May 5, 2011
Australians are paying more than $413.5 million each year in monthly fees on their transaction accounts, despite there being at least 80 fee-free options available in the market.
The average monthly fee charged (based on the 40 percent of transaction accounts monitored by RateCity that have fees) is around $5, with fees ranging from $1 up to $10 per month.
It's a surprising figure, given that consumers now have more options when it comes to finding no monthly fee transaction accounts, as more institutions slash account keeping costs to win customers.
Bank of Queensland (BoQ) is the latest to slash monthly fees, introducing the Day2Day Plus account, with unlimited free BoQ transactions and access to 3500 ATMs through the bank's link with the RediATM network.
BoQ has followed in the footsteps of National Australia Bank (NAB), which dropped monthly account keeping fees on some of its transaction accounts in 2009.
Some of the other top transaction accounts without monthly fees available through RateCity include Bankwest's Hero Transaction Account, ING Direct's Orange Everyday, NAB's Classic Banking and Citibank's Plus Transaction Account.
Beware hidden fees and charges
Just because an account has no monthly fees does not guarantee that it will be free of all fees. Instead, some charge fees to use foreign ATMs and fees to use BPay and EFTPOS to name a few.
Of the 80 transaction accounts without monthly fees monitored by RateCity, only 10 are devoid of all major fees. And many are subject to conditions. For example, Citibank's Plus transaction account charges a monthly fee of $5 if customers fail to meet monthly salary credit of $3000 or more into the account.
These fees can really add up, so it's important to read the conditions attached a transaction account and to be aware of any hidden fees and charges before you sign up.
The other downside of many monthly fee-free transaction accounts is that they pay minimal interest. For example, BoQ's Day2Day Plus has an interest rate of 0.01 percent, which is more than most others paying no interest at all. Given that interest on transaction accounts produces very little return for most customers, the banks argue that most people would rather avoid fees than earn the small amount of interest.
So if you're one of the banking customers fed up with contributing to bank's multimillion-dollar profits from fees, then consider switching to one of the many fee-free options available through RateCity. Just be aware that when comparing transaction accounts, it's a good idea to weigh up all features and conditions.
Related transaction account links