Some of us may have been in a circumstance where we outshopped and want to pay with our credit card. Some others may have also been paying attention to their card limit, but their card hasn’t been refused, and they’ll believe everything is fine.
Then they get their bank statement and learn that, during their shopping frenzy, their credit card went slightly above the limit and the bank has charged them an R145 honouring fee.
Standard Bank’s policy is to allow the transaction to proceed in order to minimise potential embarrassment, and the fee is only applied to customers who opened their accounts before June 1, 2007.
The National Credit Act does not allow for an honouring charge, according to the National Credit Regulator (NCA). Given that the statute was only enacted in 2007, this could explain Standard Bank’s policy of only charging the fee on credit cards issued prior to that date.
Standard bank in a statement said, “At Standard Bank, we aim to enable a frictionless transactional experience and strive to provide the best customer experience possible.
“We recognise that our customers might encounter situations when they need the ability to transact but do not have the necessary funds available in their accounts.
“In these situations, we allow our valued customers to exceed their available funds by a small margin, where there is potential reputational risk they could be exposed to if we do not honour their payment.”
On a transactional product like a current account, an honouring fee is also paid, but the bank says it has capped it at R100.
“We have also adjusted this fee downwards for lower value transactions where the value of the fee will not exceed the transaction value, which is in line with industry practice.”
Standard Bank appears to be the only bank that charges for exceeding a credit card limit, though FNB and Absa charge a fee for honouring a current account transaction.
Capitec stated that it allows credit card customers to exceed their limit by a little amount but does not charge a fee for this service.
“This is to improve client experience when the card is used at a point of sale. In this case, the client must have a good credit profile and be in good standing on their other credit products.
“The amount used will then be collected with the client’s instalment on the next debit date. Capitec does not charge an honouring fee for this service.”
The bank stated that this only applies to credit card transactions and that any transactions, such as a debit order, that exceed the balance on a current account would be refused.
Nedbank does not accept transactions that exceed a credit limit and stated that its policy is to “protect clients at all times” in accordance with NCA rules.
As a result, the bank “no longer enables transactions in the event of inadequate funds in individual clients’ accounts. As a result, honouring costs are not applicable.”
FIRST NATIONAL BANK
FNB will likewise not allow a consumer to exceed the credit card limit but will honour certain transactions over the current account limit provided the customer is in good standing. There is a time limit for replenishing money before having to pay an honouring fee.
The bank “offers a value-added solution that aids consumers in real-time when they have a liquidity deficiency,” according to Sajeel Jagjivan, head of pricing at FNB personal core banking.
This is associated with debit orders, credit card purchases, and scheduled payments. It guarantees the payment of an insurance debit order, for example, and allows the consumer to make a point-of-sale transaction when buying food for their family.
The customer is then given one day to correct their account by depositing additional monies before being charged a fee. The price is equal to the transaction amount for values less than R45, whereas transactions greater than R45 are charged at R45 every R100, with a maximum fee of R200.
Absa does not charge clients who exceed their credit limits on credit cards or savings accounts, although a fee may apply when a debit order is honoured on some current accounts.
According to Jean van Rooyen, head of retail pricing at Absa daily banking, fees are only charged in extraordinary instances, such as when a debit order exceeds a customer’s available balance.
“A fee of R50 per transaction applies per item that is honoured since this requires manual intervention from one of our credit officials.
“This fee is only charged per month in arrears to offer a customer the opportunity to dispute the transaction that was honoured and, indeed, the honouring fee.”