Banks rake in $4.19 billion in fees from households

Banks rake in $4.19 billion in fees from households

Banks charged customers an eye-watering $4.19 billion dollars in bank fees last year, according to the latest figures released from the Reserve Bank of Australia today.

RateCity.com.au analysis shows this equates to $441 per household in bank fees a year.

While the overall total fees paid by households is down from the previous year, credit card fees have clocked in at $1.71 billion – an increase of $36 million from the year before and the highest annual total on record.

The biggest drop was in fees from transaction accounts, following the scrapping of ATM fees by Australia’s major banks in late 2017. Today’s figures show a 20.4 per cent drop in transaction account fees from the year prior, a decrease of $223 million.

How much Australian households spent on bank fees in 2018

Key categories Spend

Change from last year

Credit cards $1.71 billion +2.2%
Home loans $1.17 billion -7.0%
Transaction accounts $869 million -20.4%
Personal loans $341 million +1.5%
Other deposit accounts $42 million -9.0%
Total $4.19 billion -6.5%

Source: RBA domestic banking fee income 2018, released June 20, 2019

RateCity.com.au research director Sally Tindall said: “Australian households are throwing $441 a year down the drain in bank fees, despite the fact there are good, fee-free products on the market.

“People often see fees as annoying but unavoidable. That’s not necessarily true. In most cases you can escape paying fees by picking fee-free products or haggling with your bank to have them waived,” she said.

“Credit cards are the worst offender and today’s data shows the problem is growing. Firstly, the fees can climb as high as $1,200 a year and secondly, a lot of Australians have more than one card burning a hole in their pocket,” she said.

TIPS

  • Call your bank and ask them to waive any fees you are paying. Arm yourself with three examples of low or fee-free products before you call.
  • When shopping for a home loan, check the comparison rate of any potential home loan to give you an indication of hidden costs. 
  • When taking out a new loan or refinancing, ask your lender to waive any fees. Chances are they’ll want your business enough to say yes.
  • If you have a rewards credit card, assess whether you are getting enough value out of the program to cover the costs of the annual fee (and any other charges you might be paying).
  • Opt for a low-fee transaction account that offers ATM rebates and waives overseas transaction fees.

HOME LOANS

Around 27% of home loans have no upfront fees and around 8% of home loans on the RateCity.com.au database have no upfront or ongoing fees.

Fee-free options

Lender Product Upfront fees Ongoing fees Ongoing variable rate
Macquarie Bank Basic Home Loan $0 $0 3.44%
UBank Variable Home Loan $0 $0 3.59%
Suncorp Back to Basics $0 $0 3.69%
Westpac Flexi First Option Home Loan $0 $0 3.78%

CREDIT CARDS

RateCity.com.au data shows there are 28 cards with no annual fees. 

Some cards with no annual fee

Company Product Annual fee Interest rate Perks
American Express Low Rate $0 8.99% Low rate
Coles No Annual Fee Mastercard $0 19.99% Rewards points
HSBC Premier World (Rewards Plus) $0 19.99% Rewards points

BANK ACCOUNTS

Transaction accounts with no fees or low fees

Company Product Monthly fee Other fee waivers
ING Direct Orange Everyday $0 No ATM fees in Aus or overseas. Third party ATM fees rebated. No currency conversion fees.
Macquarie Bank Transaction account $0 No ATM fees in Australia or overseas. Third party ATM fees waived but only in Australia. No currency conversion fees.
ME Bank Everyday Transaction Account $0 No ATM fees in Australia. Third party ATM fees waived. International fees to apply however.

Sources: RateCity.com.au, RBA domestic banking fees income, ABS household projections.

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Learn more about bank accounts

How do you find a bank account number by name?

For privacy reasons, Australian banks won’t hand out account numbers or other details about their customers. However, if you provide a bank with a BSB and account number, they should be able to confirm if those numbers belong to one of their customers.

How do I overdraw my Commonwealth Bank account?

Overdrawing a bank account can happen by accident. It’s often hard to know what your balance is, particularly with direct debits, scheduled repayments and pending transactions competing for cash.

To avoid being stuck with a bank fee every time your account is overdrawn, you can apply for a personal overdraft. This will enable you to overdraw your account up to an approved amount.

A personal overdraft is connected to your CommBank Everyday Account, so you can enjoy easy access to extra funds once approved – anywhere from $100 up to $20,000.

Your overdraft funds can be accessed via your CommBank keycard or Debit MasterCard, or online through NetBank and the CommBank app.

To apply you can either call the Commonwealth Bank directly or visit your local branch.

How can I close a Commonwealth Bank account?

You can close your Commonwealth Bank account at any branch, provided you have appropriate identification. You can also close your account over the phone, by calling 132 221, 24 hours a day.

Do you need a bank account to get a credit card?

To get a credit card, you need to show proof of income, which will almost certainly require you to have a bank account.

How can I check my bank account balance online?

Checking your bank account balance online is a simple process. Once you’ve logged in to your online banking, clock on the relevant account and the balance should be visible.

How can you cash a cheque without a bank account?

You can cash a cheque without a bank account if you visit the bank that issued the cheque. For example, if somebody sends you a cheque from Bank X (as written on the cheque) and you visit Bank X, it’s likely that Bank X will let you cash the cheque – provided the person who wrote the cheque has enough money in their account. Bank X would probably charge you a fee for the service.

Can I start a bank account online?

Yes, most lenders that operate in Australia will let you set up a bank account online. The process is usually simple and takes five to 10 minutes. You will probably need to provide a passport or birth certificate, as well as a driver’s licence, Medicare card or another form of secondary identification. Requirements differ from lender to lender, so some institutions might ask for more or different forms of ID.

Are bank accounts frozen when someone dies?

Yes, Australian bank accounts are frozen when someone dies. If you want to close the account of somebody who has died, you might have to provide proof of death and a copy of the will. You might also have to prove your relationship to the deceased person.

If you have a joint bank account with somebody who has died, you will generally be entitled to all the money in the account. Again, you might have to provide proof of death if you want to change the bank account from a joint account to a one-person account.

Can foreigners open bank account in Australia?

If you’re migrating, studying or working in Australia, you’ll be pleased to know that you can open an Australian bank account. For the most part, opening a bank account in Australia is a simple process which starts by comparing the types of bank accounts foreigners can open in Australia.

Once you’ve found a bank account that suits your needs, you can start the application process.

When you apply for the account, you’ll need to provide proof of ID which may include your passport, overseas ID or credit card. You may also need to provide a copy of your visa and proof of address in Australia.

Depending on the bank and the type of account you choose, you may be able to apply for the account online or over the phone before you arrive in Australia.

Can I find my bank account number online?

Yes, you can find your bank account number by logging into your online banking and clicking on the relevant account.

How do I open a bank account for a baby?

If you’ve just welcome a new baby into the world, congratulations. Opening a bank account for your child can be a wonderful first gift.

Before you can open your child an account, you’ll need to have a birth certificate or passport for your baby.

As the parent or guardian, you’ll also be listed as a joint holder on the account. This means you’ll need to have proof of your identification and address (a driver’s licence, passport, birth certificate or Medicare Card).

Many banks and credit unions offer baby banks accounts. Usually, you can apply online; otherwise you can head into a local branch or office with your documents.

Do you need a bank account to sell on eBay?

You don’t need a bank account to sell on eBay. But if you don’t have a bank account, you must provide either a credit card or debit card.

Which bank is best for business accounts?

Unfortunately, there’s no definitive answer to the question of which bank is best for business accounts. That’s because ‘best’ will differ from customer to customer, depending on their unique circumstances. These include not only your company’s financial position, but also its size, its age and the sector in which it operates. Another factor to consider is what features you want in a bank account. Your business may require different features than another business; and your business may require different features tomorrow than it does today.

The best thing to do is to thoroughly research the market before opening a business account. And when you do open an account, you should reassess your options every year or two, because the market moves quickly. A particular bank might offer the best account today, but be surpassed by one or several rivals tomorrow.

How can I find bank accounts in my name?

To find ‘live’ bank accounts in your name, you’ll have to ask individual lenders, which involves contacting them one by one and proving your identity each time. To find ‘unclaimed’ bank accounts (those that have been inactive for at least seven years), you can use this website.