Credit card cost hike

FEES FOR SOME: ACCOUNTS ARE UP OVER 60% IN THE PAST THREE YEARS

An ‘initiation fee’ is now levied on all new credit cards at most banks.

While Absa, FNB, Nedbank and Standard Bank have kept fee increases modest (or frozen) for cheque accounts in recent years, charges for standalone credit cards are up 20% to 75% since 2016.

Moneyweb’s analysis of pricing over the past three years shows increases across the board. The steepest increases were on Nedbank’s Classic and Gold credit cards, and Standard Bank’s Titanium and Platinum ones, with 56% to 75% jumps since 2016.

All four banks now charge the equivalent of an account fee and credit facility fee.

Absa describes the former as a fee relating “to the cost charged monthly for the administration and maintenance of the value-added features on your credit card account. This fee enables the ‘more than just credit’ features on your card”.

The latter “relates to the cost charged monthly for the routine administration of maintaining your credit card facility. This fee enables the everyday use of your credit card and the credit granted.”

Standard Bank charges a larger monthly service fee to cover the cost of providing credit, while the lower card fee covers value-adds. Some banks, like Nedbank, reserve the right to charge a “credit facility service fee” of up to R45, “depending on your risk profile”. These fees are for standalone credit cards only. Generally, there are bundled options for upper mid-market products. Here, a cheque card and credit card, and a certain number of transactions, are available at a more appealing price. All credit cards, bundled or not, carry certain more opaque charges. A decline at a point-of-sale terminal due to insufficient funds costs nearly R9. International card swipes attract a charge of 2.75% of the transaction’s rand value for

All credit cards carry certain opaque charges.

three banks.

Initiation fee

A new fee is an “initiation fee” levied on all new credit cards.

Standard Bank charges R175 on all new credit cards. Prestige Banking, which includes a credit card on the bundled option, charges R165.

Nedbank charges R189.65, however, this is free on Savvy and Professional Bundle accounts. FNB says it’ll charge “up to a maximum of R175”.

According to its 2019 pricing brochure, Absa doesn’t charge an initiation fee for credit cards.

Hilton Tarrant works at YFM. He owns shares in FirstRand.