Tag Archive | "bank fees"

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How to reduce your bank fees

Posted on 28 September 2009 by Alex

Bank fees can be very confusing. With several banking products available in the market, and with different terminologies used to describe the nature of the fees charged on these accounts, it is no wonder consumers often get confused or lose track of the fees they are paying. A simple understanding of when and where you get charged fees can help significantly reduce your fees by minimising the situations giving rise to fees.

Australian banks charged a total of $11.6 billion in fees during 2008. Exception fees accounted for $1.16 billion (10 per cent) of banks’ total fee income. Banks raked in approximately $960 million in penalty fees from households and $200 million from business customers.

Exception fees are typically charged by a financial institution when a consumer makes a late payment, overdraws an account or exceeds a credit limit. Most of these fees are pure profit for the banks. Analysis conducted by Deutsche Bank has revealed that 87 cents in every dollar a big bank takes from a customer in penalty fees is pure profit.

Bank fees can be very confusing. With several banking products available in the market, and with different terminologies used to describe the nature of the fees charged on these accounts, it is no wonder consumers often get confused or lose track of the fees they are paying. A simple understanding of when and where you get charged fees can help significantly reduce your fees by minimising the situations giving rise to fees.

Australian banks charged a total of $11.6 billion in fees during 2008. Exception fees accounted for $1.16 billion (10 per cent) of banks’ total fee income. Banks raked in approximately $960 million in penalty fees from households and $200 million from business customers.

Exception fees are typically charged by a financial institution when a consumer makes a late payment, overdraws an account or exceeds a credit limit. Most of these fees are pure profit for the banks. Analysis conducted by Deutsche Bank has revealed that 87 cents in every dollar a big bank takes from a customer in penalty fees is pure profit.

  • Some banks will switch off the ability to exceed your credit card limit on electronically authorised purchases and cash transactions. It might be worthwhile increasing your credit limit if your spending habits have changed, but make sure that the credit card you use is the most suitable for your spending patterns. Paying for unnecessary features such as complimentary insurance, purchase protection and rewards programs may end up costing you more in the long run.
  • To avoid late payment fees you should ensure that you pay at least your minimum monthly payment by the due date. It is recommended that you don’t just pay the minimum payment required, as you’ll be charged interest dating back to the purchase of each individual item, thus forfeiting the interest free period on the past purchases. Until the balance is paid off in full, current and future purchases will not be covered by interest free period.
  • Banks may offer the following services - SMS alerts for both successful and missed transactions or a ’sweeps’ facility to automatically transfer funds from another account when a direct debit is presented which may overdraw an account. Some transaction accounts may have a ’safety net’ facility which provides an overdraft limit also. These features are likely to incur a cost but may just provide added comfort or peace of mind.
  • Most importantly, shop around. Leading finance comparison sites such as infochoice.com.au can help consumers make better informed decisions around finding financial products that are better tailored to their needs.

    • Key changes for exception fees:

    ANZ

    Currently customers are charged a flat rate of $35 for all honour, dishonour and periodical payment non-payment fees. Overdrawn, over-limit and late payment fees are also charged at $35. However ANZ Access Basic account customers (students and concession card holders) are charged $10 for these Exception Fees.

    Commonwealth Bank

     

    • Dishonour Fees will reduce from $35 to $5 on all personal and business transaction accounts. 

       

    • Overdrawn Approval Fees will reduce from $30 to $10 on all personal and business transaction accounts 

       

    • Late Payment Fees will reduce from $45 to $25 on all home, investment and personal loans

     

    NAB

     

    • Account Overdrawn Fees will be abolished from $30 to $0 on personal transaction and savings accounts

     

    Westpac

     

    • Account Overdrawn Fees will reduce from $40 to $9 on all personal and business accounts 

       

    • Outward Dishonour Fees will reduce from $35/$50 to $9 on all personal and business accounts 

       

    • Periodical Payment Not Made Fees will reduce from $35/$50 to $9 on all personal and business accounts 

       

    • Missed Payment Fees will reduce from $35 to $9 on all credit cards and personal loans 

       

    • Over-Limit Fees will reduce from $35 to $9 on all credit cards and personal loans

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