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Find the best student account

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With my son starting his first student job, he needs to upgrade from his kid’s bank account to one that provides a few more transactions.

I undertook this exercise to identify what a student, or any young person, needs from a bank account and then investigated which accounts best meet these needs.

This is what my son needs:

Online purchases: The youngsters of today are digitally engaged and need to be able to buy items online, whether they need to download an app, buy an e-book or shop on Takealot. Not all bank cards allow online purchases, so it is something to check.

Online banking: This is Generation Z – born into the digital world. They need to be able to bank online, so a banking app would definitely be an advantage. My son must be able to top-up his airtime/data through his bank account. It’ll be even better if he can do this after running out of data.

Debit order/stop order: He needs to be able to transfer a portion of his earnings to his Satrix investment account. This can be done either as an EFT, stop order or debit order, however, a stop order would be the most convenient way to deal with this kind of transaction because the amount goes off automatically but is still under his control, so he can cancel it if his financial situation changes.

Savings account: He must be able to easily link a high-interest bearing savings account to his bank account.

Cost effectiveness: Banks have become competitive in their pricing, and price is not as big a differentiator as it used to be. However, one needs to be careful of bank accounts that offer a bundle of services for a set fee – my son will need to decide if he uses those services to justify the cost.

Continuity: My son will be migrating from his kid’s account to one that is better suited to his needs. Ideally, he would want
to keep the same account number, but it is already clear that this will not be possible if he stays with his present bank. However, it would be useful if his new account provided an account number that he could use for life while the banking service grows with his needs.

Easy Fica: As my son is still a few months away from his 18th birthday, he will have to complete Fica documents as a minor, which is a real hassle. This means his first choice is to stick with his existing bank, however, he could switch and use his current bank account as part of the Fica process. Note that, for anyone younger than 18, either a birth certificate or ID card will have to be provided. If the minor is still living with their parents, they need proof of the parent’s address accompanied by a declaration signed by the parent.

Parent’s bank: Ideally, he should share the same bank as his parents. This makes it easier for us to transfer money to him (or for him to pay us). Some banks provide an option where the parents can pay the child’s banking fees. While this is nice to have, the other criteria will play a bigger role.

Note: that rewards are not part of the requirements as he needs an account that meets his banking needs first. Below is a comparison of student accounts on offer.

Capitec Global

Capitec only offers one account, so it would meet my son’s needs during any stage in his life. He would have to keep a minimum balance of R25.

Online purchases: Yes, but you do have to ask for the card to be enabled for online purchases.

Online banking: Yes, and there is a banking app.

Debit order/stop order: Yes, it is a fully functional bank account, but these are charged for on a pay-as-you-use basis. He would pay R1.50 for a stop order or R3.50 for a debit order.

Savings account: Capitec has a range of savings accounts to choose from, and high interest (5.1%) is paid on the transaction account.

Cost effective: The monthly admin fee is R5.50, and includes free card swipes, airtime top-ups and payment notifications. Other transactions are on a pay-as-you-use basis. He would pay R1.50 at a retailer (Pick n Pay, Shoprite, Checkers, Boxer), R6 at a Capitec ATM and R8.50 at another bank’s ATM. Cash deposits at an ATM cost 90c per R100, so if he deposited R500, it would cost R4.50.

Continuity: This account is for anyone, so my son could keep it for the rest of his life.

Conclusion: Based on his current needs, he would spend about R14.50 a month, which makes this the second cheapest account. However, as it’s a pay-as-you-use account, he would have to watch his banking behaviour. For example, the student accounts do not charge for depositing cash, but this one does.

First National Bank

FNB has two different youth accounts. For children under the age of 18, the account has no monthly fee, but is more limited in terms of available transactions. For those between the ages of 18 and 26, the FNB Easy account is fully transactional with a monthly fee, and is the account used for this analysis.

Online purchases: Yes. You receive a EMV-enabled card, which provides for online purchases.

Online banking: Yes. It includes the FNB banking app and special deals from FNB Connect. It is free to top up airtime with FNB Connect, but costs R1.20 with another service provider.

Debit order/stop order: Yes, this is included in the monthly fee.

Savings account: You can link to a savings account, a 32-day flexi notice account and a tax-free savings cash account.

Cost effective: There is a R10 per month admin fee, which includes unlimited card swipes, free inContact, free electronic transfers, free debit orders and free cash deposits up to R3 000 at an ATM. You pay R1.40 to draw cash at a retailer, R1.85 per R100 at an FNB ATM and R7 plus R1.85 per R100 at another bank’s ATM.

This account is cost effective as long as you don’t draw cash too often. If he drew R200 at an FNB ATM, it would cost R3.70.

Continuity: FNB customers have one account number for life as they upgrade through the various products.

Interesting feature For R3 a month, he can either get a weekly balance alert or a My Limit Alert, which is useful for students who are learning to juggle their money.

Conclusion: This account meets most of my son’s needs. If he draws R100 cash at an FNB ATM, R100 cash at a retailer, buys non-FNB Connect airtime three times a month and signs up for My Limit Alert, his banking fees would come to R19.85 a month. He could reduce this further by only drawing cash at a retailer.

Absa

This is tricky to compare as it offers three different segments. A MegaU account works until the age of 19. If you keep a balance of R300 in the MegaU account, there are no monthly fees and the majority of transactions are free, including cash withdrawals at ATMs. It also allows for online purchases. Once you turn 19, you can either migrate to the Absa Transact Account, which is a low-cost pay-as-you-use account for someone earning R3 000 or less a month, or, if you are studying full time, the Student Silver Account.

For the purposes of this article, we analysed the Student Silver Account, which is a full transactional account for students between the ages of 18 and 27.

Online purchases: Yes, it is a full transactional account with an EMV-enabled card.

Online banking: Yes, with unlimited day-to-day banking.

Debit order/stop order: Yes. This is unlimited as part of the monthly fee.

Savings account: The Student Silver Account can be linked to a savings account.

Cost effective: Monthly fee of R24, which includes unlimited cash withdrawals and deposits at an Absa ATM, card swipes and withdrawals at till points, unlimited debit or stop orders and free NotifyMe.

Continuity: The Student Silver Account is only available for four years, after which you will be upgraded to the Gold Value Bundle.

Easy Fica: Normal Fica requirements apply as the student will be 18 or older.

Note: To qualify, customers need to conduct at least five banking transactions a month, of which at least two must be prepaid transactions.

Conclusion: Based on my son’s needs, the R24 per month would cover all of his banking requirements. The drawback for him is that he is not a full-time student, so he would not qualify. This comes out as the most expensive offering for youngsters.

Nedbank

Nedbank has relaunched its student account, called the Unlocked.Me Student.

Online purchases: The account comes with an EVM debit card, which allows for online purchases at all local e-commerce sites and 3-D secure international sites. Nedbank is looking at opening up to more international sites without compromising security.

Online banking: Yes, and it includes the Nedbank Money App. The app only uses data to log in, after which the data is free. You can purchase data or airtime without having any.

Debit order/stop order: Yes, it’s included in the monthly fee.

Savings account: The MyPocket savings pocket. Up to 10 MyPockets can be linked to the Unlocked.Me Student account at an interest rate of 5.25%.

Cost effective: Monthly fee of R20, which includes unlimited withdrawals at Nedbank ATMs or till points. Free debit or stop orders and all card swipes.

There is a fee to deposit money so keep in mind if the student is earing in cash. It is expensive to deposit at a Nedbank ATM (R30 plus R1.50 per R100) but more cost effective at a Nedbank intelligent-depositor ATM (R1 per R100) or Pick n Pay (R5 plus R1.50 per R100)

Continuity: The account number remains the same as the individual’s banking needs change.

Easy Fica: The usual Fica requirements apply. My son already has the Nedbank4Me account, so he will not have to re-Fica.

Note: It is available to both full-time and part-time students between the ages of 16 and 24.

Conclusion: Based on my son’s needs, the R20 per month fee would cover all his banking requirements.

Standard Bank (best value)

The Student Achiever Account is for youngsters between the ages of 16 and 23 who are studying at school, at a recognised tertiary intuition or studying part-time with an income of less than R3 000 month. This works out as the most cost-effective bank account for my son.

Online purchases: Yes.

Online banking: Yes, it includes the Standard Bank Mobile App, which has zero rated data.

Debit order/stop order: Only a stop order as a “recurring electronic account payment”. It’s included in the monthly fee, but a limit applies.

Savings account: Can be linked to a savings account.

Cost effective: A monthly fee of R5.25, which includes eight free electronic debit transactions made up of electronic interaccount transfers, debit orders, stop orders, account payments, prepaid purchases and withdrawals at retailers. There are free card swipes and airtime top-ups, as well as two free Standard Bank ATM cash withdrawals and two ATM deposits. After this, a cash withdrawal costs R1.80 per R100 at a Standard Bank ATM.

Continuity: You keep your bank account number as your banking needs change.

Note: The monthly fee increases to R69 a month when you turn 23.

Conclusion: My son would pay only R5.25 per month because, at this stage, he would not exceed the eight free electronic transactions and ATM withdrawals. However, he would need to watch his banking behaviour – if he exceeds eight transactions, the fee will increase to R25 a month.

Investec (best value, but only offered to Investec parents)

Investec offers a Youth Account for the children of Investec clients who are younger than 25.

Online purchases: Yes, it provides a Visa debit card.

Online banking: There is a dedicated Youth Banking App, which is free.

Debit order/stop order: Yes, it is a fully functional account.

Savings account: Yes, and it earns a premium interest rate.

Cost effective: There is no monthly fee, all airtime purchases are free, as are card swipes and withdrawals from selected retailers. There are no costs for online transactions. However, drawing cash at an ATM is expensive at R15 as Investec does not have its own ATM network.

Continuity: This is not necessarily guaranteed as Investec has specific requirements for someone to become a client.

Interesting feature Your child receives complimentary access to local and international SAA departure lounges at all South African airports.

Conclusion: Based on my son’s needs, this would be a cost-effective solution as most transactions are free. If he drew cash once at an ATM, that would set him back R15, but that would be his only cost. However, as we are not Investec clients, it is not an option for us.

Old Mutual money market account

This is not a specific student account, but anyone older than seven can open one.

Online purchases: Yes, the card is fully functional for online purchases.

Online banking Yes. Because there are no branches, everything is done online. Airtime purchases are free.

Debit order/stop: order Yes, it is a fully functional bank account, but you will pay when you use the function.

Savings account: It is linked to the Old Mutual money market account, which paid 7.7% interest last year.

Cost effective: There is a monthly admin fee of R4.50, which includes free card transactions. Withdrawal at a retailer is R1.50 or R8.50 at an ATM. You can only deposit cash through a retailer (Shoprite, Checkers, Pick n Pay). Debit orders are R3.40 and an EFT is R2.

Continuity: My son could keep it for the rest of his life.

Interesting feature: You can decide whether you want 5% or 15% of every card purchase to be transferred into a money market unit trust.

Conclusion: Based on my son’s needs, this account meets most of them. If he draws cash once a month at a retailer and once at an ATM, charges up with data/airtime three times a month and has a debit order, he would pay R17.90. He could cut this down by only drawing cash at a retailer. Although it’s cost effective compared with the dedicated youth accounts, as a pay-as-you-use account, he would have to watch his banking behaviour carefully so the costs do not increase.

What about just opening a pay-as-you-use account?

Should you even consider a student account when most banks have entry-level pay-as-you-use accounts that provide pretty much everything on my wish list? The problem is that some banks have either an age limit – for example, FNB’s Easy account is only for someone who is 26 or older – or they may require proof of salary. Two accounts worth considering, however, are Capitec Global and Old Mutual Money Account, both of which are cost effective.

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