01.Freedom from fees
Australian households paid $1.9 billion for transaction accounts in 2008, and banks’ fee income has been growing at 8% annually. We’ve been the victims of unfair and excessive charging and penalties are a big part of the problem; bank dishonour, default and overdrawn transaction account fees amounted to $490 million in 2008. CHOICE led the charge against those penalties, and under pressure from consumers, the Big Four banks responded with fee reductions. NAB went furthest, recently removing account penalties altogether.
We compared standalone transaction accounts available from all banks and the 10 largest building societies and credit unions. For the first time, Australian consumers can choose an account with no monthly fee, no fees for certain ‘everyday’ transactions and no penalty fees. These accounts aren’t bundled with other products; home loan customers, for example, may wish to consider the pros and cons of a mortgage offset account.
For people with high cost accounts, the potential savings from switching account or changing behaviour may amount to $200 or more per year. Average fees paid with uncompetitive transaction accounts (Fujitsu Consulting) include:
- $5 monthly account keeping fees ($60 per year)
- overlimit penalties ($95) and transaction fees ($34)
- annual cost of using ATMs belonging to another bank or company's network is estimated at $36 on average
Government data is not yet available, but the collective annual savings from switching accounts could amount to hundreds of millions of dollars for banking customers.