that these fees are for standalone credit cards only. Generally, there are bundled options for upper mid-market products (think: Platinum/Premier/Premium/Prestige accounts). Here, a cheque card and credit card, as well as a certain number of transactions, are available at a more appealing price than if these products were selected separately.

All credit cards, bundled on not, carry certain more opaque charges. A decline at a point-of-sale terminal due to insufficient funds will attract a fee of nearly R9 per instance. International card swipes attract a charge of 2.75% of the rand value of the transaction for three of the four banks (Nedbank’s fee is 2%).

2019 fees

POS decline

International transaction fee

Absa

Not disclosed*

2.75%

FNB**

R8.50

2.75%

Nedbank

R8.60

2%

Standard Bank

R9***

2.75%

* Absa charges R6.35 for a point-of-sale decline on cheque accounts

* Fees to June 30, 2019

*** R6 for e-commerce transactions

A new fee, seemingly introduced in the past year by most banks, is an ‘initiation fee’ levied on all new credit cards.

Standard Bank charges an initiation fee on all new credit cards of R175. For customers on Prestige Banking, which includes a credit card on the bundled option, the fee is R165.

At Nedbank, the initiation fee is R189.65 for new credit cards, however, this is included for free on Savvy and Professional Bundle accounts.

In its pricing guide, FNB says it will charge an initiation fee “up to a maximum of R175” for new credit cards.

According to its 2019 pricing brochure, Absa does not charge an initiation fee for credit cards.

* Hilton Tarrant works at YFM. He can still be contacted at hilton@moneyweb.co.za.

* He owns shares in FirstRand, first purchased in July 2011.

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COMMENTS   11

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And Capitecs monthly credit card fee is R35pm.

I have closed my FNB credit card. R576 per year for something, even if you don’t use it is stupid. Going to close my Nedbank one soon too.

Then I’ll just be left with my no monthly fee Virgin Money credit card.

I’ve considered VM card, but because of my current spending patterns my Discovery card is less than zero. If I stopped shopping at PnP or collecting miles then I’ll switch, but up till now my total cost of ownership was better.

Doesn’t apply if you don’t use Discovery though, then their monthly fee is very high at c.R140 pm

I have a Nedbank card that used to be free but is now R12.60/month. For some reason they recently stopped charging the “credit facility” part of the fee. At R150/year, I can’t be bothered to cancel it, let alone set up another account somewhere else. It’s a price I’m happy to keep paying for a backup, although it’s proved more useful for the rare cash withdrawal. A bonus is that it means I have both Visa and MasterCard, if that ever were to matter.

As for playing games and trying to spend more to rack up “points”: no thanks. I prefer actual money. So just enough cash in a money-market-equivalent account so that the interest earned cancels all other bank charges. That works out to about R20k capital. The time and mental energy saved is worth more.

I closed my ABSA account (after 15 years). Joined up with CAPITEC and never looked back since. Easily the best bank around. Am now saving money (monthly fees) instead of loosing money, as was the case with ABSA (who continually change the rules in their favour).

I went to Nedbank in beacon Bay, East London yesterday to fetch her credit card which had expired. She had asked a month ago and was told she would be messaged. To date no message.
After standing in the queue for half an hour outside the bank, watching people moving around inside and noting that they saw those outside, the lights go out at exactly 9.00am. At 3 minutes past a security guard comes out to tell us there is load shedding and the bank is closed.
Did they not know load shedding was going to start at 9.00am? They do not have back up power, but the Wimpy next door does have.
Time to change banks, Nedbank catch a wake up.

Nedbank is great for me – no reason for me to change.

Far as I know Virgin Money is the only one that doesn’t charge a fee. They also tried to offer a more competitive interest rate when they launched but that was shut down by the Credit Control Act, ie, govt which reckons it was encouraging people to spend on credit. Which makes absolutely no sense at all. We don’t need the government telling us when and how we can borrow money. We NEED a real free market with real competition among lenders!

It’s amazing how we have to pay for these “services” when they can legally leverage a high % of our money ( Loan out to others) to earn large amounts of interest for themselves! Why can they not make their full costs thus, instead of always upping the fees? Go figure!?
Their ‘outdated’ business model will soon result in them losing a large amounts of revenue!

Hope they make up losses by raising credit card fees even faster!

Excellent! Terrific and banks should charge even s lot MORE for credit cards
– not for account transactions on basic accounts that are essentials! Credit cards are debt traps for most users and SA needs people to save!

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