Wednesday, December 14, 2011

Let's Do Something about South African Banks

This is from Eug and I, encountering SA banks for the first time.

Here's the rundown on ABSA's charges, where my family has banked for many, many years (and ABSA is not necessarily the worst- we can do this again for FNB, Standard, Sanlam, and many others) You can download their 30 pages of fees here.
  • There's a monthly fee and usually an annual fee.
  • If you want to put your money in the bank, they take a percentage of that.
  • If you want to buy anything with the money in your bank account, they take a percentage of that
  • If you get angry and want to withdraw your money or take it somewhere else, they take a percentage of that.
  • If you want to find out if you have any money left in the bank, there's a flat fee for that.
  • And after you find out you don't have any money, and you want to know where all your money went, there's a flat fee for that.
  • And, of course, there are also the administrative fees.
  • Then, you'll get an overdraft fee because you ran out of money. 
  • It's your money! The banks have the privilege of investing it. 
All these fees hit the poor the hardest. I've never seen a more compelling reason for the Occupy Movement. South Africans, these charges are not normal or acceptable (and we're no fans of mainstream U.S. Banks, as I've written about here). Home loans/mortgages may be the reason that banks find themselves in this place of power, but there has to be a way to oppose this.

I suggest credit unions are one way. Without even considering socially responsible investing, many South African banks show themselves to be profit-mongering and NOT client-centered. Banks should represent the interests of the average client. If they don't, lets form Credit Unions and leave the banks to their large deals and outrageous charges.

Our small act of opposition, in the absence of credit unions: A potential beacon of light in the SA banking world: we're going with Capitec, which seems relatively small, but has only one kind of account with a R4.50 monthly fee and a R1.00 fee to withdraw cash at Pick'n Pay. These are the only fees we'll have to pay. They also offer 4.75% interest on your regular [checking] account. We'll let you know our experiences. And maybe one day we can be part of forming a credit union, or building strong and effective South African equivalents, known as SACCOs (check out the league here) in Cape Town.

4 comments:

Marz said...

Ah, was just about to suggest Capitec :)

The crazy part - if you're nice and wealthy, and can afford to just keep a certain amount of money in your account (Like R20000 or something, not sure how much), you can move onto a lower/no fee charge? Or you get a small admin fee but no fees for transactions?

Either way it is a complete rip off... Oh, and that R20k could be invested instead, so it's not like they're doing you a favour. Grrrr...

Debbie said...

From my understanding Capitec also have their cons... if you need a loan / overdraft from them they are likely to hit you with a massive interest rate - and the less wealthy normally bank with them, and they can least afford and understand the interest rate concept. But as long as you don't need a loan from them I haven't heard anything bad.Sorry about your banking experience - there is legislation that is supposed to help regulate the bank charges but they just find other ways around it! I left ABSA as soon as I paid off my student loan because they charged me bank charges when I had no job, no income and a student loan. As soon as I paid off my loan and was earning a salary they were interested in me again, but I waved goodbye to them!

Donna said...

Jo--

Only a bit "comforting" for those of us still in the US to know that our banks are not the only ones taking their customers to the cleaners.

Jo said...

Interesting the pros and cons about Capitec. We considered staying offshore with an international online bank, but that seemed counter to the idea of settling down and so on. I tend to appreciate the bank that allows an option for those without R20,000, even if that same bank makes it hard for you to get from a space of less money to more.