Easy Ways To Avoid Those Hefty Bank Fees

Sun Herald

Sunday December 12, 2004

Jane-Anne Lee.

It might be the season for credit card debt, but using the wrong bank account can be costly, too, reports Jane-Anne Lee.

IF you're tired of banks making big profits but charging you more for the pleasure of doing business with them, it may be time to park your money elsewhere. Transaction fees alone cost more than $430 million a year, an amount that continues to rise.

Between 1995 and 2002, over-the-counter withdrawal charges climbed from $1 to $2.50 and the monthly account servicing fees charged by the big banks jumped from $2 to about $5, the Australian Consumers Association reports.

In 2004, you can now pay up to $10 a month in account-keeping fees if you operate an account such as the Westpac Classic Plus. On the other hand, if you are with some credit unions, there often are no fees, so shop around.

You may pay a fee to get your account balance from an ATM, for phone banking (including BPAY) and internet banking. EFTPOS fees are also on the rise.

You may also pay up to $2.50 for an operator-assisted phone transaction and up to 50c for a voice-recognition service fee (see table).

Remember, you will pay dearly if you operate several accounts. You will pay more if your balance is low, you make too many transactions a month, you use ATMs other than your own, you use cheques, or you withdraw money at a branch.

Check your fees

Contact your bank to get the lowdown on all charges attached to your accounts. Consolidate accounts or change to a more suitable facility.

"These fees change all the time so you do have to read those inserts that come with your statement," says consumer advocate Narelle Brown.

"I have seen some people spend $30 a month in fees for ATM and over-the-counter withdrawals. For the year, that's $360 which would be far better off in your pocket."

Flick your bank

Ditching your bank may save you several hundred dollars a year. Rather than another bank, consider building societies, credit unions and high interest-earning cash-management trusts.

If you are a heavy ATM user, you may need a facility offering unlimited withdrawals. If you bank online, opt for the bank with the lowest or zero fees (see case study). If you keep a low account balance, switch to a financial institution that doesn't penalise you for the practice.

If you're paying a hefty account-keeping fee, consider Credit Union Australia, which has a zero account-keeping fee. You also get four free ATM transactions a month.

Choice's website www.flickyourbank.com.au can help you find a suitable account.

Limit withdrawals

If you're happy with your bank but still don't want to get hammered by fees, review your ATM withdrawal habits. "You will certainly end up paying for it if you're taking out $20 a time from an ATM," says Cannex's Garfield Wright.

Bank online

Fees and charges are usually lower if you do your banking online. You'll also be able to access your account 24 hours a day. For disciplined savers you could also put all your purchases on your credit card then make one payment either online or through a direct debit each month.

CASE STUDY

PAUL Preobrajensky had banked with the National since he was at school.

But as his transaction costs climbed to $124.56 a year, the 34-year-old project manager cast aside any feelings of loyalty and began to shop around for a better deal.

"The final crunch came when there was another fee increase and the bank introduced a charge for me to use my card at another bank's ATM," he says.

"I ended up going to HSBC because I am a heavy internet user and it had an internet banking account which costs me nothing. I decided that if I were to do all my banking on the net and limit the number of transactions to five a month through ATMs or use a free EFTPOS when I do my grocery shopping, I would pay no fees."

Aside from being fee-free, he is also earning a higher interest rate of 4.9 per cent.

"I am now keeping an open mind about my banking and am going to be a shopper of banking services and go with the institution which gives me the best value."

© 2004 Sun Herald

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