While South Africa’s four large full-service banks – Absa, FNB, Nedbank and Standard Bank – have kept fee increases modest (or frozen) for cheque accounts in recent years, charges for standalone credit cards are up, typically by anywhere from 20% to 75% since 2016.
A Moneyweb analysis of pricing over the past three years shows increases across the board. The steepest increases have been on Nedbank’s Classic and Gold credit cards, as well as Standard Bank’s Titanium and Platinum ones, with jumps of between 56% and 75% since 2016.
All four banks now charge the equivalent of an account fee and a credit facility fee. This ‘unbundling’ of fees started around three years ago and banks now have two levers to adjust.
Absa describes the former as a fee relating “to the cost charged monthly for the administration and maintenance of the value-added features on your credit card account. This fee enables the ‘more than just credit’ features on your card”, while the latter “relates to the cost charged monthly for the routine administration of maintaining your credit card facility. This fee enables the everyday use of your credit card and the credit granted.”
Standard Bank, however, charges a larger monthly service fee to cover the cost of providing credit, while the lower card fee covers value-adds. Some banks, like Nedbank, reserve the right to charge a “credit facility service fee” of up to R45, “depending on your risk profile”.
It must be noted that these fees are for standalone credit cards only. Generally, there are bundled options for upper mid-market products (think: Platinum/Premier/Premium/Prestige accounts). Here, a cheque card and credit card, as well as a certain number of transactions, are available at a more appealing price than if these products were selected separately.
All credit cards, bundled on not, carry certain more opaque charges. A decline at a point-of-sale terminal due to insufficient funds will attract a fee of nearly R9 per instance. International card swipes attract a charge of 2.75% of the rand value of the transaction for three of the four banks (Nedbank’s fee is 2%).
A new fee, seemingly introduced in the past year by most banks, is an ‘initiation fee’ levied on all new credit cards.
Standard Bank charges an initiation fee on all new credit cards of R175. For customers on Prestige Banking, which includes a credit card on the bundled option, the fee is R165.
At Nedbank, the initiation fee is R189.65 for new credit cards, however, this is included for free on Savvy and Professional Bundle accounts.
In its pricing guide, FNB says it will charge an initiation fee “up to a maximum of R175” for new credit cards.
According to its 2019 pricing brochure, Absa does not charge an initiation fee for credit cards.
* Hilton Tarrant works at YFM. He can still be contacted at firstname.lastname@example.org.
* He owns shares in FirstRand, first purchased in July 2011.
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