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Banks' $12.5 billion fee frenzy

Households hit with an annual average bank fee bill of $465 driven by fees on credit cards, loans and accounts[1]

17 June 2016

Consumer group CHOICE says new Reserve Bank of Australia figures showing Australians paid nearly $12.5 billion in bank fees last year highlight ongoing problems with confusing credit card information and a lack of effective competition.  
 
"This is the third consecutive year that bank fees have grown, with consumers paying the price," says CHOICE Head of Campaigns and Policy Erin Turner.[2]
 
"It is staggering to think that last year an average household paid $468 in bank fees, with credit card fees rising the fastest, up from 5.9 per cent in 2014 to 6.6 per cent in 2015."[3]
 
"Credit cards are already toxic for too many Australians, with one in five living on them to get through to payday, and sky-high interest rates out of step with the rest of the lending market.
 
"It's not enough for the big banks to say credit card fees are increasing because transactions are increasing – fees should be going down.[4]
 
"It's galling to see the major banks claim consumers should be grateful because fees are below their previous peak in 2009, when the fact is that only consumer campaigns and subsequent class actions forced a reduction in unfair 'exception fees' six years ago.[5]
 
"With excessive credit card fees accounting for $1.5 billion, we need action on credit card reform to simplify the information provided and improve transparency,"[6] Ms Turner says.
 
The latest Consumer Price Index (CPI) reflected the fee growth, with bank fees increasing more than the cost of education, groceries and housing.[7]
 
"Banks need to put their customers first and and end the age of excessive fees and failure to pass on Reserve Bank interest rate cuts," says Ms Turner.
 
CHOICE says consumers looking to avoid hefty fees should weigh up whether they really need a high-fee credit card, or if they would save money with a low-fee, no-frills option.
 
Consumers can use CHOICE's unbiased Compare, Ditch & Switch comparison tool to compare credit cards, at betterbanking.choice.com.au/ditch-and-switch

[1] The Australian Bankers' Association, Fees for Banking Services – 2016 Report, shows that an average household paid $9 in fees each week, or $468 in the year.
[2] See RBA, Banking Fees in Australia, 2016 http://www.rba.gov.au/publications/bulletin/2016/jun/pdf/bu-0616-6.pdf
[3] The Australian Bankers' Association, Fees for Banking Services – 2016 Report, shows that an average household paid $9 in fees each week, or $468 in the year.
[4] https://www.choice.com.au/money/budget/cost-of-living/articles/most-australians-worried-about-2015-federal-budget-210415
[5] The reduction in household bank fees since 2009 consisted mostly of a reduction in so-called 'exception fees', for example penalties relating to insufficient funds, over-limit or late-payments. This reduction followed the launch of a joint 'Fair Fees' campaign from the Consumer Action Law Centre and CHOICE from June 2007. As the campaign gained momentum, the RBA published bank exception fee data for the first time, in its May 2009 bulletin.[4] In July 2009, NAB announced it would scrap penalty fees on transaction accounts,[4] with other banks announcing reductions in August. In May 2010, Maurice Blackburn announced class actions targeting a series of bank exception fees.
[6] Op cit, fees for banking, p11
[7] Australian Bureau of Statistics, March 2016 Consumer Price Index http://www.abs.gov.au/ausstats/abs@.nsf/mf/6401.0

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