Not that long ago, the idea of paying current account fees seemed fairly ridiculous simply because nobody needed to pay current account fees. Just five short years ago fee-free banking was completely normal and banks were actually paying their customers to have current accounts with them. And they were paying very well too.
Like a lot of incredible things that seemed perfectly normal at the time, banking customers could actually get interest on their current account balances, and lots of it.* AIB and Permanent TSB were paying an eye-watering 11%, Bank of Ireland was paying 10.5% and even Halifax (remember them?) were paying 10%. Ulster Bank trumped them all though with a chunky up-front cash payout of €150 with no strings attached just for opening a current account. It was an amazing deal, and completely unimaginable today.
Of course, all of the exuberance, and freebies and high interest accounts are long gone. But fee-free banking survived for another few years until Bank of Ireland put an end to it in February 2011. And one by one the rest of the banks followed, except for one… Ulster Bank.
Which is why the news that the last truly free current account available in Ireland is to be cancelled is so disappointing. Ulster bank, the last free banking holdout, has begun notifying customers that they are going to start charging for current accounts from July 1st. Customers will pay €4 per month unless they lodge at least €3,000 a month to their account or maintain a balance of at least €3,000 at all times.
This sad milestone has prompted us to revisit our “best of banking” series and review the current accounts that are available to Irish customers right now. Even with every bank now charging fees on standard current accounts, there is still value out there, and it is still possible for many customers to avoid fees altogether. It’s also worth knowing that some banks charge a whole lot more than others, and some make it much harder to avoid fees. And some even pay a little interest.
Our criteria for consideration are pretty simple. The current accounts must be standard and generally available to most people. There must also be a way to avoid fees, no matter how difficult.** With that in mind, we have not included student accounts, membership accounts, or accounts for specific age groups, like the over 60s.
We thought a good place to start was with Ulster Bank since they inspired this review. And we’ll look at their new current account as the old free one expires on 1st July so anyone signing up now could start paying fees in two months time.
Ulster Bank Current Account
- Fees are charged monthly rather than quarterly, which is a good thing. It means that if you miss the fee waiver it will cost you €4 for just that month instead of costing you for the entire quarter (which is standard with the other banks).
- Good online and mobile banking with balance reminders and alerts which can be received by text or smartphone app – useful for avoiding fees.
Two ways to avoid fees, and the fee waivers are straightforward:
- Lodge €3,000 per month to avoid fees in that month or
- Keep €3,000 in your account throughout the month to avoid fees.
- Decent sized 146 branch network, good if you like to do your banking face-to-face.
- Fees cover unlimited transactions.
The not so good
- Banking at Ulster Bank was free. That’s ends July 1st. That’s not good.
- €3,000 is a lot of money. To beat the fees by lodging your salary, you’ll need to be earning more than €50,000 a year.***
- For the second waiver, not too many people have €3,000 lying around to use to avoid fees. And if they did they’d be better off putting it in an instant access account at Rabo, Permo, KBC etc…****
- Waivers are hard to meet and €4 per month or a potential €48 a year in fees is not good.
Ulster Bank did keep their word. They said they wouldn’t charge fees until this Summer so their customers have enjoyed the longest run of fee-free banking, although the extra stretch is probably compensation of sorts for last year’s technical problems. It’s a pity they decided to introduce maintenance fees now, but if you’ve got to pay up, this account actually offers pretty good value. €4 per month is quite low and includes unlimited transactions so you’ll only pay for the usual stuff like bounced cheques and missed payments. Plus, Ulster Bank has decent online banking and smartphone apps. If you can’t make the waivers from any other bank, this is probably the best place to be if you have to pay fees.
AIB Personal Account
- A big branch network. Sure, AIB is closing down branches but at the end of this year they’ll still have more than 200. And customers can also perform basic transactions in most post offices which brings that number to well over a thousand. Great if you like your banking face-to-face.
- Slick and well received online banking and smartphone apps.
- Simple straightforward fee waiver. The only way to avoid fees with AIB is to maintain a minimum balance of €2,500 at all times.
- €2,500 is a significant sum of money, but it is lower than the €3,000 deposit waiver required by Bank of Ireland and Ulster Bank.
The not so good
- Complicated fee structure. If you don’t meet the waiver you’ll pay €4.50 per quarter and €0.20 per automated transaction and €0.30 for paper and human transactions.
- The fees can add up fast and easily make AIB the most expensive place to bank. One automated transaction per day and a visit to the branch every now and then will see this account crack €100 per year in fees.
- €2,500 is a lot of money – but sadly, if you have it, it’s probably better off in your AIB current account helping you to avoid fees than in an instant access savings account.
- The fee waiver works quarterly. If your balance dips below €2,500 just once in a three month period, you are liable for all fees in that quarter.
If you can meet the minimum balance requirement to avoid fees, AIB is a fine place to bank. There are plenty of branches, good online access and popular smartphone apps. If you can’t meet the €2,500 minimum balance requirement, AIB can be very expensive and you’d probably be better off with another bank where fees are lower or you can avoid them altogether.
Bank of Ireland Personal Current Account
- Huge network of 275 branches – and Ireland’s largest. Great if you like your banking face-to-face.
- Recently revamped and well received online banking and good smartphone apps.
- Simple fee waiver. Maintain a minimum balance of €3,000 at all times to avoid fees.
- Potentially the lowest fees at €11.40 per quarter or €45.60 per year.
The not so good
Complicated “work it out yourself” fee structure where you have to choose what kind of fees you think will work out best for you. You can choose between:
- A quarterly fee of €11.40 for up to 90 transactions then €0.28 for each additional transaction…
- Or pay €0.28 for every transaction in and out of your account.
- It’s hard to avoid fees, €3,000 is a lot of money and it might be better off earning interest somewhere else than avoiding fees at Bank of Ireland.
- The fee waiver is quarterly. If your balance dips below €3,000 at any time in a three month period, you are liable for all fees in that quarter.
- If you don’t opt for the quarterly fee option, a transaction a day will end up costing over €100 per year, so customers need to be pro-active.
For customers that do a transaction a day or less and pay the quarterly fee, this account is decent value. It’ll cost €45.60 per year which is the lowest charged by the banks reviewed here. Bank of Ireland also has Ireland’s largest branch network which is a major selling point, and their online and smartphone access is very well rated. On the other hand, the fee waiver is high and out of reach for many people.
Permanent TSB Current Account
- Simple fee waiver. Lodge a total of €1,500 per month to avoid fees.
- No minimum balance requirement. You can lodge your €1,500, take it all back out again and you’ve met the fee waiver for that month.
- Permanent TSB is the only bank on the list to pay credit interest. This account pays interest of 1% on balances up to €1,500. It’s not much, and once the DIRT man has had his share, it might work out at a tenner per year, but still...
- Good online access and smartphone apps.
The not so good
- Although the waiver works monthly, the fees are quarterly. So if you miss the €1,500 minimum monthly lodgement in one month, you’ll pay for the whole quarter.
- Fees of €12 per quarter or €48 per year. They are in line with the other banks, but we still don’t like fees.
- Small branch network. At 76 branches, Permanent TSB has the smallest branch network of the big four. So if you like to do your banking in person and are looking at Permo as an option, make sure you’re near a branch.
We say... Permanent TSB Current Account is Ireland's Best Current Account
The Permanent TSB Current Account deserves the bonkers.ie best current account in Ireland award because it makes fee-free banking widely available again. It’s not a completely fee-free current account, but the €1,500 lodgement requirement to waive fees is the most accessible of all the banks, and should be easy for most working people to meet. In addition, there is no minimum balance requirement and the account even pays a little interest.
Permanent TSB has said they are pleased with the response to this account since they launched it at the beginning of April. Irish people are notorious for staying with their current account provider for life regardless of fees though, so it will be very interesting to see whether Permanent TSB has been able to break that mind-set with this new account. Maybe they’ll let us know?
*There was a limit to the amount of interest paid. Generally, the banks paid interest on current account balances ranging from €1,500 to €2,500.
** Danske Bank did not make the list because they do not make it possible to avoid current account fees. They may prove better value for many customers however.
***We’ve taken a single person without kids or a mortgage here.
****KBC Smart Access Demand Account 2.6%, Permanent TSB Online Instant Access Account 2.5% and RaboDirect Demand Deposit Account 2.45%. AER on €3,000 from these accounts will yield more than €48 net… but sadly, not much more.
*****Although KBC announced last month that they were planning to launch a fee-free current account - there has been no further news. We'll keep watching though.