A colleague recently calculated that if she had used bundled account pricing on her bank account she would have saved R3Â 500 in bank fees a year. That is a huge sum of money.
A survey conducted by Pick ‘n Pay banking shows that, while most people feel their banking fees are too high, many have no idea what those fees are.
The concept of bundled accounts, where you pay a set fee for a certain number of transactions each month, has been around for several years but the banks have not until recently been active in marketing them.
According to the banking ombudsman, my colleague can’t sue the bank for the money she could have saved because the information was avail-able on its website and in price reviews posted to her annually. But who reads the bumf that comes in the post?
Banks could learn a thing or two from Telkom, of all places. A couple of months ago, I contacted Telkom to report a fault on my line and a helpful gentleman asked me if I knew about Telkom’s bundled account offering. He analysed my statements and advised me on the best package for my needs. Although it took three days for my fault to be repaired, the next month my tele-phone bill dropped by R300.
The Competition Commission’s recent report into banking fees highlighted the need for banks to make their pricing more transparent and accessible. While falling short of the Telkom example, the banks have at least been using advertising spend to make customers more aware, starting with Old Mutual Bank’s campaign offering customers a set monthly fee of R85 and FNB’s full-page advert on its bundled offering.
According to Standard Bank, owing to its active sales by consultants, nearly all of its new account holders sign on to a bundled account option. But, of course, this does not help existing account holders.
In order to assess the full benefit of bundled accounts, the Mail & Guardian put the banks to the test (see box below).
I am not surprised people find it difficult to compare apples with apples because each bank not only has its own pricing structure, but different pricing for different types of accounts,
One could argue that this demonstrates a form of competition, but it is confusing to work out if you are getting the best deal, which goes against the spirit of what the Competition Commission is trying to achieve.
The one thing to watch out for is what your bundled account does not offer. This can catch the account holder unawares, especially if you go over the limit of the number of transactions included in the monthly fee.
After completing this exercise, two things struck me: banks are not proactive in assisting you to manage your expenses, and their pricing structures are too complicated to make a clean comparison.
Cheaper by the bunch
The Mail & Guardian asked the banks to shows how a person earning R300 000 a year could save on bank fees. They were requested to look at a cheque account with five debit orders a month, five ATM withdrawals, five debit-card transactions, three cheques and five Internet payments.
- FNB offers an Electronic Pricing Option capped at R75 a month. However, this does not include the R10 monthly account fee or cheque fees, which at R10 for three cheques of R500 each adds R30 to the monthly fee. So for this scenario they come in at about R115 a month, saving R80 a month if each transaction was priced individually.
- Standard Bank’s monthly fixed fee for its Classic account is R72, but this excludes the monthly Internet banking fee of R21, which brings the total to R93. Based on the M&G scenario, the client would save R88,50 a month.
- Absa’s Gold Cheque account management fee is R105, but excludes electronic payments and Internet subscription fees, which makes the total bundled option in this scenario R147,05 — still a R71 saving if you paid for each transaction separately.
- Nedbank’s Pricing Plan 18 plus would cost R209,17 compared with pay-as-you-go in this scenario of R161,63. Its bundled option represents a R48 disincentive. It is also out of kilter with debit-card transactions, which it prices the same as an ATM withdrawal. The bank is about to make an announcement with regard to its pricing structures, but until then Nedbank’s partner Old Mutual Bank (R117 for the option listed above) is the better-priced option.