Absa recently extended Absa Transact in a bid to attract clients looking to pay less to transact and bank smart customers could pay as little as R29.15 in banking fees each month.

Absa Transact was introduced in 2010, but has been completely upgraded as a product and will now be available at all 748 Absa branches countrywide – not just the Entry Level and Inclusive Banking (ELIB) Branches.

With 7,4 million entry-level banking clients in South Africa, it’s not surprising that banks are competing for their business. It becomes a question of who will win the price wars, because low-income consumers want and need the best possible deal. Standard Bank is expected to launch its low cost offering shortly.

What makes Absa Transact appealing?

According to Lawrence Twigg, managing executive for Absa’s Entry Level and Inclusive Banking, the chief attraction here is that the product is very affordable and there are no monthly service fees if you earn R2000 or more a month. It is also available at all Absa branches and Absa has a large footprint throughout South Africa.

• No monthly fees on – certain conditions: The no monthly fee sets this bank account apart from its competitors. FNB’s low cost option EasyPlan charges a R3.50 monthly fee and Capitec charges a monthly fee of R4.50 (Capitec’s new pricing list will be released on 1 March).

But beware – You do need to earn a minimum of R2 000 to qualify, if you do not earn R2000 per month you will pay a R25 monthly fee which would make this a very expensive account and their Mzansi offering or pre-paid debt card would be a better option

• No penalty fees: Absa is also the first bank to completely waive penalty fees for bounced debit orders and insufficient funds at ATM withdrawals or point of sale.  Capitec’s Global One account charges R3,75 penalty fees for these types of transactions and FNB EasyPlan has a R5 penalty charge  which means clients have to be vigilant when it comes to maintaining their accounts.
• Free airtime top–up and mobile banking: Absa Transact has no fees for buying airtime and does not charge a monthly mobile banking fee unlike some of its competitors
• Access: Absa’s offering which is now available at all Absa branches across the country makes it the most accessible. Capitec ‘s national footprint is still small in comparison to the big four, FNB currently only offers its EasyPlan through a limited number of EasyPlan branches.
• Banking for R30: According to Absa’s comparison tables, a customer who earns R3000 a month and makes an average of 17 transactions a month (such as balance enquiry, pays an account, tops up his airtime and so on) should end up paying less than R30 a month, says Twigg. That works out at roughly R1.70 a transaction. (see Bank fee comparison is smoke and mirrors)

If you’re an existing Absa customer, you’ll have to close an existing transactional account to open an Absa Transact account.

Keeping costs low

• It is important to find out from your bank how many transactions you are permitted each month. You may not know that making more than a certain number of transactions may lead to penalty fees.
• If you are cash-strapped, carefully plan how many transactions you need to conduct in a given month, and have a look at costs per transaction on your bank’s website. Itemised costs for each banking package are available. Do the math.
• Understand your spending, because you’ll then be able to look at your banking behaviour more carefully. Topping up with airtime every few days? Withdrawing money from a Saswich near work rather than your own bank’s ATM close to home? Consider what you can do to change your behaviour as it may cost you.
• Use your own bank’s ATM, unless you simply have no other choice. You could end up paying close to R8 to withdraw from another bank’s ATM, which is heavy.
• Keep your ATM card in a safe place – it can cost R25 or so to replace a lost card.
• It may seem obvious, but don’t have more bank accounts than you need. The more accounts you have, the more fees you pay.