Retirement may have its benefits, but until now free banking has not been one of them. People in retirement living off a pension and interest income are especially sensitive to costs, including bank charges.
For some time now, the big four banks have been offering discounted banking to “seniors” – typically clients aged 55 and older. Newcomer Bidvest Bank is offering those who are 65 or older an account that is largely free of charges.
With bank accounts there’s usually a catch and accounts for seniors are no different. When monthly account fees apply, they’re generally high. If there’s no monthly fee, hefty transaction fees apply, or you must earn a certain amount, have an investment account with the bank or maintain a high minimum balance – which will not necessarily be interest-earning. And fee structures are anything but simple.
Bidvest Bank
Bidvest Bank is offering seniors a bank account with no monthly account fee, no income threshold, no minimum balance required and no requirement to open an investment account.
Cash withdrawals are free – regardless of whether you draw from Bidvest Bank ATMs, the ATMs of other banks or from retailers (Pick n Pay, Shoprite Checkers and Pep stores). Unlimited debit card transactions are free and so is internet banking.
Some charges do apply, such as penalty fees for a rejected debit order (R10) or for exceeding your daily withdrawal limit (R5); for international transactions, such as drawing cash from an ATM in a foreign country (R45); and for over-the-counter transactions at a branch. For example, drawing cash from a branch will cost you a minimum of R15 or 1.1 percent of the withdrawal amount.
Bidvest still has a relatively small footprint, with 50 ATMs and 100 branches nationwide, located mainly in the major cities only.
Darren Abrahams, the head of deposits and investments at Bidvest Bank, says the bank’s offering is “particularly useful to older people who use interest income to meet monthly expenses”. They can earn interest of up to five percent on the balance left in their accounts, as long as it’s more than R50.
Another plus for Bidvest Bank’s senior clients is that they need not apply for “free banking”, Abrahams says. Clients are automatically upgraded when they turn 65.
Absa
Absa’s Prosperity transaction account is for clients aged 55 years and older who earn more than R2 000 a month. There are three pricing options on this account:
* A management fee of R159 for less than 30 transactions a month or R189 for more than 30 transactions a month.
* A monthly fee of R30, then pay-as-you-transact fees apply. For example, cash withdrawals over the counter cost R27 plus R1.15 for every R100 up to R500. Cash withdrawals from an Absa ATM cost R3.85 plus R1.10 per R100.
* A rebate of up to R500 on bank charges provided you invest a minimum of R15 000 in a fixed deposit or Money Builder account or R20 000 in a Money Market Fund or Investment Advantage account.
First National Bank
FNB’s Encore cheque account is for clients aged 55 years and older. There are three pricing options on this account:
* The unlimited option, which costs R82 a month, offers an unlimited number of transactions of various kinds. For example, you can draw from FNB’s ATMs at no cost as many times as you like in a month and make an unlimited number of cheque and debit card purchases without incurring any costs. But transactions using other banks ATMs, cash deposits, cheques issued, branch transactions, special instructions and penalty fees are excluded and charged for separately. So, every time you draw from the ATM of another bank, it will cost you R18.50 and drawing cash from a teller will cost you R34.
* The mobile pricing option, which costs R82 a month, offers an unlimited number of qualifying transactions, but cash withdrawals is not one of them. Four FNB ATM cash withdrawals are free and then pay-as-you-use rates apply.
* The standard Encore pricing option costs R93 a month and includes unlimited electronic transactions and a combination of five free branch and cheque transactions a month. But you can save yourself this monthly account fee if you keep at least R5 000 in your Encore cheque account at all times, or at least R10 000 in a linked Savings Pocket.
Regardless of the pricing option they choose, Encore accountholders get two free bank cheques a month and a 50-percent discount on annual credit card and petrol card fees. But value-added services, such as SMS payment notifications, are charged for separately. Charges also apply for help inside a branch or via telephone banking to do a payment or linked account transfer.
Nedbank
Nedbank’s Optimum current account is for clients aged 55 to 69. (Clients aged 70 and older qualify for the Prime Club current account.) It’s a pay-as-you-use account offering reduced service fees and selected free transactions if you have a balance of R10 000 or more in a Nedbank fixed deposit, notice deposit or JustSave Account. If your monthly balance is less than R10 000, you pay for the transactions you make.
For example, if your balance is R10 000 or more a cash withdrawal at a Nedbank ATM costs R1.20 per R100 or part thereof. If your balance is less than R10 000, a cash withdrawal at a Nedbank ATM will cost you R3.50 plus R1.20 per R100 or part thereof.
An annual service fee of R145 is levied on the cheque card, regardless of the balance. But debit card holders with this account don’t pay an annual fee.
Standard Bank
Standard Bank’s Consolidator account is for clients aged 55 and older. You can choose from three pricing options:
* The fixed monthly fee option costs R41 for unlimited electronic transactions (debit and stop orders, electronic account payments, inter-account transfers and debit and cheque card transactions), eight Autobank cash withdrawals, three Autobank cash deposits, eight cheques (issued and deposited) and unlimited balance inquiries, mini statements, prepaid top-ups via Standard Bank and MyUpdates SMS notifications. Internet banking is free.
* On the pay-as-you-transact option, no monthly fee applies, but transaction fees include R3 plus 1.05 percent of the value of a cash withdrawal from a Standard Bank ATM, R25 plus 1.15 percent of the value of a cash withdrawal from a branch, R12 for debit orders, and R5 for each electronic account payments.
* On the refund option, if you maintain a minimum daily balance (for the full calendar month) of at least R10 000, you get a refund on your fees on a tiered basis, based on your balance. No interest is paid on positive balances.