FNB has come to market with an aggressive pricing package that provides free and unlimited electronic banking for R66 a month. If you don’t use a cheque book, can’t remember the last time you stepped into a branch and are prepared to hunt down an FNB ATM when you need to draw cash, this could be one of the cheapest banking options for you. Smart Transmission account holders will pay even less, R59,99 a month, and they receive R10 000 funeral cover. The only difference is that the Smart account does not offer a cheque or overdraft facility.
Most fixed monthly fee accounts have up to now limited the number of transactions included in the fee. Although these bundled options can cut banking fees, their limits are frustrating for customers because you tend to be penalised if you go over your allocation – and it is difficult to remember exactly how many transactions you have already done for the month.
For R66 a month FNB’s Unlimited Option includes all debit card transactions, withdrawals from an FNB ATM, cash deposits at an ATM, internet transactions, debit orders, stop orders, as well as cellphone and telephone banking transactions. But you will be penalised for using branches, cheques or Saswich ATMs.
For normal “pay as you use” transactions you pay R21 to write a cheque or make a withdrawal from a branch. That will cost the Unlimited Option customer R25. Where they really hit hard is with non-FNB ATMs. Rather than the usual R10 to R20 fee (depending on which bank owns the ATM), FNB will charge a flat R25.
James Fowle, head of core banking solutions, says FNB is using price to change customers’ behaviour. Human capital is becoming more expensive and if you want face-to-face contact, it will cost you. However, electronic channels such as internet and cellphone banking, have fixed costs irrespective of how many people use the channel. As more customers have migrated to electronic channels, FNB has been able to reduce the costs.
The bank has also removed the fee on declined ATM transactions. Fowle says new software allows the ATM to view balances and offer withdrawal options only up to available balances. Fees for cash handling and administrative transactions have, however, increased substantially. Stop payments, cheque account honouring fees and point of sale declined fees have all increased well above inflation, with price hikes ranging from 13% to 20%. The minimum fee for cash withdrawals from branches has increased by 16% to R21. Customers will also pay a minimum fee of R15 to deposit cash at branches.
Choosing the right channel
Electronic
The average user, who draws cash once a week, makes three purchases a week on a debit card and has five debit orders a month, would save about R932 a year by opting for the Unlimited Option compared to the normal Pay as You Use cheque account.
Cheques and branches
For traditionalists who still write the occasional cheque and prefer to make branch withdrawals, there is the Fee Saver Option, which requires a minimum balance of R8 000 in your cheque account. You forgo any interest earned in return for 35 free transactions, which include cheques and branch transactions. But forgoing interest income at current interest rates is expensive. A money market fund will pay at least 10% on your R8 000, providing you with R800 income a year. Effectively you have paid R800 a year for your 35 transactions a month.
Transmission account holders, which tend to attract savers, have to maintain a balance of R6 000 a month. They receive interest and 10 free transactions a month. If you don’t want to keep a balance in your account you can opt for the Fee Manager Option which has varying monthly costs depending on your requirements. For example, a monthly fee of R90 includes 12 transactions. This bundled option was available but has increased in price from R85 — a 5,9% price increase.
Calculating the costs
Nedbank has launched a fee calculator that helps consumers compare pricing across all banks. The calculator allows clients to select a profile based on their typical transacting behaviour and to match this to a range of relevant Nedbank products. Clients can then compare the monthly fees payable across the range. This online facility, accessible via the Nedbank website (www.nedbank.co.za), will also enable clients to compare Nedbank’s fees with products offered by other banks. Clients who do not have access to the internet can call a dedicated call centre manned by qualified staff with access to the online calculator.
Nedbank also announced its new pricing for 2008. It is offering cheaper cash withdrawals when using a debit card to make withdrawals from all Pick n Pay stores, including Score and Boxer stores. The average cash withdrawal fee for R500 is R7,75 at a Nedbank ATM, but only R1,75 in store.