Many people complain about their bank charges but believe it or not, sometimes the fees are self inflicted. A typical scenario is, somewhere around the age of 12 Mom drags us off to the bank to get a kiddie account and we don’t do much of an upgrade until we realise that we need a credit card to hire a car. This may be a bit of an exaggeration but it’s not far off. In order to get the best from your banking you need to take the time to sit down with a banking consultant to design a suite of services and products that really suits your needs. This will save you money time and frustration.

Banking fees are here to stay, and when one considers what we get in terms of convenience, safety and usefulness, the fees we get charged for banking products and services, are rather insignificant. Imagine what it would be like keeping your cash in your mattress or having to stand in lines to pay all your bills. Here is the low down on banking products and what they should be used for

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Savings Accounts-who needs one?

50 years ago our savings options were pretty much limited to a company sponsored pension, and a bank savings account. Now there are literally hundreds of investment and savings options to choose from. The most basic option is the age old savings account. While a no frills savings account at a bank can be a great starting point for a child, we need to upgrade as our wealth and needs change. Using a savings account your entire life is a little like using a quill and ink to write a letter instead of a PC. You will still be able to get your point across but it is tiresome and inflexible.

Savings accounts have an important place in our financial strategy however. They can be used for short term objectives like saving for a holiday, planning wedding or buying new furniture. They are also a great place to keep an emergency fund. There are a number of different savings accounts such as a basic savings plan, fixed deposits, call accounts, and money market accounts. The best way to find the right one for your objectives is to chat to a consultant or to check out the products online.

  1. Basic savings account: This usually yields the lowest rate of interest but it is also the most flexible plan. We can withdraw or deposit money at any time and there is usually a very small minimum balance that is required to keep it active. It is a good starting point and an easy way to save for short- term goals. A savings account has all the transactional features of a current account but because it is designed for saving and not transacting the fees can be higher than a current account. It is wise to use them in for what they were designed for.
  2.  Fixed deposit- this account requires us to keep our money in the account for a certain period of time. We get a better rate of interest but the rate depends on how long the money is invested for. Fixed deposit accounts range from 3 months to three years. Be careful about selecting the period for a fixed deposit. If you need to withdraw the money early you will be charged an early withdrawal fee.
  3. Money market:  in times of high interest rates this account offers the best returns. To qualify to open a money market account the bank requires a minimum investment of R10, 000 to R20 000 (the amounts vary by bank). Depending on what the current rate of interest is, you can earn as much as 10% more than what the other types of bank accounts offer.

The rate of interest depends on what the economy is doing. In difficult economic conditions such as a high inflation environment, interest rates tend to go up which yields a better return on your savings. A money market plan also allows you quick access if you need to withdraw the money; there is no notice period.

32 day call account: These accounts are popular for people who want a better interest rate on their money but want a level of flexibility. If you need to withdraw your money you have to give the bank 32 days notice.

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The check account – The hub of your banking

A cheque account is also referred to as a current account which is probably more apt in view of the fact that cheques will eventually be phased out. A current account it is the cornerstone of our banking portfolio. Through this account we can receive our salaries, run debit orders and stop orders, do internet banking, and pay our bills. Before the internet was available we relied heavily on cheques to make purchases and payments but now we can pay our bills in our slippers while watching survivor. A current account is often the first account an individual procures that establishes a credit record. Mismanagement can result in higher charges so it is important that you ensure there are sufficient funds to cover your obligations.

If you have not yet made the switch to internet banking make a commitment to explore the benefits. Not only is it convenient, internet banking is much cheaper than building based banking. Internet banking may or may not have a small monthly fee but the fee is waived on certain accounts, chat to your banking consultant to find out more. 

Current accounts are very useful for making payments on a regular basis, If you sign a debit order, the payment will go off at a pre-determined time each month. This is a great service for people who travel or are very busy. A debit order will cost around R5.00-R10.00 a small price to pay to ensure your bills get paid from the comfort of your home.

 Cheque accounts come in all shapes and sizes and fees vary according to the services they provide. Some offer free banking if you keep a minimum deposit in your account. Generally when you sign up for your first check account you will be given a basic service but as your career progresses and income improves you will qualify for better rates and a broader range of services. Ask your bank for a breakdown of charges to see exactly what each transaction costs.

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