6 Things To Consider When Choosing A New Bank

Feb 2, 2023 | Money

Thanks to the marketing efforts of (what feels like) all the banks in South Africa, choosing a new bank to match your needs might be more difficult than you thought. Everyone is talking up their benefits, their cleverly named accounts, their advantageous fee structures – and they’re doing it everywhere, on billboards, social media, TV ads, and radio.

Before we get stuck into a few helpful tips that will help you wade through the advertising, we should point out that the best choice of bank will ultimately come down to your own particular circumstances.

Yes, these tips are relevant, but it’s important to measure all of these against your own needs and priorities. For example, the digital convenience offered by one bank may matter more to you than whether their fees and rates are the lowest.

Here are 6 important factors to take into account when choosing a new bank.

  1. Understand Your Motives

Truly, the bank you choose should fit your lifestyle and financial goals. That’s why it’s important to figure out what you want out of your banking experience. Here are a few questions to ask yourself:

  • Do you want a digitally forward bank for more convenience?
  • Do you want to earn rewards that you can use in your daily life?
  • Do you want travel perks?
  • Do you want more payment options?
  • Do you want to pay the cheapest fees?
  • Do you want lucrative savings options?
  • Do you want excellent service above all else?
  • Do you need zero monthly maintenance fees because you don’t have a regular income?
  • Do you want to experiment with investments?
  1. Banking Fees and Rates

Banks don’t do what they do out of the goodness of their hearts. They offer their services in exchange for payment, charged as a “bank charge” or “service fee.” Every bank charges differently, depending on the type of account you have, and how and when you withdraw money from your account.

Generally speaking, there are two pricing options that you need to be aware of. Firstly, there’s the pay as you use (PAYU) and then there’s the bundled option.

The PAYU accounts usually include either a super low or zero monthly fee and is great for people who perform low volume, low-value transactions. But once the number and value of your transactions increase, you might want to consider a bundled option. Speaking of which, a bundled option typically includes a range of services and transactions at no extra cost. There’s usually a limit on the number of free transactions, and thereafter you will incur additional costs if you exceed these limits.

Here is the latest banking fees for 2023, which you can click here to view.

  1. The Price and Volume of Transactions

The third factor we think is worth considering is how often you use your account. Honestly, knowing how often you plan to use your account and the monetary value of your transactions are perhaps the biggest indicators of what kind of account you’ll need. And when you’ve worked this out, you can look at each bank to see who can match your requirements.

Some bank’s offer accounts, for example, that allow you to make a certain number of free transactions per month up to a certain limit. This limit could be specific to the number of transactions, such as two free transactions in a particular category, or it could be monetary, such as R3000 in free cash withdrawals.

  1. Banking Technology

Banking used to be about, well, banking. But these days, it has evolved to more of a lifestyle offering. Something that has the power to touch on your personal and even emotional levels, which is all made possible through the introduction of digital banking technology.

The sophistication of the banking platforms varies and if technological convenience is important to you, you’ll need to check to see if the bank you choose provides all of the online and mobile banking options that you require.

  1. Location of ATMs and branches

On the other end of the scale, there are people who may need some digital conveniences, but absolutely need access to face-to-face services or to be able to withdraw cash on a regular basis – and at different locations.

If this is you, it’s important to look at the number and location of ATMs and branches that a bank has.

  1. Rewarding Rewards

Choosing a bank can occasionally come down to the incentives you stand to gain, a fact that the banking industry is well aware of. To that end, most banks offer rewards programmes that reward you with cashback and discounts. For instance, you may earn rewards based on purchases made at specific retailers or you could earn points for daily spending that can be exchanged for cash, airtime, account fees, or purchases from participating partners.

What you need to do is figure out which type of incentive programme fits in with your spending habits and goals.

Feeling informed?

There’s no doubt about it… choosing a bank can be frustrating. Especially now that there are so many more banks to choose from. And not just the traditional big guys who have evolved to become fit for purpose in the digital age. There are a number of rising challenger banks, some of whom are completely digital and in that way give the impression that there are fewer costs and more conveniences.

We hope this information has helped give you a strong idea of what you need from a bank, so that you can make an informed choice about who to entrust your finances with.

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