New VAT rate pushes up bank charges

In a recent interview on CNBC Africa, Reana Steyn, Ombudsman for Short-term Insurance and Banking, shed light on the implications of the 1 per cent VAT increase, effective from the 1st of April, on banking fees. Steyn issued a warning to consumers, highlighting that the VAT hike will have a significant impact on various bank charges that may catch consumers off guard. Steyn emphasized that while consumers are aware of price increases when purchasing goods such as groceries, they may not expect the trickle-down effect on the services they receive from banks. Monthly statements, debit orders, and transaction fees are just a few examples of services that will be impacted by the VAT increase, resulting in an overall rise in banking fees. One of the key points raised by Steyn is the impact on transaction fees. Consumers often incur charges for each transaction, such as using an ATM or making online payments. With the VAT increase, these fees will also rise, albeit by a small amount per transaction. Steyn urged consumers to be mindful of the cumulative effect of these incremental increases, which can add up over time. Moreover, Steyn highlighted the need for consumers to proactively monitor their bank charges and be cognizant of the additional VAT they now need to pay. With the cost of living already on the rise, the added burden of higher banking fees can put a strain on consumers' budgets. It is essential for individuals to budget effectively and factor in these increased expenses to avoid financial strain. As the new VAT rate takes effect, it is crucial for consumers to stay informed and understand how it impacts their day-to-day finances. Being vigilant about monitoring bank charges, exploring cost-saving alternatives, and adjusting spending habits can help mitigate the impact of the VAT increase on banking fees. Overall, staying financially savvy and proactive is key to navigating these changes successfully. In conclusion, the 1 per cent VAT increase may seem insignificant on a single transaction, but its cumulative effect on banking fees can result in a noticeable difference in consumers' wallets. Being aware of these changes and taking proactive steps to manage finances effectively will be essential in adapting to the new financial landscape.