Avoiding The Fees Frenzy

The Age

Monday October 7, 2002

Denise Cullen

Consumers are discovering weird and wonderful bank charges most have never heard of, writes Denise Cullen.

IF YOU reckon paying a $5 monthly service fee to access your own savings is a bit rich, spare a thought for people slugged $18 a year for not using their bank account.

The ANZ charges an $18 "inactive account fee" to customers who hold an Access Deeming or Access Select Account and fail to make a transaction for 12 months.

According to an ANZ spokeswoman, the fee covers the maintenance of the account, which includes attempts to contact the customer via telephone and mail.

"(But) an account service fee is not charged during this period," she explains.

They do things differently at Westpac. Inactive accounts do not attract a specific charge, although while an account remains open, normal fees and charges may continue to deplete the savings deposited there.

In cases where an inactive account goes into debt as a result of fees and charges it is closed, according to a spokeswoman.

The Australian Competition and Consumer Commission is reviewing submissions about a proposed Basic Bank Account, which would have a range of minimum features, including no account keeping fees, no minimum monthly or opening balances and up to six non-deposit transactions provided free of charge each month (including up to three over-the-counter withdrawals).

It would be suitable for health care concession holders and anyone else the banks deemed eligible.

But for everybody else, it pays to be vigilant. There is little fee relief in store for the majority of the population, according to Finance Policy Officer with the Australian Consumers Association Catherine Wolthuizen.

"The cost of banking is still rising," she says. "New fees continue to be introduced and existing fees continue to be raised."

Recent fee hikes include Westpac's decision, like the ANZ, to introduce a 1.5 per cent charge for each cash advance instead of a flat $1.50 fee. That puts the price of a $1000 cash advance at $15 - 10 times what it cost previously.

This is particularly disturbing given the rapacious appetite of consumers for cash advances, Ms Wolthuizen says.

A report on national use of plastic compiled by credit card analyst Mike Ebstein, of MWE Consulting, shows cash advances reached a new high in July, totalling $952 million. This was up by 13.7 per cent from June and by 5.1 per cent from July last year.

Ms Wolthuizen also says that if credit card reforms announced in August by the Reserve Bank of Australia are implemented - Visa and MasterCard are currently challenging the plans in court - then banks may use their loss of interchange revenue as another "excuse" to lift fees.

The Australian Bankers Association says the average Australian household pays $114 per year for a full range of banking services, including fees on transactions, home loans and savings accounts. This is equivalent to $44 per year for an individual.

But a look at some of the entries listed in the banks' individual guides to fees and charges reveals that a single act of carelessness - missing a payment or accidentally overdrawing your account - could cost you more than that in one fell swoop.

For example, National Australia Bank credit card holders who are, say, travelling interstate on holiday and forget to make their monthly repayment will find a Late Payment fee of $25 on their next statement. If souvenir shopping pushes them even marginally beyond their credit limit, they will be hit with a further $25 Over Limit fee.

Similarly, Commonwealth Bank customers who overdraw their Streamline Accounts by, say, $50 are charged an Overdrawing Approval fee of $20. But if they overdraw their accounts by between $1001 and $5000, they will also be charged a Loan Service fee of $25.

Even accessing funds from a "foreign" ATM can pack a punch. For ANZ customers, withdrawing cash from a non-ANZ branded ATM within Australia costs $1.50, while simple balance inquiries cost $1.25.

Consumers say it can be difficult to get a complete picture of the fees that apply to different accounts and banking activities.

The ANZ is the only major bank to post a clear link to comprehensive fee information on the home page of its website.

If you are a Commonwealth or National customer, you need to do quite a bit of trawling to find the equivalent information.

Westpac's website scatters the information between all its different product types while an 89-page booklet that consolidates the fees, charges and features applicable to deposit accounts is only available from a branch.

HOW TO REDUCE BANK FEES

1. Become familiar with your account. For example, people with a Westpac Classic account pay a monthly fee of $5 that entitles them to eight free withdrawals per month. But people who transact every day might be better off with a Classic Plus account - it has a $10 monthly fee but allows 25 free withdrawals per month.

2. If your current bank's offerings do not suit your requirements, switch.

3. Keep your accounts with the one institution. For example, the Commonwealth waives monthly account fees and withdrawal fees to customers with a Relationship Balance (savings or loans) worth $20,000 or more.

4. Do not use cash advances on your credit card. Ever.

5. Beware the killer one-off charges.

For example, incur a dishonour fee on some National home loans and you will be an extra $35 in the red.

6. Steer clear of ATMs not linked to your institution.

7. Be organised about your banking. For example, if you always need an extra statement for your accountant at tax time, then organise it in advance and the National will charge you only a $4 Additional Original Statement fee. Wait until you are anxiously trying to locate this document as the lodgment deadline looms and you will be charged a $7 Repeat Statement fee.

8. Maintain a certain amount in your account to avoid account keeping fees. For example, Westpac Bonus Saver customers can avoid a $2 monthly fee by keeping $500 or more in their account.

© 2002 The Age

Back to News Index | Back to Home