Sign up with GoogleThe difference is you don't pay tax on the R450 saved on banking fees. For high (40/45%) marginal rate individuals, it makes more sense to keep the cash in the account than a high interest savings account.
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FNB and Banking Fees
- Thread starter Alacrity
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The difference is you don't pay tax on the R450 saved on banking fees. For high (40/45%) marginal rate individuals, it makes more sense to keep the cash in the account than a high interest savings account.
Tomtomtom
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What, why? R450 interest at a 45% tax rate still leaves a R248 net gain.
Besides idle cash, another under-appreciated loss is the cost of acquiring a lower tax bill, and another one is the cost of a "prestigious" bank account.
As you can see on the ebucks thread, the 'prestigious' bank account is netting people R1.5K+ in ebucks every month. Definitely worth it.
Tomtomtom
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No thanks, I'll stick to keeping my costs down and refraining from the stupid games invented by my intellectual inferiors in the interest of maximising the revenue earned from dummies and posers. The latter always lose in the end. As for your claim that the tax factor makes a 0%-earning account more sensible than an interest-bearing account, would you care to back that up?
If I put the R100K (amount to waive fees in PW account) in an interest bearing account at 7.3% (the current rate I get in money maximiser), that is R608 per month in interest. After 45% tax, it's only R335 per month interest, which is less than the cost of the PW account (R420/month) which I'm now paying 0 for.
I get 14K+ ebucks a month, which can usually be sold for slightly more than face value, so make that R1.5K a month, for no effort or spending habit changes. The bottom line is my banking fees are at worst -R1080.00 per month. How much are yours?
It's also profitable for many, even without jumping through any hoops at all.
backstreetboy
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My bank charges was R7 last month and R13 in July.
I give up. :crylaugh:
Suspect99
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That's a heck of a lot more than - R1080. They robbing you man
backstreetboy
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Ah missed the minus. He should mention how much he have to spend to get that back.
Tomtomtom
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Well over -R2k, with no effort, and no tax evasion.
By the way, Money Maximiser is at 7.2% not 7.3, has a R65/mo fee, which reduces the effective interest rate on R150k to 6.68%.
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It was around R31K last month. But I incur expenses for work which get reimbursed - my monthly living costs are low.
Great, let's see how you get that R2K. There is no tax evasion going on my side.
Tomtomtom
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If you are selling eB for profit, I suppose you are declaring that income?
Money maximiser charge is waived on the fee waiver plan. I see it is 7.2% now since the repo rate reduction (which makes even more of a case for using the fee waiver option).
If I were to sell for profit, absolutely. But I was just attaching a value to them for the purposes of discussion. I use them for gift shopping, sometimes with the 40% discount, sometimes without.
So how do you get that R2K? I'll definitely change banks if I can score an extra grand a month for no effort.
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Tomtomtom
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Not sure if that exempts you from liability, but I'm not sure I care either. Regardless, eBucks and its ilk are a waste of time. Did you hear Warren Buffet got rich by carefully manipulating rewards plans?
Didn't think so.
I'd rather focus on making money from the bank the way the bank does: by paying the lowest fees possible while lending it money at the highest possible rates. That works to some extent. The rest comes from owning stock.
Rewards programmes are for suckers. This applies also to insurance. Discovery offers Vitality because it's not legally allowed to discriminate based on the (only?) relevant predictors for health outcomes. Yet the only non-stupid response is to buy the cheapest plan they offer.
You're moving the goalposts. I obviously also have investments, but the discussion is about banking fees here, and I've shown you exactly how I get to my values. The cash in my emergency fund (3 months salary) is kept in a money maximiser account and my cheque account for the fee waiver, so there is no opportunity cost. I'm not manipulating any rewards plans at all. Over a grand a month for 0 time and effort does not make me a sucker.
Tomtomtom
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I hope so. Fees are boring.
Which implies you have R170k+ invested, which is great. But you suggested earlier that given the tax on interest, one should keep money in the cheque account.
Which begs the question. What are you talking about? You still haven't defended the idea of a "prestige" account except on the grounds that it lets you play games with eBucks and magically avoid tax.
For the rest of us, paying ~R50 a month and earning some multiple of that back in interest is about the best deal that can be expected from a bank.