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In a world where the cost-of-living crisis is forcing consumers to be more careful with how they spend their money, it is important to pay as little as possible on bank fees. Unlike taxes, bank fees are not inevitable, so why pay more than you absolutely must?
“It all starts with understanding why banks charge certain fees and then you should learn what you can do to minimise them,” Cheslyn Jacobs, chief commercial officer of TymeBank, says.
“If you are questioning all the different bank fees you are charged and if they are necessary, you are not alone. Pressurised by the escalating cost of living, more and more consumers are paying closer attention to their bank statements and are interrogating their transactional bank charges.”
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Fortunately, the banking sector is now a lot more competitive and today’s consumers have several bank accounts to choose from.
Banks are like any other business, Jacobs says. “Banks charge customers fees to cover their operating expenses and make a profit. Traditional banks must also pay for physical branches (for rent, electricity, security and equipment) and that cost is also typically recouped by charging the customers.”
In most cases where physical infrastructure is involved, banking will be more costly. Even TymeBank charges a nominal fee (R10 per R1 000 or part thereof for cash withdrawals at ATMs, for example). Similarly, costs (and charges) are usually incurred when third parties, vendors or disputes are involved.
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Jacobs says the different fees you are charged are normally determined by the type of account you hold, although many banks will charge a monthly administration fee just to keep the account open even on a basic, entry-level bank account.
This is in addition to the transaction fees for every withdrawal, deposit and transfer. These fees can add up quickly and therefore Jacobs says it is important to read the terms and conditions of your particular account. These costs do not need to be excessive.
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The Financial Sector Conduct Authority (FSCA) has made a concerted effort for banks to treat customers fairly and Jacobs says a part of this requires financial service providers to make sure that customers get “clear information and are kept appropriately informed before, during and after each point of sale”.
Before: most banks should have a fee or pricing guide on their websites for the different accounts they offer. Highlight your typical transactions and compare them across banks. You can also search online as there are several consumer and news websites that offer useful comparisons.
During: when you are doing a transaction, whether it is through online banking or your banking app, as a customer you should be told upfront what your bank charges are going to be and not be bamboozled by hidden costs.
After: you should get transaction notifications either in your app or by SMS (at a standard cost). Your bank statement should also provide a clear description of the charges that came off your account each month.
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Clearly the best bank fees are the ones you do not pay at all, Jacobs says. “However, the reality is that not all transactions can be free of charge. The good is that there are smart ways of banking that can reduce your bank fees significantly, as illustrated in this table:
How else can you minimise your bank charges?
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