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Paying too much because you’re on a savings account instead of a cheque account?

The topic came up this morning while I was standing at a counter paying for a puncture repair. The guy hands me the invoice, takes my card, and asks ‘cheque or savings’.

By the way, I know this is off topic, but have you ever noticed that, even when you tell the cashier “cheque” as you hand over your card, they still ask you “savings or cheque” two minutes later?

Anyway, back to the point…
I tell him “cheque” but all the time I’m thinking to myself what’s the difference. I haven’t written a cheque in years so why do I have a cheque account’?

Right next door is a First National Bank so I pop in to ask them what the difference is?
The lady there tells me, “There’s no real difference.  Everything you can do with a cheque account, you can do with a savings account. The savings account is just cheaper.”

My ears perk up at the word ‘cheaper’. Don’t you just love the sound – cheaper? I ask her for the price guide, and with a big smile on her face, she hands one over. This all happened today so I’m only looking at the costs which apply to the working class – those of us who withdraw more than we deposit. I could have looked at the cost of cash deposits and currency conversions but I didn’t want to go down that road today

Here’s what I used for my comparison:

  • Monthly account fee
  • Cost of card purchases in store
  • Cost of cash withdrawals at an ATM
  • Cost of external debit orders

And this is what I discovered…

The Easy Account

Now the brochure doesn’t say who qualifies for this account. Whether or not it’s based on income I don’t know, and since it’s five o’ clock, I can’t ask them. But what I do know is it’s cheap.

Check this out:

  • Monthly account fee – R4.95
  • Card purchases in-store – free of charge (I’m happy about that one)
  • Cash withdrawal at an FNB ATM – R4.55 for every R1,000 with a maximum of R9.10 per withdrawal
  • Cash withdrawal at any other ATM – R9.10 per withdrawal
  • Cash withdrawal at a till point-free (Remember this one)
  • External debit orders – R3.20 each

That’s what I’d call easy! Time to look at another savings account option.

The Savings Account

This option seems to charge no monthly account fee as long as you keep a minimum balance of R2,000. But since we’re only talking R6.00 here, I’ll keep my R2,000 thank you very much.

  • Monthly account fee – R6.00
  • Card purchases in store – free
  • Cash withdrawal at an FNB ATM – R11.00 for every R500. Withdraw R10, 000 and you’ll pay R220 for the privilege.
  • Cash withdrawal at another ATM – All of the above plus a once off R6.50 per withdrawal (if I understand the brochure correctly).
  • Cash withdrawal at a till point – free
  • External debit orders – R16.00 each

Not quite as nice as the easy option, you’d agree? Then I took a look at the cheque accounts.
The big sales point about cheque accounts seems to be things like free email monthly statements, eBucks, and overdraft options.
Since you’re trying to cut down on bank charges, overdrafts are a no-no. So here then is the basic cheque account.

The Personal Cheque Account

  • Monthly account fee – R100 for unlimited use on their Gold cheque account. R145 for unlimited use on the Platinum cheque account
  • Card purchases in store – free
  • Cash withdrawal at an FNB ATM – 4 of these free every month. Then R6.70 for every R500. Withdraw R10, 000 and you’ll pay R220 for the privilege.
  • Cash withdrawal at another ATM – None free. All of the above plus a once off R6.50 per withdrawal.
  • Cash withdrawal at a till point – free
  • External debit orders – free

So how do they stack up against each other?

Let’s look at old Harry Golucky. Harry has 5 debit orders running against his account and draws cash of around R200 at least 10 times a month. He only uses an FNB ATM for this (Good man!).

Here’s how things pan out on the Easy Account:

  • R4.95 for the monthly fee
  • 10 x R200 cash withdrawals at R4.55 per withdrawal. That’s R45.50 for the month. Draw your cash at a till point and save yourself the R45.50.
  • 5 debit orders at R3.20 per debit. That’s R16.00 for the month
  • Total cost – R66.45

Here’s how things worked out on the Savings Account:

  • R6.00 for the monthly fee
  • 10 x R200 cash withdrawals at R11.00 per withdrawal. That’s R110.00 for the month. Draw your cash at a till point and save the R110.00.
  • 5 debit orders at R16.00 per debit. That’s R80.00 for the month
  • Total cost – R196.00 (Eina!)

And the Personal Cheque Account:

  • R100 for the monthly fee on the Gold account
  • 10 x R200 cash withdrawals with 4 free and the remaining 6 at R6.70 per withdrawal. That’s R40.20 for the month
  • 5 debit orders free of charge
  • Total cost – R140.20 (Add R45.00 a month to this if you insist on using the Platinum Cheque Account).

The bottom line

I like the whole Easy Account thing. But somehow I think there’s a catch. I bet when I walk in they’re going to say “because I earn more than… I don’t qualify.” I hope someone from FNB replies below.

If you have more debit orders running than I have fingers and toes, then go for the Cheque Account. I also like the idea of 4 free cash withdrawals at any FNB ATM. But do this at any other bank and you end up paying R132.00 a month instead of R40.20 for the 10 cash withdrawals.
I’m also not sold on the whole platinum cheque account thing. Besides the snob appeal, I couldn’t spot the immediate benefit from looking at their brochure.

The big loser seems to be the Savings Account – I hate giving money to the bank especially when they tell me I’m saving.

There you have it. Tell us what type of account you have by taking our poll.

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