Most expensive bank's fees now even higher - Solidarity report

Banking giant Absa, identified as one of the two most expensive banks in South Africa in the Solidarity Movement's first report on bank charges last year, has retained its title. Moreover, the bank charges of Absa's cheapest account went up by 8%, while Capitec's bank charges were not increased at all this year. These as some of the findings in the second report on bank charges of the Solidarity Research Institute (SRI) that was released by the Solidarity Movement (Solidarity, AfriForum, Solidarity Helping Hand and the Solidarity Investment Company) today.

The report compares the bank charges of different personal bank accounts of the five large commercial banks, Absa, FNB, Standard Bank, Nedbank and Capitec with each other. "When comparing the cheapest accounts of the five banks included in the SRI's report, Capitec's Global One account comes out as the least expensive. The average bank charges of this account over eight different user profiles amount to R67,35 a month and have not been increased since 2010," according to Paul Joubert, senior researcher at the SRI. "Absa's cheapest option, the Silver Package account, has average monthly charges that are more than double that of the Capitec account. The charges also rose by 8%, from R140,90 to R152,15, between 2010 and 2011."

Each bank's cheapest account in 2010 and 2011

(Cost calculated as an average of eight transactional profiles, excluding minimum balances and the effect of interest or forgone interest.)

According to the report, Standard Bank and Absa are still overall the most expensive of the five banks included in the study, and Capitec and FNB are the cheapest. Capitec has the least expensive transmission account on the whole, but if a client wants an overdraft, a chequebook and a credit card directly linked to the account, FNB offers the cheapest current accounts by and large. Nedbank offers the third cheapest rates.

The bank charges of various combinations of monthly transactions were calculated on different expenditure levels. The study deals with only on the core aspects of transactional accounts to make comparisons as fair as possible and focuses on personal accounts. Business accounts are therefore not part of the comparisons.

"Solidarity's report on bank charges led to a greater awareness of the cost of bank services among consumers last year," according to Dirk Hermann, Deputy General Secretary of Solidarity. "Consumers now go to greater lengths to be informed and are prepared to move their personal accounts to get better value for money. Recent marketing campaigns by banks that were geared towards informed consumers, showed that banks can no longer rely on traditional loyalty, but have to compete for consumers who are looking for value for money."

The SRI cautions in the report that consumers must not simply assume that the account recommended to them by a bank is the cheapest option. "At Absa, Standard Bank and Nedbank the transmission accounts, marketed as cheap, are not often really the cheapest options," explained Hermann.

According to Hermann, the SRI's report on bank charges is a sound guideline for people who want to evaluate their bank charges, but every individual has unique banking habits. "People must therefore make decisions based on their own user profile," said Hermann.

The Solidarity Movement conducted a separate investigation into the bank charges of the large commercial banks' company accounts following the release of the report on bank charges last year. The Movement subsequently moved 35 of their bank accounts from Absa to FNB.

* Read the report at www.solidaritymedia.co.za. Click here.

Statement issued by Dirk Hermann, Deputy General Secretary: Solidarity, October 20 2011

Click here to sign up to receive our free daily headline email newsletter