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Absa freezes monthly fees, hikes cash charges

Only Capitec has yet to announce pricing changes.
The bank says it provided R9.8bn in payment relief to customers last year. Image: Bloomberg

Absa has announced that monthly account fees for its “core” offers, including Transact, Gold Value Bundle, Premium Banking and Private Banking, will not increase in 2021.

Absa is the last of the four full-service banks to announce pricing for the year. FNB froze its fees in July 2020, while Standard Bank and Nedbank both announced in December that theirs would remain the same from January. Capitec will announce price changes later this month. It cut its monthly fee in 2019, held it steady last year, and is widely expected not to change it for a further year.

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Absa is selling its changes as a “comprehensive, new-look pricing structure” – and it takes effect from March 1, which is atypical. Generally, pricing changes occur at the start of its financial year in January. This suggests the bank waited longer than normal to make the decision, perhaps weighed by concerns over the impact of the second wave of the Covid-19 pandemic.

Free banking

It has scrapped the monthly fee on its Student Silver cheque account (this currently costs R29 a month). This account is bundled with an unlimited suite of standard transactions (withdrawals/deposits, payments, swipes, debit orders and airtime purchases) on the bank’s electronic channels. Given the aggressive nature of this change, this segment is clearly a renewed focus for the bank. Market pressures from lower or zero cost alternatives such as Capitec and TymeBank as well as other banks which have cut fees for entry-level accounts will have chipped away at this base for some time.

Immediate payments fee

Separately, it has cut the fee for immediate payments made to other banks. This is currently R65 but will drop to as little as R10 (for amounts less than or equal to R1 000) from March. Immediate payments for amounts above this will cost R49, making these 33% cheaper.

Cash charges continue rising

The bank has increased the fees for withdrawing and depositing cash at its ATMs by 10%. These charges are R2.20 per R100 (or part thereof), whether drawn or deposited.

This makes its charges for larger withdrawals pricey, especially when compared to other banks.

Customers on its Gold Value Bundle or Premium Banking accounts have a set value of ‘free’ withdrawals and deposits per month (R4 500 and R6 500 respectively). Withdrawals at retailers’ point-of-sale are free across these two bundled accounts. The changes also see these costs fall away on the entry-level Transact account.

Strangely, the bank has added an option where Gold and Premium bundled customers can “upgrade” their package to “receive unlimited free Absa ATM cash withdrawals” for R75 a month.

Nuisance transactions

It has halved its card replacement fee to R70 from March. However, the so-called “declined fee” where a transaction is unsuccessful will increase from R8.50 to R10. Dishonoured or returned payments currently cost R50 for the first three in a 12-month cycle, thereafter increasing to R150 each. This drops to R10 for the first four (thereafter, R150). Disputes of debit orders online or in its banking app will cost R5 within 40 days. This is currently free.

Read: SA’s best and worst banks

Monthly account fees increase slightly on both its mid- and upper-mid-market (Gold and Premium Banking) credit cards.

The bank says it provided “R9.8 billion in payment relief to customers, and more than R250 million in relief through a combination of fee reductions and interest rate subsidies last year”. Some of the latter would’ve come from waived Saswitch penalties for drawing cash at other bank’s ATMs during the peak of the pandemic.

It also notes that the “embedded retrenchment, disability and death cover” on its core offers “paid out a further R160 million to customers in 2020”.

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I fail to understand the logic of people accepting to pay bank fees. Sure, the banks need to make money but to charge people a 2.2% fee (as stated in the article) for accessing their own money or depositing it into the banks does not make sense to me. In the United Arab Emirates where I live, I have not paid bank fees on my accounts in 15 years. NO monthly / annual fee, NO account maintenance fee, NO cash withdrawal fee (not even outside of my bank’s ATM network), NO fee for transferring money between accounts internally, NO fee for transferring funds between banks in the UAE (i.e. to pay utility bills, etc.), NO fees on cheques issued, and NO cash deposit fee. With the likes of Capitec and others moving towards a ZERO-FEE cost structure I suggest it is just a matter of time before ALL BANKS adopt the same approach and banking will becoming zero cost to most account holders. Sure, the situation in the United Arab Emirates is different but it is only a matter of time before South Africa catches up with what I believe should be a zero-cost banking system. South African banks will have to come up with other ways to make money without fleecing their customers with bank fees.

Thanks to Capitec, the other banks had no choice but to adapt

Reminds me of a story a friend once told me many years ago

He had R2000 in an Absa savings account. Worked overseas for 3 to 4 years. Upon his return, he inquired about his balance, low and behold, his account was in arrears due to “bank charges”

His comment was “I saved myself bankrupt with Absa”

Most Banks have no morals.. Don’t believe one word when they tell you they care about your wellbeing!

They’ll praise you the one day when you don’t need them and repossess your home the next when you do

Nedbank fees up 35% to 100%.

Our small business accounts were reclassified giving an effective 100% increase in monthly maintenance fee! These are Trust accounts which we are forced to hold by SARS; the Trusts are merely asset holding, hence zero bank transactions other than bank charges and deposits to cover them.

What recommendations for asset holding small business accounts?

Change your bank

Shop around..Old Mutual, Investec or even FNB

Is this supposed to be a good news article?
Are you sure FNB froze banking fees?
Strange that I just started paying proper high banking fees since a few months ago with FNB.

Quote “However, the so-called “declined fee” where a transaction is unsuccessful will increase from R8.50 to R10. Dishonoured or returned payments currently cost R50 for the first three in a 12-month cycle, thereafter increasing to R150 each. This drops to R10 for the first four (thereafter, R150). Disputes of debit orders online or in its banking app will cost R5 within 40 days. This is currently free.”

Seriously this is a crime against the poor people in SA. No wonder they draw all their salary in cash and dont use card transactions. How can you charge R10.00 for a declined transaction.

How can you charge R150 for a declined debit order. The debit order is a contract between the client and the supplier NOT the bank. Any investigation into the actual cost of returned a transaction will be in the cents not rands.

I agree with you

I only use an FNB Debit card and transfer funds from one account to my Debit card as and when i use it

On the odd occasion, i’ve forgotten to transfer funds and my account is debited with R25 immediately..It makes me want to throw up

Cry me a river..It’s a debit card and nothing else for goodness sake..

Thats how we get fleeced and they, the banks make millions out of our stupidity

End of comments.

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