Based on the latest RBA banking fees report, which showed banks are making $4.5 billion in fees each year - a 3.7% increase from 2016 - Mozo has revealed that Aussie households are paying nearly $500 a year in bank fees.
One of the biggest contributors were credit card fees, which was largely attributed to banks reinstating annual fees on cards that previously had fees waived or an increase in foreign exchange conversion fees.
“After the hit Australian cardholders have taken on the rewards cards front, banks jacking up annual fees on credit cards is a bit like rubbing salt in the wounds. Customers should really be determining whether the value on return they’re getting from their credit card is outweighing the annual fee they’re paying. If it isn’t, a no-frills credit card with lower annual fees could be a good option,” said Kirsty Lamont, Mozo Director.
Credit card exception fees, like late payment fees, also spiked in 2017 after a 4 year downward trend.
“Late payment fees are an income stream for banks and an unnecessary expense for many cardholders. This fee can be easily avoided by setting up a direct debit to ensure your credit card repayment for the month is covered as soon as you get paid,” Lamont said.
Surprisingly, home loan and personal loan fees remained stable over 2017, however fees in non-transaction accounts, like term deposits, rose.
Back in September, banks abolished ATM fees, allowing Aussies to withdraw their cash with their debit cards at no extra cost, but it clearly hasn’t put a dent in the bank’s profit from bank fees.
“While customers have been enjoying the benefits of free ATM withdrawals from multiple banks, this hasn’t actually equated to lower overall banking fees for Australian customers,” said Lamont.
At the moment, there are 59 fee free bank accounts currently in the Mozo database, along with 47 home loans with no upfront or ongoing fees and 29 credit cards with no annual fee.
Mozo data found that the top two fee free bank accounts were:
- ING, Orange Everyday: No account fees and free ATM use when you deposit your pay of $1,000+ and make at least 5 card purchases each month.
- UBank, USaver Ultra Transaction Account: No account fees and unlimited free transactions from own-bank ATMs, internet and Visa debit purchases.
Lamont has encouraged Aussies to look beyond the Big Four banks and toward mutuals, online and non-bank alternatives when shopping around on their financial products, as they are generally more competitive in terms of fees.
“Unlike other expenses in our lives, bank fees can, for the most part, be avoided. Review your statements and if you’re paying any account service charges or steep annual fees, shop around for the best fee free options. Your efforts could save you hundreds of dollars every year,” she said.
So if you’re ready to say goodbye to pesky bank fees, make our bank account comparison tool your next stop.