If you have stayed loyal to your bank for a few years you may be paying too much in account fees. But the good news is that competition among the big four banks (Absa, FNB, Standard Bank, Nedbank) and Capitec, which has become a dominant player, is fierce.
Other competitors are entering the market too. If you are open to trying different things, there are other companies – particularly in the fintech space – that allow you to transact in simpler ways. While some are basic, they are bound to become more sophisticated in their offerings in the future.
Which bank is the cheapest?
When it comes to traditional banking, Capitec’s Global One offers the cheapest transactional account in general, according to Solidarity’s 2016 Bank Charges report. The bank’s no-frills approach and policy of paying interest (currently at least 5.35%) on positive balances is what keeps it at the top of the affordability list. And now that Capitec offers a credit card, it is bound to garner even more attention.
Runners-up include FNB and Absa who have closely emulated the Capitec model. Meanwhile, Standard Bank and Nedbank are said to have experimented (and are still experimenting) with different types of accounts.
What this means is that you can never be sure from one year to the next which bank will offer you better rates. It’s best to compare bank accounts at least on an annual basis to ensure you are still getting value for money.
Are banks the only option?
With some banks taking advantage of the common-law set-off rule (which in effect allows them to take your money to pay off your debt without your permission), offering poor service, allowing illegal debit orders, and failing to provide adequate security, it’s no wonder customers are looking at their options outside of traditional banking and into the fintech space.
Glen Jordan, co-founder and director of IMB Financial Services, is convinced this is partly why his fintech firm – which enables customers to save their money and transact using their cellphones and a MasterCard – has landed 45 000 clients since launching in 2014.
“We’ve all heard stories about illegal debit orders – it happens all the time. You spend hours on the phone sorting it out.
“It gets reversed and then you get charged for that too. Consumers change to escape debit orders, not because of fees.”
IMB allows customers to transact through “wallets”, which allow them to pay their bills, send money home and make Metrorail ticket purchases. The no-frills offering doesn’t allow for debit orders.
And with retailers like Pick n Pay offering a credit facility on their Smart Shopper cards, it looks like the banking space is set to become ever more competitive. Soon consumers will be even more spoilt for choice.
How do you make the switch?
If you are going to stick with traditional banking, switching accounts can easily be done online. However, after filling out the forms, it takes an average of 45 days to complete the process. But with a good understanding of the process, switching doesn’t have to be scary or difficult.
The best way to do this is to keep both new and old bank accounts open until debit orders and other transactions have been switched to the right bank account and all payments in and out are operating smoothly.
“Check with your employer from which date your salary will be paid into your new bank account. Owing to the fact that a number of employers have payroll cutoff dates, your next salary may still be paid into your previous bank account, with only the subsequent one being paid into your new bank account,” says Ryan Prozesky, CEO of FNB Value Banking Solutions.
Keep sufficient funds in your old bank account to cover one month’s debit orders.
“This is to safeguard against the beneficiary/ collecting company not processing the new banking details by the time the debit order runs, and to ensure that in the switching process a vital debit order isn’t missed,” advises Prozesky.
Finally, it’s important to supply the new bank with the correct information when it comes to policy numbers, account numbers and your contact details. While there are some banks that provide debit order switching services, in certain instances, some service providers or human resources departments won’t accept instructions from the bank, which means that you will have to submit the instruction yourself.