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SA’s cheapest bank account

Budget bank accounts can boost financial inclusion.

Perceptions of excessively high bank charges have, over the years, driven consumers away from the traditional big four retail banks to up-start Capitec. But it seems the big four are fighting back.   

Capitec, arguably the fastest growing bank in the country, is said to be popular among the low- to middle-income and student markets due to its simple and affordable Pay-As-You-Transact (PAYT) account – its only account type. But fee schedules for 2017 show that Absa, FNB, Nedbank and Standard Bank have undercut Capitec’s monthly account fee. This means that Absa now boasts the cheapest PAYT account while Capitec’s Global One account is the most expensive in the category. But, unlike Capitec no other bank is said to pay interest on positive PAYT account balances. 

 

Absa

Basic Banking

Capitec

Global One

FNB

Easy Account

Nedbank

Pay-As-You-Use

Standard Bank

Access Account

Monthly Account Fee

R 4.95

R 5.50

R5.25

R5.00

R4.99

Minimum Account Balance

N/A

R25

N/A

R50.00

R20.00

Cheque Deposit: Bank ATM

Free

R30*

R45 + R5/cheque

R20.00

R30.00

Cash Deposit: Bank ATM

R3.95 + R1.35/R100

90c/R100

90c/R100

R4 + R1.40/R100

R1.60/R100

Cash Withdrawal: Till Point

R1.15

R1.50

Free

R2.00

R1.60

Cash Withdrawal: Bank ATM

R5.00

R6.00

R1.85/R100

R6.50

R1.60/R100

Cash Withdrawal: Saswitch ATM

R8.50

R8.50

R8 + R1.50/R100

R8.00 + 70c/R100

R6.70 + R1.60/R100

Payments: Internal Debit Order

Free

Free**

Free

Free

Free

Payments: External Debit Order

R3.50

R3.50

R3.75

R5.00

R9.50

*Capitec does not charge a fee for salary cheque deposits

** Capitec charges R3.50 for debit orders placed at a branch, the service is free online and via its banking app

Source: Absa, Capitec, FNB, Nedbank, Standard Bank

Although the difference in monthly account fees is marginal, the transaction fees quickly add up. A simple model, which includes a monthly account fee as well as combinations of ATM and till point cash withdrawals and internal and external debit orders, shows that the costs associated with Absa’s PAYT account still beats that of its competitors.

 

Absa

Basic Banking

Capitec

Global One

FNB

Easy Account

Nedbank

Pay-As-You- Use

Standard Bank

Access

Account

Monthly Account Fee

R4.95

R5.50

R5.25

R5.00

R4.99

5 Till Point Cash Withdrawals

R5.75

R7.50

0

R10

R8.00

5 ATM Cash withdrawals of R500

R25.00

R30.00

R46.25

R32.50

R40.00

5 Internal Debit Orders

0

0**

0

0

0

5 External Debits Orders

R17.50

R17.50

R18.75

R25.00

R47.50

 Total

R53.20

R60.50

R70.25

R72.50

R100.49

*The above costs exclude optional SMS/email notification charges

** Capitec charges R3.50 for debit orders placed at a branch, the service is free online and via its banking app

In fact, Absa’s Basic Banking Account Fee combined with the above transactions is also marginally cheaper than its least expensive Flexi Value Bundle Account. At R 55 per month, the bundle offers unlimited debit card purchases and withdrawals as well as fund transfers and payments but caps ATM withdrawals and electronic payments, including debit orders. FNB’s Easy Account Bundle, a similar offering, costs R53 per monthly while the monthly fee on Nedbank’s Ke Yona Bundle is R50 and Standard Bank charges R100 per month for its Elite Banking Account.

PAYT accounts are said to be best suited to consumers with limited monthly transactions. Given this and the higher margins that banks are likely to make off premier accounts it’s no wonder that the big four don’t aggressively punt their PAYT offerings.

But PAYT accounts can go a long way in ensuring financial inclusion in South Africa. The 2016 FinScope Study on Financial Inclusion found that 11% of the adult population or 4.3 million adults are entirely excluded from the financial system. It found that the country appears to be financially inclusive on the surface as 77% of adults are banked but if South Africa Social Security Agency (Sassa) card holders are excluded only 58% of adults are in fact banked.

In a separate study the Boston Consulting Group found that perceptions of high fees limit the use of banking services in the country. Forty percent of respondents in a survey, the results of which were published in 2017, said transaction account fees are too high with one even saying that “the mattress doesn’t charge for small withdrawals”. It also found that only 24% of adults make more than three monthly transactions including deposits, withdrawals and swipes in order to avoid fees. As such, more than 60% of all purchases are paid for in cash.

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COMMENTS   13

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Please do an article on the cheapest banks for children as this would also help financial education.

This simple model is not very sensible.
Why would anyone make 10 cash withdrawals in a month (5 till point and 5 ATM)? That is a cash withdrawal every 3 days.
Most people making use of these accounts will also not have 10 monthly debit orders.

I make about 6/7 cash withdrawals a month off my savings account via an ATM as I don’t want to carry a wad of notes in my wallet. Thus it is more convenient for me to do the transactions I do and also I pay my gardener in cash of R 1500 so 3 drawing are for his wages (my drawings are limited to R 500 per 24 hour cycle) -its all a case of in the event of being mugged how much are you prepared to lose

Eish….Absa’s old Volkskas fighting spirit coming back?

Most people do not do the amount of cash withdrawals you have indicated. Also, most people do not have as many as 10 debit orders. If you say between 4 and 6 that may be closer to average.

In addition, you fail to mention that with the Capitec account, the account attracts an interest for credit balance at above 5% so that adjusts the costs you may incur.

I agree, please show with interest income.

Make an assumption like R7500 incorm with a 50% reduction on day one and the rest reducng average per day over the remainder of the month

A bank that actually gives interest is a bank I invest in. All the others are just platforms to consume and not get anything back.

Assuming you’re investing only for purposes of making more money; then your statement does not make sense.

As an INVESTOR you’d invest in a bank that has less costs (in this case, interest costs incurred in paying depositors).
As a DEPOSITOR you’d bank with a bank that pays more interest for deposits.

we’re talking about smallish balances, of course investment wise you wont keep all your cash in any of these accounts, but at small balances of say R10k for liquid monthly cash needs, Capitec blows everyone out the water due to the only payer of interest on balances held in a transactional account.

from the article “This means that Absa now boasts the cheapest PAYT account while Capitec’s Global One account is the most expensive in the category. But, unlike Capitec no other bank is said to pay interest on positive PAYT account balances.”

This makes all the difference, paying R1 more per month for an account is insignificant compared to earning say R500 per annum on a R10k balance due to interest.

Why isn’t Old Mutual’s Money Account (in association with Bidvest Bank) included in the list. Their account is R4.5/month (which makes them the cheapest) and the savings component is a unit trust (Old Mutual Money Market Unit Trust). This account also gives a black bank card, which is a nice add-on feature.

Agree with other posters – showing interest earned (which I am sure is headed by Capitec) gives the real view. I am a Capitec customer and always come out net positive every month…

Some corrections:

1. Capitec charges R3.50 per external debit order, REGARDLES of whether it is set in a branch or online (I know, I am their client).

2. Regarding Absa, you mention R 3.50 fee for external debit order. It might apply to their cheapest product; I pay R 8.50 per debit order on their CALL account.

For simple and cheapest banking (and the high interest benefit on credit balance), I prefer Capitec, until Capitec becomes big enough to charge their captive client base higher fees (which they are bound to do, like every capitalist corporate).

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