'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 Arde Reports

Article excerpt

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. …