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Fees charged on savings accounts are affecting people's ability to save, forcing them to use credit more than is needed, the National Credit Regulator (NCR) said on Friday.
Chief executive of the NCR Gabriel Davel was testifying at the Competition Commission's public enquiry into banking costs, which entered its third day of hearings on Friday.
Davel said that with the exception of one financial institution the returns on all entry level savings accounts were negative.
"If people see negative growth on their savings they stop saving. It is the logical thing to do," he said.
Davel said a study indicated that negative returns could be as high as 43 percent.
"The effect is that people don't save, so when there is a crisis they have to borrow money, which brings on more debt," Davel said.
The Congress of South African Trade Unions, which testified on Thursday, said: "Bank charges and costs are punitive, exploitative and unjust." - With Sapa