How to cut costs when using your bank account

I don’t know which bank you bank with. I won’t tell you mine either because it’ll change how you engage with the rest of this story.

But a long time ago, when Mr. Kibaki was still a sitting president and ZUKU wasn’t competing yet with Safaricom for the home internet space, I had a current account where I was charged Sh850 a month. It was a flat rate, I wasn’t charged anything else for the account besides this monthly Sh850.

Whatever other services I needed were ‘free’ – ‘free’ ATM withdrawals, ‘free’ cheque book, ‘free’ wallet to put this cheque book in, ‘free’ monthly e-statements, ‘free’ bank transfers.

In retrospect though, I was being charged an arm and a leg for banking services.

CHANGE

Then the undersea fibre optic cable landed on our shores, Internet washed up to our backyards from 2012 (thereabouts) and changed the way we consume banking products.

Internet made things like ‘free’ e-statements and ‘free’ bank transfers no longer a privilege but a basic service accessible to every consumer, it made chequebooks seem as outdated at SMSs. And now that we’re here, who really needs a wallet for their cheque book? Really, who does?

What’s even better, the cost of internet is almost negligible compared to the flat-rate ledger fees my bank was taking from me every month.

So I closed my fancy, pricey account and opened another current account.

CUTTING COSTS

It’s from this current current account (ha-ha) that I’ve learned how to cut costs and make the most of internet and mobile banking. Now the total costs to use my bank account efficiently doesn’t amount to more than Sh200 per month.

Here’s how it goes for me:

1. I’m not charged a monthly ledger fee: With this new account, I’m charged per transaction – ATM withdrawals, over-the-counter withdrawals, cash transfers to other banks, cheque books, mobile banking. I make sure to make the most of these transactions so that I’m not charged extra for being disorganised and not planning myself beforehand.

2. I make, at most, only two ATM withdrawals in a month: I’m charged about Sh35 per withdrawal plus excise duty of 12% on the same. (Our government will suck us dry with these punitive tax measures.) So that comes to a total of Sh39.20. Two withdrawals a month makes it Sh78. My monthly budget guides me on how much to withdraw, so I know not to squander the money once it’s in my hands.

3. I still use cheques for large money transfers, not M-Pesa Paybill: I don’t use RTGS because I’ll be charged per transfer. It’s about 500 bob to transfer cash to other banks, but it’s free for interbank transfers. A cheque book of about 100 leaves costs me Sh330. These 100 leaves serve me well for two years.

I write my cheques but I don’t make the cheque deposits myself, I pay a boda boda guy I trust to do these bank runs for me. I make sure to give him all the cheques at once to save myself the cost of disorganisation. Having him do the deposits saves me time and it keeps him gainfully employed. He charges Sh200 for my cheque deposits.

In comparison, moving money from my bank account to my M-Pesa then to make a Paybill deposit would cost me about Sh350.

4. I use my Visa debit card to make payments: A majority of establishments in this town take Visa cards for payment. What’s even better, it’s free to use and saves you the hustle of handling cash.

I get anxious handling large sums of cash because it’s easy to misplace it or misspend it. My Uber account is also linked to my Visa card.

There are some supermarkets I’ve been to, though, that say you must make a purchase of at least Sh500 to use your Visa card. There’s a beauty parlour I went to where they charged me an extra 5% of the bill to use my card. Some shops insist that you make an ATM withdrawal instead of paying by Visa card; I avoid such.

To keep an eye on personal safety, I make sure this account has just enough for me to survive on for the month, it’s not bloated with cash.

5. I only use mobile banking in an emergency: And when I do, I pull the cash from my savings account with my other bank. I’ve just had a look at my statement and noted that it doesn’t cost that much to send cash from my account direct to another M-Pesa line.

If you take in the cost of my time to walk to the ATM, the actual cost of withdrawing then the cost of sending the money to the other side, it’s cheaper to use mobile banking for such transactions.