Which bank offers you the best deal?

Let us start with savings. If you save your money with the bank, it will pay you some money in terms of interest for keeping your money there. It is not out of benevolence, but because the bank uses your money to make more money.

Centenary bank pays two per cent per quarter (three months) in interest for saving your money with them. Dfcu bank pays seven per cent per annum on maximum savings. Commercial Bank of Africa Uganda (CBAU) will also pay you seven per cent per annum.

Barclays bank seems to have the best deal; it pays up to nine per cent per annum if you open a savings account with them. And if you are looking for a bank to open a fixed deposit account, ABC Capital, Bank of India, and NC Bank are prospects – all pay up to 17 per cent in interest per annum.

Cairo International bank pays 16 per cent while Exim bank offers 15.5 per cent. Centenary bank and Dfcu will pay you 14 per cent and 11 per cent, respectively, for fixed deposits.

Fixed deposit accounts are used by commercial banks to draw in deposits. It provides a higher interest than the savings account because the banks hold your money for a much longer time.

LENDING RATES

One of the most followed figures is that of the lending rate. At what cost can a bank accept to give you its money if you wanted to borrow?

As at July 1, 2016, Stanbic bank and Bank of India had the lowest rate at 19 per cent. All the other banks are either at 20 per cent or above.

It is, however,important to note that this is just a benchmark rate. The bank will have to look at your risk profile – the riskier you are, the higher interest it will charge you. If the bank assesses you and thinks you are less risky, then it will give money at lower cost.

There are other loan-related charges – from application fee to insurance fee to legal and loan monitoring fees. GT bank and Exim bank charge Shs 200,000 as application fee each. ABC capital charges Shs 50,000 while Bank of Africa charges Shs 65,000 for individuals and Shs 125,000 for companies. Dfcu and Centenary bank charge Shs 20,000 each.

CHARGES ON ACCOUNT

Most banks will go miles to convince you to open an account with them, promising no monthly charges, free ATM withdrawals, etcetera. But there will always be a cost somewhere – overtly or covertly.

They will also penalise you for going against some of their rules. For instance, Bank of Africa and Standard Chartered bank will charge you Shs 20,000 as penalty for going below the minimum amount on a savings account. Barclays will charge you Shs 16,500 while Dfcu will charge you Shs 16,000.

How about when you want to close your account? Apart from Standard Chartered bank, which says it is free, all the other banks charge you for that – with the fee being between Shs 10,000 and Shs 27,000 for wanting to leave them. Bank of Baroda charges Shs 27,500 if you decide to close your account.

To get your financial statement, some banks will give it to you free of charge while others will charge you. Bank of Baroda and Cairo bank charge Shs 3,300 for a bank statement. Equity bank charges Shs 3,500 per page and Orient bank will ask for Shs 5,000 per page.

Most banks offer one free statement per month but charge you when you want more. Centenary bank indicates it does not charge for the financial statement but it charges you Shs 2,000 when you go to the counter.

All but Bank of India and Stanbic have charges on ATM withdrawals on ordinary accounts ranging between Shs 500 and Shs 2,000. But Stanbic charges Shs 1,000 for savings account.

amwesigwa@observer.ug