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Aussies wasting millions on bank account fees

Sophie Elsworth   National Featurer Courier Mail  January 27, 2013

AUSTRALIANS are forking out hundreds of millions of dollars a year on transaction account fees despite most accounts allowing users to escape charges.

Analysis by comparison website RateCity, found there are 134 transaction accounts available for everyday banking and 57 per cent don't charge monthly account-keeping fees.

Data shows Australians spent an estimated $360.5 million on transaction account fees in 2011 including monthly fees and other costs incurred such as penalties for overdrawing. This fell from 2010 when they spent $534.9 million.

Spokeswoman for RateCity Michelle Hutchison says Australians are spending far too much on transaction account fees and she says they should look at switching.

"People are probably naive and don't realise how much easier it is now to switch transaction accounts," she says. "Also complacency - people get comfortable and don't want to deal with the process of changing accounts."

Account switching was made easier from July 1 last year, allowing a customer's new financial institution to do all the work to move them from one bank to another. Hutchison says many transaction accounts from the big banks wiped transaction fees in 2009 after banking reforms kicked in.

"It is a mix of banks and non-banks that charge monthly fees on transaction accounts," she says. "Many accounts from the major banks don't charge this fee or waive it if used correctly."

Charges including monthly account-keeping fees vary between institutions, with the average charge $5 a month.

It's common for banks to require a customer to deposit a certain amount each month so they are not charged fees.

Australian Bankers' Association chief executive Steven Munchenberg says there's plenty of choice for customers if they do want to switch to fee-free accounts.

"There's a lot of accounts that don't charge fees, some accounts will charge fees depending on what features the account has," he says.

"There's certainly a lot of accounts out there that have low fees or no fees.

"In the past couple of years, banks have significantly reduced the amount of fees households pay."

Munchenberg says the number of Australians taking advantage of the banking reforms and switching is "relatively low", but suggests unhappy consumers look at changing financial institutions through a simple process.

"From a consumer's point of view if they feel they are paying too high an amount in fees ... they should certainly talk to their bank about whether there is a better product," he says.

"They can get on to the comparison websites and look at what else is on offer."


* Contact your new bank.

* Ask them to get a list of all your regular debits and credits made to your old account in the past 13 months.

* Work out which of these you want to move across to your new account.

* Sign a form permitting your new bank to give all these organisations your new account details.

Last modified onTuesday, 28 May 2013 04:47

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