‘Bundles’ may cost less than paying for each transaction

Pay-as-you-go accounts suit people who perform very few transactions a month, according to Solidarity’s latest survey of bank charges. Angelique Ardé reports If you’re paying bank charges on a pay-as-you-transact (PAYT) basis, it could be costing you more than if you chose a “bundled” account. The PAYT accounts offered by the big banks are more expensive than their bundle-type equivalents, according to the latest report on bank charges by trade union Solidarity.

“PAYT accounts are therefore suitable only for people who perform a very limited number of transactions each month,” this year’s Solidarity report states.

Even the accounts that are aimed at low-income earners – and these accounts are usually available only on a PAYT basis – are more costly than the cheapest bundle- type accounts, the report says.

Paul Joubert, a senior researcher at the Solidarity Research Institute, says the relatively high cost of PAYT accounts is leaving many consumers with little option but to move to bundle-type accounts.

“Bundled” accounts are characterised by a fixed monthly fee – between R80 and R150 – in exchange for a limited or an unlimited number of transactions.

Typically, the bundle includes a credit card and access to an overdraft facility.

Over the past few years, the “Big Four” – Absa, First National Bank (FNB), Nedbank and Standard Bank – have been increasingly marketing these accounts, the report says.

Solidarity’s report is based on four profiles of bank customers who perform 12, 17, 24 and 29 transactions a month respectively. In summary, the cheapest account is based on the average cost across all four customer profiles.

Based on its research, Solidarity found that the top-ranking – in other words, the least expensive – bundled account is Absa’s Silver Value Bundle, which costs R79 a month. It is followed by FNB’s Smart Cheque Limited (R84 a month), Nedbank’s Savvy current account ( R89 a month) and Standard Bank’s Elite Plus account (R99 a month).

The Solidarity report notes that the cost of an ordinary current account has remained stable since last year, “but there is no indication that it will decrease”.

NOT MUCH BELOW R80

The “Big Four” have few options if you want to pay charges of less than R80 a month, it says.

“Only FNB’s Smart Unlimited account and the Fee Saver option on the Smart Cheque, Gold Cheque and Platinum Cheque accounts offer the possibility to pay less than R80 a month for someone who performs as few as 12 basic transactions a month,” the report says.

Capitec’s Global One account is “a considerably cheaper alternative for many people”, although the bank does not offer an overdraft facility or a credit card.

A number of the accounts that the “Big Four” offer to the lowest segment of the market “also provide a cheaper alternative, but almost all of these accounts have specific disadvantages that, in spite of the lower cost, will make them unattractive for many bank clients”.

Joubert says that when Capitec does launch its much-awaited credit card, possibly this year, it will “broaden Capitec’s appeal, especially among people at high income levels”.

Capitec has just one account, the Global One account, which is available on a PAYT basis only, but the transaction fees are low compared with its competitors. For example, you pay an administration fee of R4.50 a month, R1 to draw cash from tills at Pick n Pay, Shoprite, Checkers or Boxer, R4.30 to draw from a Capitec ATM and R7 from other banks’ ATMs, and there is no fee for using your card for debit purchases.

In Solidarity’s comparison of the big banks’ middle-market accounts, Capitec again came out tops for the fourth year in a row (the Solidarity report is four years old). It was followed by FNB, Absa, Nedbank and Standard Bank. Last year, FNB took second place, followed by Standard Bank, Absa and Nedbank.

Bank charges did not change significantly over the past year, the report shows.

There was a marginal increase in the cost of withdrawals at ATMs and the cost of cash and cheque deposits increased across the board. These changes had a negligible impact on the cost comparisons.

However, Standard Bank’s decision to close its Achiever Electronic account – the bank’s “most competitive mainstream account” – to new clients weakened the bank’s performance in this year’s comparison.

Last year, Standard Bank was rated third in the survey, thanks to the Achiever Electronic account. Because Standard Bank’s Elite Plus account is now its cheapest “mainstream account”, the bank fell into last place this year. On average, the Elite Plus account costs almost 30 percent more than the Achiever Electronic account.

Kershia Singh, media liaison for Standard Bank, says the Achiever Electronic account was replaced by the Access Account Plus account, “which offers better value by way of funeral benefits”. This decision was in keeping with the bank’s