Most banks have lowered their charges - Solidarity: Consumer pressure seemingly the driving force

Four of the five large commercial banks in South Africa have lowered the cost of virtually all their accounts over the past year, with Nedbank as the only exception. Capitec, whose bank charges were already the lowest in 2010 and 2011, lowered its charges even further in 2012. These are some of the findings in the Solidarity Research Institute's (SRI's) third annual report on bank charges that compares the bank charges of various personal bank accounts of the five large commercial banks, namely Absa, FNB, Standard Bank, Nedbank and Capitec, with each other.

Paul Joubert, senior economics researcher at the SRI, says although noteworthy changes have occurred since the previous report was published, one aspect has not changed. ‘When the cheapest accounts of the five banks are compared, Capitec's Global One account is still the least expensive of them all. This account's average bank charges across eight different user profiles amount to R55, 50 a month, which is a 15, 9% decrease from R66, 00 in 2011. By contrast, Nedbank's cheapest option is its Savvy Electronic account. This account's average monthly bank charges are more than double those of Capitec and, in addition, this account's charges have increased by 4, 5%, from R107, 79 to R112, 61, between 2011 and 2012.'

Each bank's cheapest account in 2011 and 2012

(Charges calculated as an average of eight transaction profiles, the effect of interest or forgone interest excluded.)

The bank charges of Absa, FNB, Standard Bank and Capitec were not lowered for the abovementioned accounts only - the bank charges of almost all accounts of these banks have decreased. The effect of Absa and Standard Bank's comprehensive efforts to make their bank charges more competitive is clearly visible in the report. Absa and Standard Bank were the most expensive banks in 2010 and 2011, but they now offer stiff competition to FNB, previously the clear market leader with the popular ‘bundle' type accounts. However, Standard Bank is, as in previous years, still being handicapped by the fact that it levies an exceptionally high fee of R16 for creating or amending stop orders. Many bank clients will, however, not be affected by this fee and without it, the Achiever Electronic account's average costs would have been only R85, 81 and not R109, 81.

Moreover, each of the "Big Four" commercial banks is promoting a "low-cost" account: Absa's Transact, FNB's EasyPlan, Standard Bank's AccessAccount and Nedbank's Ke Yona. Standard Bank's AccessAccount is the most expensive of these accounts across the board. ‘As far as the "low-cost" accounts are concerned, the choice is really limited to Capitec's Global One account, FNB's EasyPlan account and Absa's Transact account, ' says Joubert.

According to Joubert, lower charges and stronger competition make up the main theme of this year's report. ‘It appears that consumers are more informed and are putting more pressure on their banks to offer better value for money. Judging by the decreases in four of the five large banks' charges, it seems that this consumer pressure is starting to pay off.'

The SRI's report on bank charges serves as a good guide for people who want to evaluate their bank charges, but each individual's banking habits are unique. People should therefore still make decisions based on their own banking habits and preferences.

Download the full report: click here.

Statement issued by Paul Joubert, Senior economics researcher: SRI, October 18 2012

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