How to avoid bank penalty fees

The announcement of a class action against Australia's big banks for fee gouging reinforces why customers need to scrutinise their statements.
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04.Standard account penalties

How credit card penalty fees rose between 2000 and 2008 


Credit card penalties 2000–2008
Fees 2000 2001 2002 2003 2004 2005 2006 2007 2008
Late payment fee ($) 20 20 21 23 29 29 31 31 31
Over limit fee ($) 0 6 13 25 28 29 30 30 30

Source: Reserve Bank of Australia bulletins up to May 2009, based on average fees for major banks’ credit cards.

More info: check out our Credit cards report and use the interactive calculator to compare interest rates and annual fees.

Fees from the big banks at May 2008

  Transaction account and credit card penalties
Bank (in alphabetical order) Periodic payment dishonour ($) Direct debit dishonour ($) Overdrawn account ($) Cheque dishonour (outward) ($) Deposited cheque dishonour ($) Stop cheque ($)* Credit card late payment ($) Credit card over limit ($)
ANZ 35 35 35 35 0 15 35 35
Commonwealth 35 35 30 (B) 35 0 15 25 25
National Australia (A) 0–30 0–30 0–30 (B) 0–30 0 15 30 25
St George 45 45 38 45 0 8 / 15 (C) 35 30
Westpac 35 35 40 (B) 35 0 12 35 35

Source: The banks, May 2008.

* The fee usually depends on circumstances. There’s often no fee if the cheque is lost, stolen or unsigned and you provide the cheque number, for example.
(A) NAB's Clear Banking account has zero penalty fees (conditions apply, see Fair go on fees for details), while other NAB accounts charge $30.
(B) Charged per day, not per item (on the day the bank honours the transaction).
(C) $15 for staff-assisted request; $8 to stop a cheque through phone or internet banking.

When the penalties are charged

  • Periodic payment dishonour: You ask your bank to make regular payments to another account (for example to pay your rent or a bill) but when the payment is processed your account has insufficient funds and the transaction is declined (similar to direct debit dishonours).
  • Overdrawn account: You write a cheque or authorise a payment from your account but the transaction causes your account to be overdrawn.
  • Cheque dishonour (outward): You write a cheque; when it's presented for payment your account doesn't have enough funds for the cheque to clear, so the cheque is dishonoured and you're penalised.
  • Cheque dishonour (inward): You present a cheque to your bank and it's dishonoured by the bank of the person who wrote the cheque.
  • Stop cheque: You write a cheque but then ask your bank to cancel it and stop payment. You may be charged another fee if the cheque is subsequently presented for payment by a third party.
  • Late payment fee: If you don’t pay the minimum amount by the due date. These penalties are sometimes even applied more than once in a statement period. Some credit unions charge $15 every seven days until a late payment is received. Remember, just paying the minimum (for example, 4% of the remaining balance) means you’re charged interest on the other 96% of your debt.
  • Over-limit fee: If you exceed your credit limit, even by a small amount, you can be penalised. It’s a bit like a speeding fine — except when you’re caught speeding, the fine often depends on how far over the speed limit you were travelling — whereas with some credit cards the same penalty can apply whether you’re $1, $1000 or $10,000 over your limit (although some banks such don’t charge unless you’re a certain percentage over your limit).

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