Avoiding Unnecessary Bank Fees

Posted on October 28th, 2013 · Posted in News

Our big four banks are set to announce a record combined annual profit of $27 billion over the next couple of weeks.  This is great news if you’re a shareholder, but not so good if you’re a customer with excessive or unnecessary fees adding to their profits.  Analysis by the Australian Bankers’ Association shows fees charged for home loans, credit cards and transaction accounts make up 90% of household bank fees.  So let’s look at how to recognise them & avoid them all together.

To begin, get out your bank statements and identify all the common, recurring fees you pay. Think account keeping and transaction costs, foreign exchange fees, late payment penalties, overdrawn account charges and ATM withdrawals.  Once all the fees have been listed, the next step is to see whether they’re fair compared with industry averages and how you can change your behaviour to trim them. Because, apart from getting a better deal, good planning and awareness of fees is the quickest way to cut them.

As a yardstick, the average Australian household pays $8.94 each week in bank fees, so at the very least you should be aiming to get below that. But with good planning, it’s not impossible to bring that down to near zero.  There are mortgage products that carry no monthly fee, credit cards without an annual cost and transaction accounts that charge nothing provided you only withdraw from the right ATMs. Making these accounts work is good planning.  Of course, the more features and flexibility an account has, the more expensive fees tend to be, so the trick is to figure out what features you need and find a product that fits.

Once you’ve compared your current accounts with the market and identified savings, it’s time to ask a few questions.  When heading into these discussions with the bank, it’s vital to understand that whatever level of customer you are, there is significant value attached to your business.  Banks know that a simple savings account can lead to a credit card that can lead to a mortgage and a lifetime of fees, so don’t underestimate your bargaining power.

Ask what each fee is for, what they’re providing in return, and what can be offered by way of a better deal. Nine times out of ten the bank will put concessions on the table.  It’s also worth asking what you need to do to have fees waived altogether. Most banks will offer to waive account keeping fees if you make a certain number of transactions each month, so find out what these waiver levels are.  Similarly, there might be waivers for bundling products with the same provider.  Of course, you still need to work out the sums on bundling but if it fits the bill then it can be a money saving move that centralises all your finances.

All sounds a bit hard?  Then let Infinity Partners Finance help you Strengthen Your Financial Future by doing the legwork for you.  Contact us today for a FREE finance review!