Banks rake in $4.19 billion in fees from households

Banks charged customers an eye-watering $4.19 billion dollars in bank fees last year, according to the latest figures released from the Reserve Bank of Australia.

RateCity.com.au analysis shows this equates to $441 per household in bank fees a year.

While the overall total fees paid by households is down from the previous year, credit card fees have clocked in at $1.71 billion - an increase of $36 million from the year before and the highest annual total on record.

The biggest drop was in fees from transaction accounts, following the scrapping of ATM fees by Australia’s major banks in late 2017.

These  figures show a 20.4 per cent drop in transaction account fees from the year prior, a decrease of $223 million.

How much Australian households spent on bank fees in 2018:

 Source: RBA domestic banking fee income 2018, released June 20, 2019

RateCity.com.au research director Sally Tindall said:

“Australian households are throwing $441 a year down the drain in bank fees, despite the fact there are good, fee-free products on the market.

“People often see fees as annoying but unavoidable. That’s not necessarily true. In most cases you can escape paying fees by picking fee-free products or haggling with your bank to have them waived,” she said.

“Credit cards are the worst offender and today’s data shows the problem is growing. Firstly, the fees can climb as high as $1,200 a year and secondly, a lot of Australians have more than one card burning a hole in their pocket,” she said.

TIPS:

• Call your bank and ask them to waive any fees you are paying. Arm yourself with three examples of low or fee-free products before you call.
• When shopping for a home loan, check the comparison rate of any potential home loan to give you an indication of hidden costs.
• When taking out a new loan or refinancing, ask your lender to waive any fees. Chances are they’ll want your business enough to say yes.
• If you have a rewards credit card, assess whether you are getting enough value out of the program to cover the costs of the annual fee (and any other charges you might be paying).
• Opt for a low-fee transaction account that offers ATM rebates and waives overseas transaction fees.

HOME LOANS

Around 27% of home loans have no upfront fees and around 8% of home loans on the RateCity.com.au database have no upfront or ongoing fees.

Fee free options:

CREDIT CARDS

RateCity.com.au data shows there are 28 cards with no annual fees.

Some cards with no annual fee:

BANK ACCOUNTS

Transaction accounts with no fees or low fees 

Sources: RateCity.com.au, RBA domestic banking fees income, ABS household projections.

About Brett Warren Brett Warren is National Director of Metropole Properties and uses his two decades of property investment experience to advise clients how to grow, protect and pass on their wealth through strategic property advice.