Recent research found millions of Aussies feel they’re bank fees are too high. The study indicates 10.8 million Australians are looking to change banks this year. And it’s because of dissatisfaction with their bank’s hefty charges.
The Reserve Bank of Australia also had bad news for Australians. Its study found Australians are each handing over a tear-inducing $515 a year on bank fees!
What’s With The Fees Anyway?
Why do banks feel the need to charge these stupendous fees? Part of your bank’s fee structure pays for the overhead cost of operating their branch network. Tough luck, if you prefer the simplicity and convenience of online or mobile banking!
Overhead costs are just one factor in the bank’s reliance on its fee structure. Deregulation has shrunk the banks’ interest income from their loans. Lately, Australia’s “Big Four” banks have pushed into more sophisticated financial products.
The Profit Imperative
Not surprisingly, their banking culture has changed too. Gone is that friendly neighbourhood bank servicing retail customers and small businesses. An obsession with growing profitability replaced its former local community focus.
Enter new revenue streams involving an increasingly wide and complex set of fees.
Bank fees have become so ubiquitous that most Australian simply accepted them. Others never checked the bank statements and were unaware of how much they paid in fees.
Help Is At Hand
However, it’s not all despair and despondency. There are a lot of banking options available to Australians. So, there is no reason for you to be paying bank fees. At the very least, you should be able to shrink their impact on your pocket.
- Step 1. Understand what bank fees you are paying right now.
- Step 2. Do some smart planning.
- Step 3. Make some changes for the better to your banking. You'll have those fees whittled down in no time.
Problem 1. The Account Keeping Fees Scourge
Far too many Australians still find their finances blighted by account keeping fees. If you bank online or rarely visit a branch, you’re still paying for the privilege.
Leaving your cash idling away in the bank's transaction account is just doing the bank favour. And you're probably earning a miserly rate of interest on that cash to boot.
Find an account that has zero account keeping fees. Charges are laid out in the Terms and Conditions. Many banks will waive their account-keeping fee if your salary is deposited directly into your account each month.
Problem 2. Sneaky ATM Fees
If there were a stupid fee award, this one would be a clear winner. We have Finder.com.au to thank for an insightful survey. Over 50 per cent of respondents admitted regularly withdrawing cash from an ATM that was not part of their bank’s network. That convenience is costing Australians close to $800 million dollars every year!
This has to be the easiest fee in the world to avoid. Simply locate your bank’s nearest ATM and use it for all your cash withdrawals. A leisurely stroll could be saving you an average of $2 a visit. If you happen to live in a city there is no excuse for using a foreign ATM given the size of bank ATM networks. If you live in a regional area, opt for a bank with a local ATM network or go with a bank that doesn’t charge ATM fees. They do exist.
Problem 3. Dastardly Late Fees
Around $600 million dollars disappear down the gurgle hole of bank profits each year. This is thanks to Australian’s inability to paying their bills on time. In Australia, late fees have become a scourge on society. That cash could be nestling snugly in your wallet or bring invested for your future.
The smart way not to incur late fees is to make your payments on time. Simple, I agree. It turns out millions of Australians struggle to track their bills’ due dates. Fixing it is simple. Plug in a recurring due date in your electronic calendars. Having a handle on your finances is critical if you want to cut these pesky late fees.
Still concerned about forgetting to pay your mortgage, car loan, or credit card on time? Simply set up an automatic direct debit linked to your account. That way you’ll never have to worry about late payment fees ever again.
Problem 4. Overdraft Fees Ahead
Overdrafts can be useful. They help if you have fluctuating income flows and large outgoing payments all the time. But, you pay through the nose for having the convenience of a line of credit at your fingertips.
Is there a simpler coping strategy? Map out your direct debit payment schedule. Then structure your payments so they fall due only after your salary hits your account. Leave a few days leeway. That way your deductions are protected if an unforeseen delay occurs.
Problem 5. Warning, Application Fees Ahead
The average application fee for an Australian Home Loan is now around $449. Some lending institutions will charge you $1,400! Just for the privilege of considering your application! The application fee can gobble up a few months of that lower rate you negotiated. This can be a problem if you're applying for your first home loan, re-mortgaging your property or switching banks.
The smart thing to do about your application fee is to include a break on them in your loan negotiations. In exchange for your long-term business, many lenders will either waive or reduce their application fee.
Final Observations
Australians are rebelling against these hefty bank fees. More Australians are shopping around than ever before. And the hunt is on for better deals. Adopt our tips outlined above and shave off hundreds of dollars in bank fees. Take a long hard look at your bank statements and check for fees. If you're not getting a good deal, walk down the street to another bank. There is absolutely no reason you should be paying over $500 a year on bank fees.
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