Last week FNB released its price review for the next year (effective July 1st), with a few tweaks and changes, and two new product offerings.
Banking for kids and students
Banking for kids and studentsFNB has rebranded its youth offering with the launch of FNBy, which I must admit is compelling for a parent of teenagers.
Children under the age of 18 can bank for free. There are no monthly fees and free card swipes, although there is a charge to withdraw cash – you pay a flat fee of R1.40 to draw cash at a retailer or R1.85 per R100 to withdraw at an ATM.
Kids also have access to the FNB App and rewards programmes. The free InContact messaging can be set up for parents also to receive the notifications, so you can keep an eye on your child’s spending habits. The child can also put money into the a linked savings pocket and earn 6.5% interest on balances of R100 or more – certainly better than the rate that Mom and Dad are getting!
For students between the ages of 18 and 25 there is a monthly fee of R10, reduced from the R25 paid on the previous FNB student offering. This also includes free card swipes and free withdrawals and deposits up to R3 000 per month. This account offers additional linked savings accounts such as a 32-day notice account. It also includes free online and cellphone banking.
This is an attractive offering but the catch is that it is only available to children whose parents bank with FNB.
One credit facility, one card
FNB is launching the Fusion Premier account which combines your credit card and cheque account into one facility with one card. The benefit is that anytime you use your card, even if you are not accessing credit, you earn eBucks based on a credit card spend rate, which earns you more eBucks per swipe.
Personally, I am not convinced of any real benefits, and you need to seriously analyse your banking behaviour before considering this product. Effectively it combines the features of an overdraft facility with a credit card, giving 30 days’ interest-free credit on card purchases. Currently overdraft facilities tend to have lower interest rates than credit cards, so find out what interest rate you will be charged. FNB’s response is that credit rates are personalised, so it would depend on the client.
You will also be spending your own money before spending the credit facility, as you would with an overdraft, but that removes the full benefit of the interest-free period that you receive on your credit card (up to 55 days), which savvy banking customers use by swiping their credit cards interest free and then settling in full every month.
By combining both your overdraft and credit card facility, it will give you a much higher overdraft availability which could end up in tears if you are not keeping track of your spending. Remember your next paycheque would first go to pay the overdraft, whereas if you had a separate credit card you could pay it off over time. You need to think carefully about whether this offering makes sense to you.
Fee increases
While Premier and Private clients will not experience higher fees, there have been changes to the Easy and Gold accounts. Easy Account customers on the pay-as-you-use option will be paying R5.25 per month, up from R4.95, for free card transactions and electronic transfers but will start to pay 40c for their InContact SMSs which seems counterintuitive, as it is an important element in the fight against crime. Ryan Prozesky, CEO of Value Banking Solutions at FNB, says the aim is to encourage customers to migrate to the FNB App which provides payment notifications for free and which will soon have zero-rated data costs across all mobile providers. This does assume that the customer has a smart phone which may be an issue in the Easy segment, which has smart phone penetration of only around 50%.
Easy Account clients on the bundle option will be paying R53 (R4 more) per month for their bundle of services and will also have changes to ATM withdrawal limits. Previously the bundle included free unlimited cash-at-till withdrawals and four free ATM withdrawals. This has been changed to a total cash withdrawal limit of R3 000 per month, irrespective of whether you are using an ATM or tillpoint. This will benefit clients who will find it easier to manage how much cash they withdraw in a month rather than worrying about how many transactions they have done. Many customers do not feel comfortable carrying around large amounts of cash so the ability to withdraw smaller amounts more frequently will be a benefit.
FNB has discontinued the cashback rewards programme for pay-as-you-use Easy Account customers. Prozesky says the take-up was very low as customers did not transact sufficiently to move into tiered reward levels, however, they will be introducing a more direct rewards programme linked to grocery vouchers.
Gold Account customers will be spending R105 per month (R5 increase) for their unlimited bundle of electronic transactions, and will be subject to a R5 000 limit for free withdrawals. FNB continues to drive the electronic channels by making branch transactions eye-wateringly expensive. For example, to deposit cash at a branch will cost you R60 plus R1.90/R100 – on R1 000 that would be R79 compared to a R9 ATM fee (or free if you have a bundled fee option).
This article first appeared in City Press.
Two points: 1) The banks are pushing usage of credit cards over debit cards as they earn a significantly greater percentage on the spend. Retailers will need to make up the cost through higher prices, so for 0.5% extra in eBucks, people will end up paying 2.5% higher retail prices. We will always be the losers. 2) If you want to benefit from the 30-day interest-free period, you need to sweep the balance of your current account into a savings account before you spend on the credit card and return it when the payment is due. That way, your account will be empty and you will be spending on credit rather than spending your own money during the interest-free period. At the same time, you will be earning a slightly higher rate of interest on your cash. However, this requires discipline and focus, without which, it could end in tears.
Are you referring to the Fusion account?
This is very helpful. I told the FNB lady who called me to call tomorrow so that I do my own research. And then comes this uswful article. Am not taking up their offer.
Thank you for this post, Maya. As a financial journalist, it may be worth having another look at this offering as, in my experience this year alone, FNB has been pushing the fusion account more than ever. To me, it borders on reckless credit lending given that it appears to provide a very thin line between credit and actual money. The broader arc of a fusion account lends itself to perpetual debt in favour of the bank. As you say, if you’re not good at managing your money, this could end up in tears.
I also got offered the same deal, sounded to good to be true.
Thank you so much for the information!makes sense.
I am not happy about this Fusion card. First of all I think the bank official failed to give me all the information. I was there for a change of address and not to apply for a card and and my fault entirely I did not question her further. Too much pressure. I am cancelling as I like to have full control of my credit purchases.
Interesting comment. I have this argument with them all the time. They try to convince me it is a great product but I think it can end up in more debt unless you manage it well
Thank you! This was very helpful in understanding the Fusion account.
Great information! And thank you for that warning about the Fusion account, I absolutely agree. That’s a slippery slope for many non-savvy customers who don’t track their spending.