One of the most common consumer complaints about banks is that besides being too high, bank charges can be incredibly complicated; subject to myriad terms, conditions and small print.
Though it can also be difficult to compare bank charges and determine whether you're paying too much or if there's another package of services better suited to your needs because banks bundle their services differently. So you have to be proactive to save on bank charges.
Studies have shown that bank charges in this country are on average higher than in other countries. Our banks pay relatively low interest on investments and charge relatively high rates on loans.
A study commissioned by the National Treasury and the Reserve Bank showed that our bank charges on a certain set of transactions are on average 142percent higher than in Canada, the country with the second-highest charges.
For a particular bundle of services, local banks charged on average R2694, while Canadian banks charged on average R1888 for the same services.
Though Nedbank paved the way for competitive bank charges last year by introducing low fees, other banks defended themselves by saying Nedbank's fees reduction was an attempt to bring its fees structure in line with other banks because their charges were very expensive.
Our banks charge a yearly fee for current accounts as well as fees for each deposit and withdrawal.
The National Treasury study said Canada is the only other country where banks levy charges on each transaction.
Though yearly fees levied on current accounts are relatively low, other fees banks charge make current accounts the most expensive of the countries surveyed.
Old Mutual Bank's proactive steps to limit bank charges are:
l Set a benchmark. Compare statements for three months, list the types of transactions and charges and divide by three. This will give you an average cost a month which, in turn, will give you some basis for comparison and will also show where you're racking up charges.
Once you know the kind of services you use most and how much you're paying, you can see if there's a package that provides what you need at a better price.
It pays to be sure about your requirements because packages usually specify the number and type of transactions allowed for a given fee, for example cash withdrawals, balance enquiries and Internet log-ons. If you exceed the monthly limits, charges go up considerably.
l Change your banking behaviour. If you can't find a better package, look at what's driving up your costs. It could be the cost of swiping a debit card at the point of sale, withdrawals, in-branch enquiries, Internet banking or writing cheques.
l Be a responsible customer. Banks charge punitive fees for careless behaviour like bouncing cheques, not making out cheques properly or not having sufficient funds to cover a debit order.