According to Just Money, a “bank account is a safe and practical
place to keep your money. When you open a bank account you enter
into an agreement with the bank whereby you give your money to
the bank to look after it, and it then provides you with easy
and instant access to your funds in addition to a number of
other useful features. This is the sort of account that people
use on a day to day basis as opposed to a savings account which
may offer you better earnings on your money at the sacrifice of
practicality for everyday living.”
Why do I need a bank account and what will I use it for?
Just Money Says” As with most things there are positive and
negative aspects to bank accounts but so long as you choose
wisely and shop around to find the bank account that suits you
best you will almost certainly find that the advantages far
outweigh the disadvantages. Having a bank account provides a
safe place to have your income paid into, makes it quick and
simple to pay your bills and allows you to monitor your
expenses. Furthermore, it comes with a debit card and this means
that instead of having to carry large sums of cash around with
you, which is both dangerous and a bother, you can make
purchases quickly and easily in most shops and you can access
your funds in a bank branch or any ATM wherever you are.”
It is not easy to find the best banking product or solution to
meet Some banks may have introductory offers or rewards for
opening an account with them but don’t make your decision based
upon this alone. You must make sure that the bank account you
are choosing will be best for you in the long run. To do this
you must work out what features you require from your account
and what fees you will be charged for them. Your bank account
will come with a debit card and with this alone you can perform
the majority of functions that you need to but there are
additional features that a bank account can offer so you should
consider these features and the related questions:
Cheque book - you should think about whether or not you also
require a cheque book. If you do there will be additional fees
and you should bear in mind the following points: paying by
cheque is slower than paying with a debit card, carrying a
cheque book can be impractical and criminals can intercept
cheques and rewrite them. For these reasons the use of cheque
books is becoming outdated and people tend to favour the use of
a debit card.
Overdraft facility - do you need to have the option of an
overdraft, and if so how large do you need it to be?
Earning interest on your balance - if you tend to have a
significant amount of money in your account rather than being in
the red then it may be important to have a bank account that
earns you interest on the balance of your account. Different
banks will offer different rates of interest or none at all, so
make sure you take this into consideration.
Efficiency and service - this is not so much a specific feature
of your bank account but rather your bank as a whole. It can be
difficult to gauge the efficiency and service of a bank but you
can get a rough idea by using their website, speaking to the
managers and phoning the bank. For most people this is of great
importance because after all you’re giving your money to the
bank and you want to be reassured that they will look after it
and you.
These are the basic features to consider when looking for the
right bank account but if you are a person with a higher income
(> R15,000) then you may have the option of additional
facilities. These may include: life cover, a credit card, an
interest free overdraft and access to savings and investment
products.
Banks have a complicated system of fees so it is absolutely
vital that you figure out which account is best for you. For
example, if you have a large sum of money in your account then a
good interest rate will be very important, but if you are
constantly low on money and making lots of payments then it will
be more important to have a low transaction fee. The fees you
may be charged include the following:
Monthly administration fee - this is just the cost of having the
bank account and debit card. On top of this you will be charged
for one offs such as replacement of a lost card.
Cash withdrawal fee - banks charge you for withdrawing cash but
the amount you are charged will depend on how much you withdraw
and where you withdraw it from. You will be charged less for
withdrawals from your bank’s ATM but more for withdrawing cash
from a branch counter or a Saswitch ATM. When paying in shops
with a debit card you may have the option of getting cash back
but you will also pay a fee for this.
You need to consider whereabouts you will be withdrawing your
money from and how often each month you will do so. Withdrawing
from your own bank’s ATM will cost you less than from other
banks.
Fees and Charges Banks have a complicated system of fees so it
is absolutely vital that you figure out which account is best
for you. For example, if you have a large sum of money in your
account then a good interest rate will be very important, but if
you are constantly low on money and making lots of payments then
it will be more important to have a low transaction fee. The
fees you may be charged include the following:
Overdraft fees - your bank account may allow you to have an
overdraft facility. If you do have an overdraft some bank
accounts may only charge you interest on the amount you are
overdrawn, but others may charge you just for the option of
having an overdraft, irrespective of whether or not you use it.
You need to consider how much your bank will charge you just for
having an overdraft facility and the rate of interest they will
charge you when you are overdrawn.
Cash deposits, fund transfers, account payments - you will be
charged for paying cash into your account, paying money out of
your account, paying via a debit/stop order and transferring
money between any of your accounts. The fees for these
transactions can be complicated and they depend on a number of
things such as the size of the transaction and whether or not
you are transferring money between two accounts with the same
bank or accounts with different banks. In any case you will
normally be charged more for carrying out these transactions at
a branch counter than at an ATM.
You need to consider how often and how much money you will be
paying in and out of your account.
Balance enquiries and statement fees - you will be charged for
making balance enquiries and getting a bank statement but the
amount you are charged will depend on whether you do it at your
own bank’s ATM, at a branch counter or at a Saswitch ATM.
Electronic banking fees - banks now offer the option of banking
over the internet, via phone or cell phone, or even via SMS in
some cases. The amount they charge varies for each facility but
it may be the case that if you pay for internet banking then you
get phone banking free. You need to consider your preferred
means of banking and your ease of access to your bank and it’s
ATMs. If you live far away and have internet access it may well
be a good idea to use internet banking or phone banking; it is a
quick and easy way to make payments, transfer funds and keep an
eye on your expenses. If your bank offers you the facility of
internet banking you need to check that you can bank online at
any time or if the facility closes down at certain times of the
night.
Transaction limits - some bank accounts charge you a lower fee
for a limited number of transactions but then a much higher fee
for any additional transactions.
You need to find out what the transaction limits are on your
account, if any, and avoid exceeding them.
Dishonoured fees - your bank account will charge you if you make
payments from your account that you cannot afford, if payments
are returned and if you deposit post dated cheques.
You need to be aware of these charges and keep a close eye on
your finances to avoid incurring them.
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