Overview
This lecture explains banking fees, types of bank transactions, and how to calculate the total cost of bank fees using specific examples.
What Are Banking Fees?
- Banks charge fees for various services such as deposits, withdrawals, and account maintenance.
- Bank fees can reduce your account balance unexpectedly if not considered.
Types of Banking Transactions & Typical Fees
- Monthly maintenance fee: Charged just for having a bank account (e.g., 5 rand/month).
- Self-service banking fee: Charged for internet or mobile banking access (e.g., 15 rand/month).
- Deposits: Fee may apply for depositing cash, especially over the counter (e.g., 5 rand).
- Withdrawals: Vary by method—over the counter (e.g., 10 rand), at your bank's ATM (e.g., 5 rand), another bank's ATM (e.g., 7 rand), at till points (e.g., 2 rand).
- Account payments and purchases: Electronic payments/transfers are often free.
- Stop orders and debit orders: Fixed fees apply (e.g., stop order 5 rand, debit order 2.50 rand or 5 rand if external).
- Balance inquiries: Limited free inquiries; additional ones charged (e.g., first free, then 10 rand at counter).
- Returned debit orders: Charged when insufficient funds (e.g., 4 rand).
- Special fee structures: Sometimes a fixed fee plus a percentage of the transaction (e.g., 10 rand + 3% of amount withdrawn).
- "Per part thereof" fees: Additional amount charged for each full or partial increment of a set sum.
Calculating Total Bank Fees
- To find your total monthly bank charges, add up individual fees for each transaction type performed.
- Some transactions may be free; always check the bank's fee table.
- Practice calculating fees for exam preparation.
Exam Example Scenarios
- Work through tables or lists of transaction activities to identify and sum up all applicable fees.
- Pay attention to both fixed and percentage-based fees in example questions.
Key Terms & Definitions
- Banking fees — Charges by banks for account services and transactions.
- Transaction — Any activity in a bank account, like deposits or withdrawals.
- Debit order — Automated withdrawal from your account for a recurring payment.
- Stop order — Instruction to the bank to pay a set amount regularly to someone else.
- Per part thereof — Charging fees based on each full or partial unit of a set sum.
Action Items / Next Steps
- Review and practice fee calculations using past exam papers.
- Familiarize yourself with your bank's own fee schedule.
- Practice identifying and adding up all applicable banking fees for typical monthly transactions.