SPAR Inpiration

Budgeting Brilliance

How to Save on Your Bank Charges

Bank charges are an inevitable expense in today’s world, but that doesn’t mean you need to let them run rampant. These are some simple ways to bring down your monthly banking bill.

Draw cash less often. Charges for drawing cash are some of the highest charges a bank applies. By drawing less often, you reduce the minimum withdrawal fee that is charged every time. If you must have cash on you, try to draw slightly more each time instead – trying to strike a balance with the risk of carrying too much cash. Instead, try to swipe your cards wherever possible.

Only draw cash from your own bank’s ATM. Drawing from another bank’s ATM (or from an unaffiliated cash machine) will incur extra interbank fees, eating into your hard-earned cash. Many supermarkets also now allow you to draw cash from their tills, at very attractive fees.

Review your need for an overdraft. When first getting a cheque account, you would normally have an overdraft offered at the same time. Having this facility is likely costing you every month, even if you never use it. If you’re financially responsible, and never dip into your overdraft, cancel the facility altogether, and save yourself a pretty penny every year.

Investigate the all-in packages on offer. If you’re an average or above-average user of your account, it can often work out cheaper to have an all-inclusive package, instead of being charged for each and every transaction. Find out what is included free at the various package levels (withdrawals, EFT’s, internet banking, cellphone banking, etc.). Then, examine your own usage patterns over the last 3-6 months (how many cash withdrawals, how many EFT's, how many inter-account transfers, etc.), calculate what that has cost you in monthly charges, and compare.

Ask yourself if you really need that gold/platinum card. At each card level, the annual card/account fees increase, and you could be paying significantly more than you really need to. Are there actual benefits that come with the fancier card (such as lower interest rates), or is it just for your own image and ego?

Don’t use cheques unnecessarily (and be careful about accepting them too). Cheques are fast becoming outdated in most circles, and banks charge heavily for their use. With the uptick in cheque fraud (it’s very easy to write a cheque, and then cancel it minutes later), also be wary about accepting them as payment, especially if you’re parting with the goods there and then.

On some accounts – especially investment accounts – monthly fees drop away entirely if you maintain a minimum balance in the account. Find out if this applies to any of your accounts, and what the threshold is.

Use the online portal of your bank wherever possible. Banks are trying to cut down on the expenses of physical branches, so they often charge more for in-branch transactions, to persuade their clients to use the online channels instead.

Use your debit/cheque/credit cards for purchases (either online or at brick-and-mortar stores). Most banks charge for electronic transfers, so doing EFT's instead of swiping could be raising unnecessary charges. By using your cards instead, the merchant carries the cost of the transaction.

Make sure that there’s always enough in your account to cover debit and stop orders due to come off. If any of these ‘bounce’ due to insufficient funds, you’ll be charged painful penalty fees. Remember, if you need to arrange finance or cover, setting it up before you need it is always cheaper than when you have to do so in an emergency.

Gareth Cotten (B.Comm Accounting and Honours in Taxation) is the founder of the Good Advice blog www.goodadvice.co.za and an entrepreneur with a strong financial background. His business endeavours include financial coaching and consulting, and he also teaches a number of UCT finance short courses offered through GetSmarter www.getsmarter.co.za .