Banking fees and a semi-cash society

Banking here redefines the phrase “to nickel and dime.” Banking isn’t free – around $250/year just to have a checking account for deposits/withdrawals and a debit card. You get charged on everything from deposits to checking your balance at an ATM. (An example pricing guide from one of the banks can be found here.)

Some of it makes sense – you get charged more when you do something from in a branch vs. doing it from an ATM, which reflects a bank’s higher cost of letting you interact with a human being. Others just make banking expensive. Usually the fee options are:
-Pay as you go
-Pay a flat month fee (about 170 rand or ~$22/month)
-Hold a minimum balance

Credit cards also charge a per-month fee, so I don’t think I will have any credit cards here (just the debit card that comes with my bank account).

This explains one thing I had noticed: SA is much more of a cash society than I had expected to find. I rarely see people using credit or debit cards. Now it makes sense: if I get charged to have a card and charged every time I use it, I’ll withdraw chunks of cash and use that little by little.

I’m not sure what percentage of the population has banking services, but it seems that having a large portion of your population out of the banking circles would be pretty bad for development. There are higher hurdles to moving money around, there is higher theft risk, and it’s harder for lower income people to save.

There is a small bank called Capitec that has taken a different approach and is growing rapidly. They have lower fees and branches mostly in more sketchy, poorer areas in order to win people who don’t have any banking services currently. They are offering about 7% interest on accounts in order to draw money, so I may try to use them.