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April 2011
BANK LIKE A BANKER
By Suzette van
Niekerk, Exceed Asset Management |
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| Suzette
van Niekerk, Director: Exceed
Asset Management |
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In
the following paragraph, we’ll
be asking you three questions. For
each of them, answer either ‘yes’
or ‘no’. When you set
out to buy new shoes, do you generally
tend to browse around and compare
the options at different stores before
making a purchase? When you buy a
new car, do you compare the costs
of various models before taking the
plunge? When you order food at a restaurant,
do you check the price of a meal first
before telling the waitress what you
want?
Trick
Question
Now here’s the trick question:
Do you apply the same principles in
terms of banking? Because whether
you answered yes once, twice or three
times in the above paragraph, the
principle stays the same – banking
is part of your monthly expenses and
only by comparing costs and shopping
around for the best deals will you
really be able to save on those nagging
fees.
Here are ten expert
tips to get you started: |
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| 1. |
If you own a business,
however small it may be, for which you need
a credit card machine, make sure you have
the best possible deal on that credit card
facility. |
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According to Suzette Van Niekerk from Exceed
Asset Management, you can halve your monthly
fees by being smart about your choice. “Bear
in mind that a monthly rental fee comes
into play, that there is a contract fee
and that you also pay an amount (up to 5%)
on every transaction. These costs differ
from bank to bank so compare prices before
committing to one which may be pricier than
most.”
Many businesses add these bank fees to the
total invoices of their clients, which can
also be avoided by getting the best possible
deal. “Whether you run a guesthouse
or own a panel-beating shop, you can save
a lot and also offer your clients the best
possible service with some shrewd planning,”
says Van Niekerk. |
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| 2. |
It doesn’t matter whether
you’re a dab hand with the internet
or not, it’s definitely worth your
while to start using online banking, as
you can make great savings on various transactions
this way. |
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For example, says Van Niekerk, “an
internet transfer is often far cheaper than
making a deposit at the nearest branch of
your bank, and also a lot more affordable
than paying by cheque”. She adds that
cash is not necessarily king either, as
fees are involved with first drawing the
money and secondly with paying it into an
account – whereas one online transfer
could streamline the process, without costing
an arm and a leg. |
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| 3. |
Debit orders are wonderfully
simple and easy as they allow you to forget
about lots of paperwork and payments, and
ensure that payments are made on time. |
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However, different banks charge different
amounts for debit orders so find out what
you are currently paying and start comparing
it with other banks’ fees. |
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| 4. |
Save, save, save – it’s
the first thing any banker will advise you
to do, even when times are tough. |
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Actually, financial experts strongly advise
saving especially when times are tough.
“The fact that the world is emerging
from the economic downturn is good news
– but most of us have had a tough
couple of years, financially, and would
welcome a breather,” says Sugendhree
Reddy, director of banking products at Standard
Bank. She adds that a good way to free money
up to clear debt – and hopefully eventually
save – is to re-examine your insurance
policies.
“You’re probably
still paying premiums on assets you no longer
have or are still insured for more than
the market value of your car. Once you’ve
adjusted the premiums, use the money you’ve
saved to either bolster your savings account
or pay off debt. And just keeping working
towards having more savings than debt,”
she says. |
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| 5. |
If you’re a pensioner, be
sure to investigate the perks available
to you, and insist on making use of them.
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Many banks offer incentives such as low
or no bank fees on certain fixed amounts
in a bank account, and it’s a good
idea to find out if your bank adjusts these
numbers when interest rates go up or down. |
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| 6. |
Make sure you understand the difference
between the various types of accounts. |
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“Many people still don’t understand
that you don’t get any interest on
money in a cheque account, so when it comes
to funds which are not part of your monthly
deductions, it would be far better to put
it in a savings or money market account,”
says Van Niekerk. |
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| 7. |
To support your medium-term goals,
like buying a car or putting a deposit down
on a property, it’s a good idea to
put your money into either a fixed deposit
or a money market call account. |
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“A fixed deposit gives you a good
interest rate and you have to give notice
when you want to take your money out –
making it ideal for medium-term savings,”
says Reddy, adding that, “a money
market account can have an even higher rate,
but it still allows you to access your money
quickly. This is a good option for saving,
but you have to be honest with yourself
about how disciplined you will be about
leaving your savings to mature.” |
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| 8. |
Be vigilant when you open new
accounts and, even though it may seem boring,
take the time to read the fine print. |
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“Often fees are involved, such as
a starting fee and on-going fees on accounts
like a money market account, and these are
collected automatically,” says van
Niekerk. If you’re unsure, ask your
banker to explain in detail what all the
relevant fees are which will be deducted
directly and decide on the back of that
whether the account is worth your while. |
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| 9. |
When you draw cash from an ATM,
do you know what the charge is for every
withdrawal? |
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You may think you’re saving money
by drawing (and subsequently spending) only
small amounts at a time, but once you’ve
considered that you actually pay anything
from R5 to R11 per withdrawal, it suddenly
would make a lot more sense to rather draw
one larger amount weekly instead of small
amounts every other day.
However, things do get more complicated
the more you draw too, and at some banks,
the charges for drawing R600 can be double
that of drawing R500. This is just yet another
incentive to spend some time finding out
exactly what deal your bank is offering
you, and what every single transaction –
even an ATM withdrawal – costs. |
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| 10. |
Children of bankers and financial
experts tend to be well versed in the art
of shrewd money management, but there’s
no reason why your kids can’t enjoy
the same benefits. |
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“The lessons of money management are
best learnt when young,” says Reddy.
Most banks accommodate youngsters and their
specific banking needs (such as the Standard
Bank Sum1 account), allowing them to graduate
from piggy-bank savings to formal banking.
Having an account teaches children the basics
of transacting on an electronic account
– and accounts like these involve
little or no banking fees. It’s also
a great way to teach children about savings,
and seeing how they earn even small amounts
of interest can be a huge incentive for
smart money management.
The business of banking has changed dramatically
over the last few decades, and long gone
are the days of hiding your hard-earned
cash under the mattress. It seems that more
often than not, electronic transfers are
the way to go (and far cheaper to boot),
and in the absence of conformity when it
comes to various banking fees, shopping
around for the best deals definitely pays
off in the long run. |
The article was originally
written by Riekie Human - RCS Lifestyle, March
2011, who interviewed Suzette van Niekerk.
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