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Bank fees

28 April 2006 Angelo Coppola

Some interesting feedback on the bank fee newsletter.

*  There is one important cost factor you have not mentioned when you talk of the sliding fee applied to ATM withdrawals by banks and that is the cost of transporting cash.

I am not defending the banks because I agree that they are charging consumers too much but the cost of transporting cash in RSA is a huge cost factor for the banks so it stands to reason that if you draw more cash you pay a higher fee. Conversely if you deposit cash at a bank this is why they charge you a cash deposit fee.
Just my thoughts while I was reading your article.

Thanks for your interesting and thought provoking articles.

*   Regarding the issues on banking fees, just want to share a few thoughts from New Zealand. I lived here for a while but keep myself up to date on SA issues because I will return at some stage.

For the people that think that bank charges are high in SA, think again, its not high its MASSIVE in comparison with NZ. Here students and older people pay NO fees whatsoever. If one is fortunate enough and can maintain a balance of NZ$ 4000 or more combined in all your accounts at one bank, zero fees!, nothing, nill! Online banking, ATM withdrawals no fees on any transaction. The fees on my business account dont bother me at all because its such a small expense its not worth worrying about. If you shop around here the chances are that you will come away with no fees at all on any account as well as 7% interest on a + balance on a current account.

Keep up the good work and thanks for your newsletter.

*  Well spotted, Angelo. I trust that you will bring this to the attention of the authorities investigating the whole banking charges debacle. In the light of disclosures like these and others like bulking, one wonders how much more will need to be exposed before companies realize that they cannot hide irregularities forever.
 
The industry is already taking so much flak that the intermediary really has a tough time out there, and certainly does not need all of this.

*  JOIN OUR PETITION AGAINST OUTRAGEOUS BANK CHARGES...

"BANKS: PYRAMID SCHEMES FOR RICH SHARE-HOLDERS"

WAKE UP, SOUTH AFRICANS!

Do you know that in the United States and other countries account holders pay very little or no bank charges. Why, because the American public made a noise about it?

So South Africans, why are we allowing banks to eat away more and more of our hard earned money? Go back many years and you will remember that you actually EARNED the interest that was advertised on our bank account. Today that is far from the truth.

FACT: 76% OF SOUTH AFRICANS DON'T SAVE - the less people save the more they spend and the more they spend the higher inflation the Minister of Finance needs a wake-up call. Where is the "saving" in "savings account"?

ONLY IN SOUTH AFRICA: Did you know that according to an official at the banking council, the Reserve Bank takes 2,5 to 4% of our money in the bank and keeps it without the bank getting any interest back and so we lose out. The Reserve Bank makes money in this way for their own private use, and this is the ONLY country in the world that works like this.

Business as usual? I don't think so!

The bank is using YOUR money to make money so why should you be paying the bank when you deposit YOUR money into THEIR business. Before ATM's were around we withdrew our money from a teller who had to be paid.

Now there are fewer tellers and more ATM'S which cost-effectively process thousands of transactions yet we must pay up to 1% of our ATM withdrawal and the bank may only be giving you just over 0.2% interest for that month.

It means you would have to keep your money in the bank for 10 months just to recover the 2% you lost in these charges. So this means that you have now PAID the bank to take YOUR money for 10 months and make a profit with it for themselves of 21% or more per year depending on the current rate and time of writing this article. Banks also now charge if you pay cash into your credit card account or home loan to pay it off. Think logically - would you pay 1% extra to a shop when paying YOUR account!? You usually get a discount for cash!

Retailers have to carry the risk of carrying cash so what makes a bank so special? Also, when you buy at a shop, do you pay them to give you a cash slip so you can see what they have charged you???? NO! You already pay a monthly handling charge on your loan repayment plus you will pay your house back several times more than what it actually cost in interest to the bank.

Banks charge a service fee on accounts even if no service was done -  now how much does it cost a bank to keep your money in the bank without any service..? R40 like they are charging?

One bank has at present 6 million customers so at R40 for doing nothing one bank has collected 240 million rand a month and then they tell us they can't afford not to charge all the other ridiculous fees on top of that plus the debit interest they charge on loans, etc.

Pensioners are being charged this service fee, so what does the R40 increase in pension grant from the Government mean when it is swallowed by the banks?

In South Africa, with high inflation, banks should be encouraging people to save effectively and not overcharging them so that they need to borrow more from the banks.

South Africans are worrying about the high interest rates charged but have lost focus on the real issue... the high bank charges, which, years ago did not exist!! These now exceed your earning interest. What will they be charging in 5 years?
 
The banks monopolise the consumer by all being the same -in fact they all meet regularly to discuss how they are going to charge us in the future.
 
As one person put it... "money under the mattress has less chance of disappearing in a fire than at the bank after they have grabbed from you."

BANKS ARE OUT TO MAKE MONEY FROM YOUR MONEY JUST AS ANY OTHER BUSINESS. THE QUESTION IS, ARE THEY PUTTING YOU FIRST... OR THEMSELVES?

BANKS DO NOT TELL US HOW MUCH THEY SPEND ON ADVERTISING WITH THE PROFITS THEY MAKE FROM US.

THEY USE OUR MONEY TO BUILD SPORTS FACILITIES, ETC.

BILLIONS THAT SHOULD BE IN OUR ACCOUNTS AS INTEREST.

How much they get away with is up to you, not on your own but together with others who sign this petition. So if you believe that the bank charges are unjustified and unfair and should be drastically reduced, or in most cases done away with, then simply add your name to this list which we will use in our fight.

This petition will be taken to members of parliament and other appropriate avenues such as media. I have already written an article in the Sunday Tribune but more needs to be done.

Quick Polls

QUESTION

Do you believe this is the toughest period for financial advice in many years?

ANSWER

Yes, it’s hard to navigate the challenges and difficult to adapt. I’m struggling.
No, I have managed to navigate the challenges and have adapted. I’m good.
50/50. I just feel like whether we like it or not, we have to ready ourselves for change… be resilient and scale for the future. It’s not about survival of the fittest anymore but survival of the quickest. We just have to move on with life.
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