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Credit card accounts
Annual card fees remain largely based on previous fees, although some banks have converted those fees into monthly fees.
The National Credit Regulator (NCR) says it is not illegal for a bank to recover its administration costs through an initiation fee and monthly service fees, as long as these fees do not exceed the maximums set by the Act.
The NCR says it anticipates that the competition between credit providers will result in most of them charging considerably less than the maximum limit.
ABSA ABSA says in May it reduced, simplified and removed some of its charges on credit cards.
For example, before May, the annual fee for a primary card on ABSA's Silver account was R75.55, plus a R29.10 fee to cover you in the event that you lost your card, making a total of R104.65 a year, or R8.72 a month.
The fee for a secondary card was R47.50 a year, plus R29.10 a year for lost card cover, making the fee R76.60 a year (R6.38 a month).
From May 1, the fee for a Silver credit card is R9.50 a month, and this includes free lost-card cover and a free secondary card. If you open certain current accounts with ABSA, you will not pay any monthly fees for its credit cards.
First National Bank (FNB) On June 1, FNB standardised the fee on its credit cards at R155 a year. This means that some of its fees have been reduced while others have increased. For example, in 2006, the annual fee on FNB's Silver card was R145, while the annual fee on its Gold card was R175.
However, FNB has introduced an electronic service option (ESO) that offers potential savings to all the bank's credit card holders who agree to receive their statements by email, to settle their accounts electronically (by debit order, internet, cellphone, telephone or at an ATM) and to use the bank's in-Contact alert service. For example, if you agree to use the ESO, you will pay only R99 a year for your Silver, Gold or Platinum credit card.
Nedbank Nedbank says that since the NCA was implemented, it has reduced, removed or simplified charges on its credit cards. For example, it has scrapped fees for a copy of a statement, being over your credit limit and paying late, as well as card-replacement fees and supplementary card fees on certain credit cards.
The annual fee for Nedbank's Classic card is R110, which is the same as it was before the NCA was implemented on June 1.
Standard Bank Standard Bank says it has not changed its credit card fees since these were adjusted in January. It says it has discontinued over-the-limit fees and late payment fees.
Interest rates
As is the case with vehicle finance agreements, the maximum interest rate you can be charged on an outstanding balance on a credit card is the repo rate multiplied by 2.2, plus 10 percentage points. Currently, this works out to an interest rate of 30.9 percent a year.
ABSA If you opened your credit card account before June 1 this year, the interest rates you pay will not change because of the NCA, but new rates apply to credit accounts opened after this date, or if you upgrade your card or your credit limit is increased.
In many cases, Absa has reduced its interest rates, but there are cases where the rates have increased. For example, on the Silver credit card, the interest rate for balances up to R10 000 was 22 percent a year, while the rate for balances over R10 000 was 19 percent.
Clients who open new Silver credit card accounts will now pay 21 percent on all purchases, except for cash withdrawals, petrol and other expenses on your garage card, which will attract interest of 23 percent a year.
FNB FNB says the interest rates you were paying on credit card accounts opened before the introduction of the NCA will remain. On new accounts, the maximum rates allowed under the NCA will be applied, with rebates that depend on your risk profile.
Nedbank Nedbank says the interest rate it charges on its credit card accounts hasn't changed as a result of the NCA being implemented. But interest rates are linked to the repo rate, which recently increased. Currently, the interest rate on the Classic and Gold cards is 20.4 percent.
Standard Bank Standard Bank says its interest rates remain the same, but rates on new accounts are linked to the prime rate. |
Posted on Friday, July 20, 2007 (Archive on Friday, August 31, 2007)
Posted by hayleym Contributed by hayleym
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