With my son starting his first student job, he needs to upgrade from his kid’s bank account to one that provides a few more transactions. Part of this exercise was to identify what a student, or any young person, needs from a bank account and then identify which accounts out there best meet those needs.

This is what my son needs:

Online purchases: the working youth of today are digitally engaged and need to be able to make online purchases, whether that is downloading an app, buying an e-book, or shopping on Takealot. Not all bank cards allow you to do online purchases so it is something to double check.

Online banking: This is Generation-Z – born into the digital world. They need to be able to do their banking online. A banking app would definitely be an advantage. He must be able to top up his airtime/data through his bank account, first prize even when there is no data left.

Debit order/stop order: He needs to be able to transfer a portion of his earnings to his Satrix investment account. This can be done either as an EFT, stop order or debit order, however the most convenient would be a stop order (this is created through online banking) as the saving goes off automatically but is still under his control so he can cancel it if his finances change.

Savings account: He must be able to easily link a high-interest savings account to his bank account.

Cost effective: Banks have become competitive in their pricing and price is not as big a differentiator as it used to be. However, one needs to be careful of bank accounts that offer a bundle of services for a set fee – my son will need to decide if he uses those services to justify the cost.

Continuity: My son will be migrating from his kid’s account to one better suited to his needs. Ideally, he would want to keep the same account number he has with his previous account, but already it is clear that it is not possible through his existing bank. However, it would be very useful if this new account created an account number that he could use forever while the banking service grew with his needs.

Easy FICA: As my son is still a few months away from his 18^th birthday, he will have to complete FICA documents as a minor which is a real hassle. This means his first choice would be to stick with his existing bank, however, he could switch and use his current bank account as part of the FICA process. Note that for anyone under 18 either a birth certificate or ID card would have to be provided. If still living with the parents, they need proof of parent’s address accompanied by a declaration signed by the parent.

Parent’s bank: Ideally, he should share the same bank as us, his parents. This makes it easier for us to transfer money to him (or for him to pay us). Some banks provide an option where the parents can pay the child’s banking fees. While a nice-to-have, the other criteria will play a bigger role.

Note that rewards are not part of the requirements. He needs an account that meets his banking needs first.

Below is a comparison of all the student accounts on offer.

FNB

FNB offers two different youth accounts, branded as FNBy. For children under the age of 18, the account has no monthly fee, but is more limited in terms of transactions available. For youth aged 18 to 26, the FNBy account is fully transactional with a monthly fee and is the account used for this analysis.

Online Purchase: Yes – you receive an EMV-enabled card that provides for online purchases.

Online Banking: Yes – it includes the FNB banking app and special deals from FNB Connect. It is free to top up airtime with FNB Connect, but R1.20 for any other service provider.

Debit order/stop order: Yes, included in the monthly fee.

Savings account: You can link to a savings account, 32-day flexi notice and TFSA cash account.

Cost effective: R10 per month admin fee which includes unlimited card swipes, free inContact, free electronic transfers, free debit orders, and free cash deposits at an ATM up to R3000. You pay R1.40 to draw cash at a retailer, R1.85 per R100 at an FNB ATM and R7 + R1.85 per R100 at another bank’s ATM. So, this account is cost effective as long as you don’t draw cash too often. If he drew R200 at an FNB ATM it would cost R3.70.

Continuity: FNB customers have one account number for life as they upgrade through the various products.

Interesting feature: For R3 per month he can either get a weekly balance alert or a My Limit Alert – useful for students learning to juggle their money.

Based on my son’s needs, this account meets most of them. If he draws R100 cash at an FNB ATM, R100 cash withdrawal at a retailer, buys non-FNB Connect airtime three times a month and signs up for My Limit Alert, his total banking fee would be R19.85. He could reduce this by only drawing cash at a retailer.

Absa

This is tricky to compare as it offers three different segments. A MegaU account is for up to the age of 19. If you keep a balance of R300 in the MegaU account there are no monthly fees and the majority of transactions are free including cash withdrawals at ATMs. It also allows for online purchases. This is a very cost-effective kid’s account. Once you turn 19 you can either migrate to the Absa Transact Account, which is a low-cost pay-as-you use account for someone earning R3000 or less a month, or if you are studying full time the Student Silver Account. For the purposes of this article we analysed the Student Silver Account which is a full transactional account for students between the ages of 18 and 27.

Online Purchase: Yes, it is a full transactional account with an EMV-enabled card.

Online Banking: Yes with unlimited day-to-day banking.

Debit order/stop order: Yes, unlimited as part of the monthly fee.

Savings account: Yes, you can link to a savings account.

Cost effective: Monthly fee of R24 which includes unlimited cash withdrawals and deposits at Absa ATMs, card swipes and withdrawals at till points, unlimited debit or stop orders and free NotifyMe.

Continuity: The Student Silver Account is only available for four years after which you will be upgraded to the Gold Value Bundle.

Easy FICA: Normal FICA requirements as the student will be 18.

Note: To qualify, customers need to conduct at least five banking transactions per month of which at least two must be pre-paid transactions.

Based on my son’s needs, the R24 per month would cover all his banking requirements. The drawback for him personally is that he is not a fulltime student, so would not qualify. It comes out as the most expensive of the Youth offerings.

Nedbank

Nedbank has just re-launched its student account, which will be renamed the Unlocked.me Student Account.

Online Purchase: The account comes with an EVM debit card which allows for online purchases at all local ecommerce sites and for 3D secure international sites. Nedbank is currently looking at opening to more international sites, without compromising security.

Online Banking: Yes and includes the Nedbank Money App. The App only uses data to log in, after which the data is free. You can purchase data or airtime without having any.

Debit order/stop order: Yes, included in the monthly fee.

Savings account: MyPocket savings pocket and up to 10 MyPockets can be linked to the Unlocked.Me Student account at an interest rate of 5.25% (at time of writing).

Cost effective: Monthly fee of R20 which includes unlimited withdrawals at Nedbank ATMs or till points, free debit or stop orders, and all card swipes. There is a fee to deposit money so keep in mind if the student is earning in cash. It is expensive to deposit at a Nedbank ATM (R30 plus R1.50 per R100) but more cost effective at a Nedbank intelligent-depositor ATM ( R1 per R100) or PicknPay (R5 plus R1.50 per R100).

Continuity: The account number remains the same as the individual moves through their various life stages and different banking transactional product needs.

Easy FICA: Usual FICA requirements. As my son already has the Nedbank4Me account he will not have to re-FICA.

Note: It is available to both fulltime and part-time students between the ages of 16 and 24.

Based on my son’s needs the R20 per month would cover all his banking requirements.

Standard Bank (best value)

The Student Achiever Account is for youth between the ages of 16 and 23 who are studying at school or a recognised tertiary institution or studying part-time with an income of less than R3000 per month. It works out as the most cost-effective bank account for my son.

Online Purchase:  Yes.

Online Banking: Yes, includes Standard Bank Mobile App which has zero-rated data.

Debit order/Stop order: Only a stop order as a “recurring electronic account payment”. Included in monthly fee but limit applies.

Savings account: Can link to a savings account.

Cost effective: A monthly fee of R5.25 which includes eight free electronic debit transactions made up of electronic inter-account transfers, debit orders, stop orders, account payments, prepaid purchases and withdrawals at retailers. Card swipes are free and airtime top-can be done. It includes two free Standard Bank ATM cash withdrawals and two ATM deposits, after which a cash withdrawal costs R1.80 per R100 at a Standard Bank ATM.

Continuity: You keep your bank account number as your banking needs change.

Note: The monthly fee increases to R69 per month when you turn 23.

Conclusion: He would pay only R5.25 per month as at this stage he would not exceed the eight free electronic transactions and ATM withdrawals. He would, however, need to watch his banking behaviour, because if he exceeds eight transactions, then the fee increases to R25 per month.

Investec (best value but only for Investec parents)

Investec offers a Youth Account for the children of Investec clients under the age of 25.

Online Purchase: Yes – it provides a Visa debit card.

Online Banking: There is a dedicated Youth Banking App which is free.

Debit order/Stop order: Yes, fully functional account.

Savings account: Yes and earns a premium interest rate.

Cost effective: There is no monthly fee, all airtime purchases are free, as well as card swipes and withdrawals from selected retailers. There are no costs for online transactions. Drawing cash at an ATM is very expensive at R15 as Investec does not have their own ATM network.

Continuity: This is not necessarily guaranteed as Investec has specific requirements to become a client.

Interesting feature: Your child receives complimentary access to local and international SAA departure lounges at all South African airports.

Based on my son’s needs this would be a very cost-effective solution as most transactions are free. If he drew cash once at an ATM that would set him back R15 but that would be his only cost. However, as we are not Investec clients it would not be an option.

What about just opening a pay-as-you-use account?

Should you even consider a student account at all when most banks have entry-level pay-as-you use accounts which provide pretty much everything on my wish list? The problem is that some banks have either an age limit, for example the FNB Easy Account is only for someone aged 26 or older, or they may require proof of salary. Two accounts worth considering however, are the Capitec Global One Account and the Old Mutual Money Account, both of which are very cost effective.

 Old Mutual Money Account

This is not a specific student account but anyone from the age of seven can open one.

Online Purchase: Yes, the card is fully functional for online purchases.

Online Banking: Yes – as there are no branches it is all online. Airtime purchases are free.

Debit order/Stop order: Yes, it is a fully functional bank account, but these are charged for on a pay-as-you-use basis.

Savings account: It is linked to the Old Mutual money market account which paid 7.7% last year.

Cost effective: A monthly admin fee of R4.50 which includes free card transactions. Withdrawal at a retailer is R1.50 or an ATM R8.50 (like Investec it does not have its own ATM network so drawing cash from an ATM is expensive). You can only deposit cash through a retailer (Shoprite, Checkers, PicknPay etc). Debit orders are R3.40 and an EFT is R2.

Continuity: This account is for anyone, irrespective of age, so my son could keep it forever.

Interesting feature: You can create automatic savings where money is transferred into a savings account every time you swipe your card. You select an amount between 5% and 15% of every card purchase to be transferred into a money market unit trust account.

Conclusion: This account meets most of my son’s needs. If he draws cash once a month at a retailer and once at an ATM, charges up with data/airtime three times a month and has one debit order, he would pay R17.90. He could cut this by only drawing cash at a retailer. Although cost effective compared to the dedicated youth accounts, as a pay-as-you-use account he would have to watch his banking behaviour carefully so the costs do not build up.

Capitec Global One Account

Capitec only offers a single account type, so it would meet the needs of my son over any stage of his life. He would have to keep a minimum balance of R25.

Online Purchase: Yes, but you do have to request to have the card enabled for online purchases.

Online Banking: Yes – and there is a Banking App to go with it.

Debit order/Stop order: Yes, it is a fully functional bank account, but these are charged for on a pay-as-you-use basis. He would pay R1.50 for a stop order or R3.50 for a debit order.

Savings account: Capitec has a range of savings options to choose from, though the Global One account itself pays an attractive rate (5.1% at time of writing).

Cost effective: The monthly admin fee is R5.50 and includes free card swipes, airtime top-ups and payment notifications. Other transactions are on a pay-as-you-use basis. He would pay R1.50 to draw cash at a retailer (PicknPay, Shoprite, Checkers, Boxer), R6 at a Capitec ATM and R8.50 at another bank’s ATM. Cash deposits at an ATM are 90c per R100. So if he deposited R500 that would cost R4.50.

Continuity: This account is for anyone, irrespective of age, so my son could keep it forever.

Conclusion: Based on his current needs he would spend about R14.50 per month, which comes in the second cheapest of all the accounts. However, as a pay-as-you-use account he would have to watch his banking behavior and cash withdrawals. For example if he wanted to deposit cash, that would carry a cost, which the student accounts do not.

This article first appeared in City Press.