We sent our new City Press intern Liziwe Ndalana to do some field research on opening a bank account. Liziwe’s experience highlights how important service is to us as customers. Liziwe was so impressed with Absa’s service she was nearly convinced to switch banks, however price does matter in the end.

We sent Liziwe to investigate which was the best bank for her needs. Her mission was to ask as many questions as possible in order to fully understand the product and how much it would actually cost her.

We wanted to understand how easy or difficult it is for someone to gain the information they needed to make an informed decision. After going into Cape Town branches of Absa, Capitec, FNB, Nedbank and Standard Bank these were her conclusions:

Nedbank: Consultant was not fully informed

The consultant was friendly and welcomed me warmly and explained the product in detail, however, when I asked more detailed questions on investment accounts he stumbled. I got confused while he was explaining and if I hadn’t had been more enlightened on the subject I would have been persuaded to take the product that was not suitable to my needs and would end up paying more.

He explained several accounts but recommended a cheque account and I left the bank knowing exactly what my monthly “flat fee” would cover and what additional fees I may incur.

Nedbank options based on my needs:

The Savvy Electronic Account has a monthly maintenance fee of R79, 00. This amount includes all electronic transactions such as debit orders and transfers, four Nedbank ATM transactions and one emailed statement, eight sms notifications, and free cellphone banking.

Transactor Account  is a pay-as-you-use. You pay a monthly maintenance fee of R9.50 and then for each transaction. If you are making frequent transactions this can be more expensive.

Capitec Bank: Limited offering

The consultant was very friendly, very knowledgeable of the product; however they did not have documentation, such as brochures or online printouts that would further assist me in case I needed more clarity when I was at home. Capitec has a single bank offering for all customers irrespective of their income. You “pay as you use” so there is no fixed fee offering.

This account pays a very high interest rate of 6% on balances under R10 000 and you can add four more savings accounts so it is great for saving. Capitec only offers personal loans, no home loans or car finance. The global account does not provide any value-add services like rewards programme or funeral cover.

Capitec Global One Account fees:

R4.50 monthly fee

R3 per debit order

R3 per electronic transfer

R4 to withdraw from a Capitec account

R7 to withdraw from another bank’s ATM

 R1 to do a cash back at PicknPay or Checkers

ABSA BANK: Outstanding service, expensive offering

The Absa consultant was friendly, patient and explained the products in details, pausing to listen when I asked questions. It was an eye opener to learn how much I was paying on my banking fees. She also explained ways to prevent penalty fees and told me about fees that were not included in the brochure. Even though I had waited nearly an hour to see a consultant it was worth the wait.

Absa options based on my needs:

Transactor Account has no monthly fee but you pay per transaction. The ATM withdrawal will cost you R3, 85 per transaction; this is irrespective of the amount you withdraw. At the till points you pay only R1, 00.

Cheque Account: Absa offers a cheque account to people who earn more R7, 000 or more. You can choose to “pay as you use” or select a fixed fee of R89 that includes five Absa ATM transactions, five debit card purchases (swiping your card at a retail store), ten electronic payments such as debit orders and money transfers. ATM, cellphone and internet balance enquires are free. Internet transactions are free, but you get charged to register and maintain the account online.

FNB: Unsatisfactory service but good offering

The consultant was not friendly and showed little interest in explaining anything to me. I started by asking questions and she reluctantly answered me. I asked her to make me printouts and she told me she was unable to and opened the website to show me the details. After pleading with her to print me the information, she eventually did.

However she was the only consultant who advised that I opted for a transactional account which tends to be cheaper than a cheque account.  She made it clear that whether I have a cheque or smart account, I will still be able to apply for a home loan or car finance as it is more important to have a good credit record.

FNB options for my needs:

Smart Transact Account is for people who earn R5, 000 or more but who do not want a cheque account. You can opt for the “pay as you use” option but for people who make frequent transactions the fixed rate at R69 per month is the best as it covers all electronic transactions including FNB ATM withdrawals.

Gold Cheque account is for people earning over R5 500 per month. The consultant said that the fixed fee option on the cheque account tend to be the most cost effective for people who transact regularly.

Customers must ensure that they are registered with e-bucks to earn any points.

Standard Bank: Reduced costs but not ideal

Before I am able to speak to a consultant, Standard Bank insisted on scanning my ID book. Then the consultant refused to accept a bank statement as proof of residence as they “do not accept bank statements from other banks” and would only accept a posted letter or municipal account. This is not a requirement at the other banks.

Standard Bank options for my needs:

Elite Banking is a cheque account suitable for people who earn a minimum of R8, 5000, but if you earn a minimum of R7, 000 and have a Degree or Diploma then they can open the account for you. This account has a monthly fee of R99 which has been decreased from R179 since 02 April 2012. The fee covers eight ATM withdrawals, three branch withdrawals, three ATM deposits; two money transfers and all internet and cell phone banking as well as free card swipes at till points. The account also provides an overdraft facility.

Achiever Electronic is a transactional account with a fixed monthly fee of R69 making it the same price as FNB Smart; however unlike FNB the transactions are limited to five ATM withdrawals, three ATM deposits and two money transfers. You also get free Internet and cell phone banking and no charge for swiping your card at a till point.

Decision time

Liziwe was extremely impressed with Absa’s service “they made me feel like an individual and took time to explain all the fees”. Initially Liziwe was prepared to pay R89 a month to bank with Absa compared to her existing FNB Smart account’s R69, however once she sat down and worked out her transaction requirements and what it would cost her, she realized that Absa would work out substantially more expensive.

As Liziwe uses public transport which requires cash on a daily basis and she does not feel comfortable walking around with cash, she typically makes around 10 ATM withdrawals a month. FNB Smart Account has unlimited FNB ATM withdrawals while Absa’s offering is limited to 5 withdrawals a month and thereafter she would have to pay R3.75 per withdrawal. However the FNB consultant failed to inform her that if she withdrew money from a non-FNB ATM then she would incur a charge of R32 – this would have come as a nasty shock.

Liziwe did not initially consider a Capitec account as she liked the idea of having a bank account that was specific to her needs rather than Capitec’s approach of a single account for every customer irrespective of income or transaction levels. However once she looked at the cost benefit, Capitec was very attractive and if Liziwe made fewer ATM withdrawals it may have been a better option than her current account except that Capitec does not offer home loans, credit cards or car finance and Liziwe would like to keep all her banking with one bank.

Lessons learnt

• SMS Notification: Absa was the only bank to tell her about SMS notification even though all the banks offer it. It is extremely important to sign up for it as it is the best way to protect your account against fraud. It also helps you to keep track of how much money is in your account.
• Beware overdraft facilities: Liziwe had moved away from a cheque account to a electronic transactional account so that she did not have access to an overdraft facility. “When I had my overdraft facility I knew I could buy things even though I didn’t have the money so this got me into debt”.
• Understand your individual needs: Liziwe had to look at per own personal banking profile to see which bank offered the best value. Due to her high number of cash withdrawals she needed to consider an account that would offer unlimited withdrawals but which also had an ATM near her place of work and home.
• Pay-as-you-go vs monthly fee: Pay-as-you go accounts are a good option for someone with a few monthly transactions; however Liziwe found that the fixed fee worked out cheaper for her needs. If you select a pay-as-you go check the monthly admin fee as that can vary significantly between banks.
• Know your limits: Some of the banks have limits as to how many transactions are covered under a fixed fee. Make sure you know these limits and do not exceed them.

This article was first published in City Press