Capitec still generally offers the lowest bank charges for personal transactional accounts, even for clients in the middle income group, according to trade union Solidarity’s fifth research report on banking costs.
Competition has however increased, especially in the offering to low income customers, said Paul Joubert, senior researcher at the Solidarity Research Institute.
He does caution that the research results represent only an overview of bank charges in 2014. Some rewards programs and synergies with other products have not been taken into account. In some cases clients may value these aspects enough to pay a bit more in bank charges.
Solidarity took the offerings of the five major banks, Absa, FNB, Standard Bank, Nedbank and Capitec to low, middle and upper middle class clients and compared costs on profiles with respectively 12, 17, 24 and 29 transactions per month.
Low income, basic banking needs
Capitec is the only bank that offers interest on positive balances. If that is taken into account, a client with an average balance of R2 380 and doing 12 transactions per month will pay R22.94 per month in bank charges – the lowest of all five banks. If the interest is not taken into account, FNB would have been the cheapest, followed by Absa.
Standard Bank offers a large number of so-called AccessPoints at thousands of small businesses all over the country and the convenience of that may for some customers justify paying a bit more, Joubert said.
Nedbank is considerably more expensive with no notable additional advantages and cannot really compete with its peers in this market segment, Solidarity found.
Low income, more sophisticated needs
According to Solidarity the offering in this segment has declined as Nedbank and Standard Bank withdrew its products in this market segment. Comparing costs in a client doing 17 transactions per month, Capitec is the cheapest, even without taking interest into account.
Absa and FNB’s bundle options are cheaper than their pay-as-you-transact options. FNB’s bundle account is marginally more costly than Absa’s, but offers unlimited electronic transactions, which Absa’s does not.
Middle class income, sophisticated banking needs
Capitec offers only one account to clients in all income groups and is also the cheapest in this category, Solidarity found. The difference between the lowest and highest cost at the other four banks is about R20.00 and clients may make a choice based on other factors than cost only.
Nedbank, the second cheapest, for example, charges extra for other benefits like access to its reward programme. Absa, in third place, and FNB in fourth, include various other benefits and discounts to these account holders, Solidarity found.
Standard bank is the most expensive in this flagship category and participation in its reward program is subject to an additional fee of R20 per month.
Upper middle class and sophisticated banking needs
Solidarity did not include Capitec’s transactional account in this category, because it does not offer the significant extra benefits that characterise these accounts. Capitec is nevertheless considerably cheaper than its peers in this category, Solidarity said.
FNB is the cheapest among the four big banks in a comparison made over 29 transactions, with Absa in a close second position. Standard Bank is in third position with Nedbank the most expensive.
Solidarity said the customer in this category would most probably base their choice on the benefits and service the bank offers, rather than cost only.
Joubert said clients should ask themselves whether the extra benefits really justify the higher costs. “If you pay more than R120 per month in banking fees, you are probably paying too much”, he said.
Solidarity concluded that Capitec’s Global One account is still the cheapest option over all categories, thanks to the interest it offers. It does not offer overdraft facilities and credit cards, but in other respects offers normal banking functionality, including electronic and international transactions.
Among the big four banks Absa and FNB are in most cases the cheapest and priced very close to each other.
Nedbank does not compete well on bank charges, except in the middle class category, where its Savvy account (Plus option) is the cheapest after Capitec.
Standard bank is the most expensive in all but the basic low income category.