A simple way to save

Do you know how much money you fork out each month on bank charges? Do you know that other banks may charge less?

Andy Gilder, MD of bank comparison website www.justmoney.co.za says, “Knowing exactly how you spend your money is crucial if you want to shave some expenses off your lifestyle,” Yet very few people actually take the time to find out. Make a list of all your expenses during a given time-frame, including your monthly bank charges.

Once you know how much you are spending, it becomes easier to figure out what is unnecessary.
It’s very important to assess whether you really need all the services for which you are paying. Keith McIvor, managing executive for Absa’s transactional banking and deposits cluster, says that far too many people stick with one product, even though circumstances or habits may have changed over time.

Once you’ve done a proper assessment of your needs, compare products and their costs. Websites like www.bankmonitor.co.za, www.justmoney.co.za and www.thinkmoney.co.za allow you to compare everything from fixed deposits and money market rates to savings accounts and credit cards.

And, always watch out for the fine print. A gold card might be nice to flash around while paying for lunch but, before you take up the offer, check if it costs more than a regular card. If so, find out what the differences are that make it worth that extra expense.

Go Digital
All banks want you to use their electronic options, ATMs, cellphones and the internet- and so they’ve made these options significantly cheaper than in-branch banking — in some cases, fees have been waived altogether.

Withdrawing fewer, larger amounts from an ATM is another saver. Where possible, only use your own bank’s ATMs. “Drawing money from another bank’s ATM has got to be one of the most needless wastes of money. You’ll pay around R7 extra for every transaction you make. Do that a couple of times a month and you’ve chucked away a Friday lunch,” says Gilder.

Watch out for…
Penalty fees. Some banks will fine you as much as R50 if you have a debit order on an account but no money in the bank. Capitec Bank’s CEO, Riaan Stassen, says 40 percent of debit orders are returned because of lack of funds.

Credit control
If you are disciplined, a credit card is one of the cheapest and most efficient products on the market — you don’t pay transaction charges and if you are diligent about paying off the full amount every month, you get at least 55 days’ worth of free interest.

If, however, you only pay the minimum balance, or only pay the amount on day 56, then you pay rather high rates of interest on the full amount for all 56 days. In other words, the “no interest” period falls away.

And, if you draw money from a credit card, you pay a significant fee and start paying interest on that money immediately. So, the costs involved rise very quickly. This goes for transfers from your credit card to any of your other accounts too.

Be bold
Don’t be afraid to ask your bank to clarify anything you don’t understand. And, if you are not happy with their response, go elsewhere. Shopping around is in your best interests.