AIB must just love Bertie. The bank was getting a roasting on Wednesday because it announced it’s going to pretty much dump free banking and start squeezing more fees out of current account customers. Then on Thursday the Mahon report was published and it’s been all Bertie all the time since.
Funny that. A former head of state who’s famous for not having a bank account inadvertently comes to the rescue of a bank that’s now owned by the state.
Bertie would probably tell you that bank accounts are nothing but trouble though. Sure if he’d never opened one, nobody would know a whit about his race winnings, his dig-outs or his whip-arounds. They wouldn’t know about his English speaking payments, or his Sterling lodgements or the cupla hundred grand that he popped into his bank accounts in various sums and currencies over the years.
Everybody knows Bertie didn’t have a bank account when he was Minister for Finance but the big mystery is where he kept his cash. Some TDs reckoned he had it stashed in shoe-boxes, or in socks in the hot-press, but Bertie himself would only say he kept it “in his own possession”. So in 1994, after seven years without an account, Bertie finally packed the pockets of his anorak and headed to the bank, where he dropped off fifty grand. And the rest, as they say, is history.
We may chuckle now, but maybe Bertie was on to something. Even if you’re not trying to hide big heaps of cash, fees are getting so high now that it would nearly make financial sense to go without a bank account altogether...
The latest of course is AIB, who are joining Bank of Ireland in making it nearly impossible for most of their current account customers to avoid fees.If you’re one of the million or so people who bank with AIB, from the 28th of May the only way to get free banking will be to keep an extraordinary €2,500 in your current account at all times. And you won’t earn any interest on that cash either.
If you don’t have a spare two and a half grand lying around that you can lend to AIB indefinitely and for free, you’ll have to give them €4.50 per quarter in “maintenance” fees instead. And here’s the best bit; you’ll also have to fork over between 20 and 30 cents for every single transaction. All of them. Money out of the ATM? 20 cent. Write a cheque? 30 cent. Pay a direct debit? 20 cent. Go to the bank? 30 cent. Get paid? 20 cent… What??? Hang on, is AIB really going to charge customers for having their pay plonked into their accounts by automated lodgement? Yup, they sure are…
So in the interest of trying to figure out what these fees could really cost, I had a look at my current account today and found that over the last month I made 80 transactions. It sounds like a lot, and it was a busy month, but it’s mostly small day to day stuff and I use my Visa debit card instead of cash for nearly everything. If I was paying transaction fees for all of them, I reckon it’d cost me around €20* per month.
So between transaction fees and quarterly maintenance fees, I could be looking at €258 a year in current account fees! And of the Irish banks, AIB used to have the lowest charges and the easiest ways to avoid them. Not any more, that's for sure.
On Morning Ireland yesterday, National Consumer Agency boss Ann Fitzgerald said that “if we as consumers stay passive and accept this kind of thing, it will become the norm.” And she’s right on the money. The banks know that we practically never switch current accounts which is why they keep hiking fees. In fact, less than two people per thousand switched accounts last year. Which is so few it might as well be zero as far as the banks are concerned.
But it doesn’t have to be like that. People don’t switch current accounts because they think it’s too hard and they have so much tied up in them. But it isn’t difficult at all. Ok, it's a bit of hassle and you'll have to visit your bank, but the Central Bank made a Switching Code that the banks have to obey. It says that your old bank has to help you switch to your new bank and even help with your direct debits and payments.
Unlike Bertie, I know I couldn’t swop a bank account for a shoebox, but there are still a few honest to goodness ways to bank for free in Ireland. And with fees going up the way they are, I’d be surprised if we don’t see more than just a few people switch this year.
*If half were charged at 20 cent and half at 30.