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Bye Bye Savings Account Fees?

Bye Bye Savings Account Fees?

We might be seeing a trend to get rid of fees on transaction accounts but what’s happening with savings account fees? Jackie Pearson investigates.

November 4, 2009

Consumer groups praised the National Australia Bank’s recent decision to abolish monthly account keeping fees from its Classic and eBanking personal accounts.

The move (along with its decision to remove its $25 over-the-limit credit card fees and reduce its credit card late payment fee from $30 to $5) will be good news for almost one million NAB customers.

While the other major banks have already received some positive publicity in recent months for changes to penalty fees, the NAB‘s competitors have not, so far, matched this latest move on account keeping fees.

But while there’s movement on credit card and transaction account fees, what about fees on savings accounts?

Already fee-free
The good news for serious savers is that the online savings accounts offering the highest interest rates also come with no monthly account-keeping fees.

In fact, the 12 savings accounts currently offering the highest interest rates available (3.9 percent or more) don’t have account-keeping fees.

Compare transaction fees
You do have to be careful to compare transaction fees, even on the top savings accounts. Because these accounts are designed for serious savers, they discourage withdrawals by charging transaction fees.

For example, you may have to pay $2.50 per withdrawal, even if you use one of your own bank’s ATMs. And, of course, you may not be entitled to receive any bonus interest paid on some accounts in any month that you do withdraw money from the account.

High fees on bottom accounts
Accounts that are not rated by CANSTAR CANNEX or that pay little or no interest are also more likely to slog you with both account-keeping fees and transaction-based fees.

If you have an old-fashioned passbook or cash management style savings account, there is a higher likelihood that you will be paying fees.

With some accounts, not only will you earn no interest at all if your balance is below $25,000, you will also be paying $5 or $6 each month as an account maintenance fee.

On those accounts you could also be paying $1.10 for an Eftpos transaction and $1.50 to withdraw money from your own bank’s ATM. There are better places to keep your savings.

Compare and make the shift
Savers are better off shifting their balances to accounts paying high interest that are fee-free. If you’re a serious saver, there’s no point waiting to find out if the banks will start removing or reducing fees on savings accounts, you’re better off switching to a high-rate, no fee savings account as soon as possible.

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