Choosing a bank account is one of the most important financial decisions people can make. Not only does a bank account allow you to keep your money safe, but also to transact between accounts, apply for credit, or make investments for your future.
There are several major factors you should consider when choosing a bank account – and selecting the right account that offers the services you require, the features you need, and fees that are affordable can make a big difference to your everyday life.
Who are the major banks?
While South Africa has many banks, opening an account with a bank that either has a significant presence and facilities in your area, or directly meets your needs with affordable fees and higher interest rates for saving, can be a powerful tool to ensuring that you get the best value-for-money from your account.
While recent years have seen newer banks come to the fore, South Africa’s ‘Big Five’ banks – namely Standard Bank, ABSA, FNB, Nedbank, and Capitec – are the most prominent.
Standard Bank is one of south Africa’s oldest banking institutions was founded in 1862. While today the bank has expanded into several other African and international countries, the company is still headquartered in Johannesburg.
Absa (originally Amalgamated Banks of South Africa, and formerly Barclays Africa Group Limited) is a major South African bank that was founded in 1991. ABSA today operates in Southern and East Africa.
First National Bank, or FNB, is another of South Africa’s ‘Big Five’ banks and was founded in 1838, and operates in South Africa, Namibia, and Botswana. As a division of the First Rand Group, FNB has siblings in Rand Merchant Bank and Wesbank.
Nedbank (founded in 1888 as the Nederlandsche Bank en Credietvereeniging voor Zuid-Afrika (Dutch Bank and Credit Union for South Africa) is a major South African bank that offers wholesale and retail banking services as well as insurance, asset management, and wealth management.
The newest member of South Africa’s ‘Big 5’ banks, Capitec Bank was founded in 2001 and is now the largest retail bank in the country with over 6.2 million customers. The bank’s major product is its Global One account which is a combined transactional, savings, and credit facility.
Founded in 1974, Investec Group is an international banking and investment company that offers wealth and asset management as well as private banking, transactional banking, and equity and investment products.
TymeBank is a newer and exclusively digital bank founded in 2015 by South African billionaire Patrice Motsepe among other investors, The bank does not operate physical bank branches, and customers can only transact either online through the web or through a smartphone app. However, the bank does operate self-service kiosks in Pick n Pay and Boxer stores.
Discovery Bank is another exclusively digital bank offered by Discovery Limited as part of the company’s Vitality scheme. Discovery Bank offers its customers a transactional bank account and credit facility. Notably, customers who enrol with Vitality Money can earn rewards through healthy financial behaviour – such as preferential saving and borrowing rates.
What account fees will I pay?
The term ‘account fees’ refers to any charges imposed by financial institutions on their personal and business customers for account set-up, maintenance, and minor transactional services.
Account fees differ largely between banks and selecting the right charges can significantly affect your budget. By choosing services that you need, you can often tailor account fees to your requirements.
While some bank accounts offer a fixed monthly fee, some now offer minimal monthly fees, or no fees at all – and instead charge usage fees depending on your banking activities. This can include, for example, charges for depositing money into your savings account.
Do I need private banking?
Private banking refers to financial services that are usually offered to high-net worth individuals. Private banking doesn’t refer to a privately-owned bank, but instead refers to customer services that are usually rendered personally rather than through mass-market customer assistant centres. Private banking accounts are usually expensive for this purpose and may offer additional bonuses such as discounts on certain goods or services.
How do their savings facilities work?
A savings facility, also called a savings account, is a form of bank account which is designed to help funds grow through interest. Savings accounts are different from transactional accounts in that they do not typically support a debit card facility, do not have cheque facilities, and support a limited number of cash withdrawals.
Different banks offer different savings facilities, which each offer different account fees, interest rates, and withdrawal fees; and some accounts may offer a higher interest rate for ‘locking’ an account (that is, not making any withdrawals for a certain period).
Choosing the right savings facility – with the lowest fees, highest interest rate, and accessibility options of your preference – is key to growing your money over time.
What withdrawal charges can I expect?
Many South African banks charge withdrawal fees from cheque accounts; these fees can differ between the means used to withdraw funds such as using an ATM from the same bank that owns the account, or a Point-of-Sale withdrawal (used at a grocery store, for example).
More recently, banks have moved to charging withdrawal fees per R100 note.
While banks change their offerings frequently – and further introduce newer and cost-effective accounts frequently – withdrawal charges can range from approximately R6 to R15.00 at an ATM. Selecting a bank account with affordable fees – especially if you tend to use cash frequently – can save you money in the long-run.