Fine-tuning your bank account

My Treasury is all about getting you the most out of your bank account. But what about what you put in? Here’s are suggestions for maximising every rand and avoiding unnecessary fees.

What’s the price of convenience?

Mobile payments are great. Now you can pay for that cappuccino or new pair of jeans with the tap of a phone or the snap of a QR code without fumbling for cash or your credit card. But how much does your bank charge you for each transaction? Your bank account could include free card swipes and ATM withdrawals, but you may still be charges for other payment methods.

Pay your credit card on time

Avoid additional charges and interest by paying your credit card on time, avoiding using your overdraft facility and ensuring you have enough cash to meet debit orders. This sounds like obvious, even exasperating advice: credit facilities exist precisely so you can use them when you’re short of funds. That’s true, and you these services are often genuinely useful. But are they really worth incurring additional costs, particularly when that money could be used for something truly desirable or useful?

Consolidate your bank accounts

By consolidating your cash, you could be eligible for significantly better returns from your bank. For example, if you have R40 000 in your current account and R70 000 in a savings account, the combined sum would exceed the R100 000 minimum balance of some of the best performing bank accounts.  

Don’t lose your gains to tax

Avoid paying tax on your returns with a tax free savings account. It’s totally legal; in fact, Sars initiated the idea to encourage South Africans to save. There are limits to how much you can invest tax free (Pravin Gordhan just announced the annual limit will be raised by R3 000 to R33 000 per year). For this reason, many investors choose to allocate the tax free portion of their investment to high-yielding investments, such as equities. However, if you do not wish to engage in relatively risky investments, or your exposure to the stock market is solely via your pension fund, a tax free bank account is an effective way to maximise your gains.

Is your bank account too expensive?

That triple-platinum rainmaker card might look impressive when you pay for drinks at the clubhouse, but does the fee structure really work for you? Five hundred free ATM withdrawals and monthly access to an airport lounge may not justify the account’s monthly cost, particularly if you don’t often travel or use ATMs.