High banking fees discourage savings

High banking fees discourage savings

Fees charged on savings accounts discourage people from saving, who then use credit more than is needed, the National Credit Regulator said today.

Gabriel Davel, the chief executive officer, testifying at the public hearings of the Competition Commission's Banking Enquiry in Pretoria, said that with the exception of one financial institution the returns on all entry level savings accounts were negative. "If people see negative growth on their savings they stop saving. It is the logical thing to do," Davel told the enquiry which is into its third day of hearings.

He said a study indicated that the negative returns were as much as 19%, if return debit fees were brought into consideration it was as high as 43%. "The effect is that people don't save so when there is a crisis they have to borrow money, which brings on debt," Davel explained.

---