Cheapest banks in South Africa
The Solidarity Research Institute (SRI) has released its 2022 Bank Charges Report, revealing that TymeBank is the cheapest bank in the country.
Solidarity economic researcher, Theuns du Buisson, said the report revealed that digital banks TymeBank and Bank Zero offered the same services as traditional banks like Absa, Capitec, FNB, Nedbank, and Standard Bank, at a fraction of the price.
“It will even be possible to do business at these banks completely free of charge if cash transactions and the sending of money to cell phone numbers are avoided,” Du Buisson said.
According to the report, competition in the banking sector was rising, with cost being a significant factor for the newer entrants.
SRI adjusted its methodology for this year’s report to keep pace with changes in consumer behaviour.
“Following a survey, we also decided to adjust the list of transactions to include fewer cash transactions this year,” Du Buisson explained.
“These have been replaced with sending money to cell phone numbers, as well as Internet transfers.”
“The latter is now free of charge for all accounts, except for the very simple transaction accounts. At the two online banks, Internet payments are also free of charge.”
The table below breaks down which types of transactions were included for each account category.
For its overall comparison, Solidarity calculated the basket price of 25 transactions.
It found that the total cost of these transactions would range between R99 and R143 at the traditional banks, compared to R21.50 for TymeBank customers and R25 for those with Bank Zero.
“The new online banks, which compete purely on the basis of costs, are by far the overall winners when it comes to costs alone,” Du Buisson said.
“Even when compared to the cheapest accounts of the traditional banks, those with branches, the traditional banks are lagging far behind.”
“I would not be surprised if the new banks become big banks as well within a few years,” Du Buisson added.
The chart below compares the total prices of 25 transactions on accounts with the three digital-focused banks in South Africa.
For low-cost accounts at conventional banks, Absa and Capitec were the cheapest.
Absa charged a total amount of R37.10 for a basket of 12 transactions in this category’s analysis. Capitec charged only 80 cents more for the same transactions.
Using a 17-transaction basket, Capitec was the cheapest, with a total amount of R42.90.
FNB’s Easy PAYU account was in second place using this methodology, with a total basket cost of R54.45.
SRI noted that Capitec was the only one of the big five banks to offer interest on transactional accounts.
The chart below compares the prices of low-cost banking accounts using 12-transaction and 17-transaction baskets.
When it came to the cheapest account for middle-class banking needs from the conventional banks, FNB was the overall winner with its FNB Aspire Current account.
“Like the other accounts in this category, it is a bundled account with a fixed amount which includes a series of free transactions,” the SRI explained.
“FNB is by far the winner in this category because all the transactions on our list are included in the fixed amount of R99.”
Standard Bank’s MYMO Plus account took second place, with R129.40.
Below is a comparison of the costs of 25 transactions on the big five’s banking accounts aimed at the middle class.
FNB also claimed top honours for accounts with more “sophisticated” banking needs.
The FNB Fusion Premier account racked up a total cost of R236 for a list of 30 transactions in this category.
It was followed by the Absa Premier Banking account with a total amount of R242.50 for the same transactions.
“Both of these banks offer good value because the number of free transactions they offer is more than that of Nedbank and Standard Bank,” SRI stated.
The chart below compares the cost of premium banking accounts using a 30-transaction basket.
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