The cheapest bank accounts in South Africa

I made the move from Investec to Capitec in March of this year and this saved me a significant amount of money. You can read more about that in my March finance update. Before making the switch I did a lot of research to find the cheapest bank account because moving banks is a crapload of work and I won’t do it again. Since I already did the research I figured I should post it so everyone can make an informed decision.

Just like Exchange Traded Funds (ETFs) are having a race to the bottom with regards to fees, the banks are also playing this game. Every now an then you hear that a bank has shaved off one rand here and fifty cents there in the hope of attracting new clients (or keeping existing clients).

To be honest, paying one rand less to bank, won’t make me switch banks. I also know that the bank charging one rand less will constantly change as the fees vary. I just wanted a bank that had stable finances, a decently priced account and if they offered a bit of interest on this account it would be a bonus.

What will it cost?

The first thing that I did was to determine what the typical South African will do with their bank account during the month. I assumed that you would need to do three Electronic Fund Transfers (EFTs), two debit orders, a deposit and withdrawals from your bank, another bank and a Point of Sale (POS). This might be slightly more than the average South African withdraws, but I want to include all three for a proper comparison. Also, I’m not going to include swipes as these are free on the packages. Let’s start with the big 5 banks.

	Capitec	FNB	Absa	Nedbank	Standard Bank
Account fees	R5	R5.75	R5.3	R5.5	R5.6
Deposit	R5	R4.75	R12	R5	R8.25
EFT	R1	R3.75	R2.5	R2.2	R1.5
Debit order	R3.5	R3.75	R3.8	R5.5	R5.5
Withdrawal (Own)	R6	R9.5	R6.5	R7	R9.25
Withdrawal (Other)	R8	R18.5	R18	R18	R18.25
Withdrawal (POS)	R1	R1.6	R1.6	R2	R1.4
Monthly average	R35	R58.85	R58.5	R55.1	R58.25

Analysis

From the above figures, Capitec has the cheapest bank account at just R35 per month. Their offering is made even more attractive by the fact that their transactional account earns interest (technically a savings account). The average South African earns R21 190 per month, so after saving a few rands and then systematically using the rest of the money during the month, I assume the average amount in the account will be around R5 000. At 4.75%, that means interest of about R20. So your effective cost is even lower at R15.

Then the cherry on top (for me personally) is that their instant payments are R8, five times cheaper than the closest competitor. I checked and I did four instant payments in the last year and it is, therefore, something I must consider. Their fixed deposit savings rate is also respectable. So, they are an all-round good option. You can find the links to the account costs here (Capitec, FNB, Absa, Nedbank and Standard Bank)

Other cheap options

There are a few other low-cost offerings as well which definitely deserve a mention. The costs of these can be seen below.

	Tyme Bank	Bidvest	Old Mutual
Account fees	R0	R6	R4.95
Deposit	R4	R4	R5
EFT	R2	R7	R1
Debit order	R2	R5	R2
Withdrawal (Own)	R2	R6	R7
Withdrawal (Other)	R8	R13	R10
Withdrawal (POS)	R2	R5	R1
Monthly average	R26	R65	R34.95

Tyme bank is the most affordable. Especially since the account will cost you nothing if you do not make any transactions during the month. Tyme Bank also has arguably the best savings interest rates and can be accessed anytime.

The account from Bidvest is not as affordable as the other options. However, the Old Mutual account really surprised me. When I made the switch, I did not consider them. Probably because their unit trusts and retirement annuities are ridiculously expensive. These accounts do not offer interest like the Capitec account, but the fees are extremely affordable. You can have a look at the fees here (Tyme Bank, Bidvest and Old Mutual).

Cheapest bank account

If you are looking for the cheapest bank account in South Africa, then you should look at either Capitec, Tyme Bank or Old Mutual. Depending on what your transactions are, the cheapest bank account might be different for you. However, if you are willing to spend R30 more per month, you can go with any of the abovementioned options.

Rewards programs will also change the amount you effectively spend on banking, but that’s a topic for another day. You need to determine whether you really need all the bells and whistles offered by the more expensive packages from these banks. For me, it did not make sense.

Be safe out there,

Hendrik

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Endnote

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