We put the banks’ new gadgets to the test and tell you how to keep account fees under control, writes Niall Brady
Banks are rolling out smartphone apps that allow you to manage your money on the move – just as they start charging up to 30c for each transaction.
Bank of Ireland launched its app earlier this month, leaving only Permanent TSB as the bank without a smartphone application. Ulster Bank has upgraded its app to allow users to make payments from their smartphones. It has also developed the first banking app in Ireland for BlackBerryy users.
Customers will pay for these services, though, via fees that could put the cost of operating a current account at €74 to €96 a year for a typical customer. Allied Irish Banks will end free banking for thousands of customers by tomorrow by introducing a charge of 20c per transaction, plus a fixed fee of €4.50 per quarter, for thouse who do not keep €2,500 in their current accounts at all times.
National Irish Bank (NIB) will end free banking for all customers by the end of 2012, even for those with large balances. This leaves Ulster Bank as the only current account provider that does not charge for transactions, although this is under review.
We put the banks’ apps to the test and tell you how to minimise fees and charges.
BANKING TO GO
Apps typically give access to current accounts, credit cards, loans and deposit accounts from a smartphone. The most popular features are balance checking, reviewing recent transactions, paying bills and moving money to other accounts.
NIB’s app comes closest to offering all of the functions available from online banking although customers must wait until next year to be able to make payments to bank accounts overseas.
While most apps restrict users to a view of their last six transactions, NIB gives them access to all activity on their previous 13 months. Its app has a search and sort function, allowing users to identify all payments to a particular payee, for example during the 13-month period.
NIB allows smartphone users to make payments to any bank account in Ireland. Most other apps restrict payments to those set up in advance as payees using online banking.
This could be a nuisance for users who have abandoned online banking in favour of an app. Glynis Hopson of Ulster Banks said: “Customers saw it as a nice ting to have when we launched Ireland’s first bank app back in 2010. Now they expect it and have come to depend on the app.”
A survey of 984 adults by Ulster Bank found that two-thirds of those with a banking app prefer it to banking online.
As a late starter, Bank of Ireland has a lot of ground to cover with its new app, aimed at the 500,000 customers who have registered for its online banking.
Gavin Kelly of Bank of Ireland said 16% of visits to its website are made up from mobile phones, a percentage that is increasing. Its app is currently limited to iPhones users, with mobile services for customers with Android and BlackBerry phones to follow.
Paying regular bills such as electricity, gas, credit cards and insurance accounts for a large chunk of transactions – and fees – on many current accounts.
An Post offers a way of paying bills for free at its network of 1,150 post offices or online at Mybills.ie, which has 70,000 registered users. To use the online service, you transfer funds from your bank account by direct debit or electronic transfer to Mybills.ie. It passes the money to the companies whose bills you want to pay. To get the most from the service, you should try to pay several bills together to limit the number of funds transfers, each of which will trigger a transaction charge.
More than 100 companies have signed up for the service including Airtricity, Bord Gais, Eircom, Electric Ireland, 02, 3 and Vodafone. Mybills.ie also allows payments to many local authorities and waste companies. MBNA is the only credit card company on the list of payees though, while Irish Life is the only insurance company. Sky and UPC are also missing.
Payments are not made by direct debit, leaving users free to decide how much of each bill they want to pay. The drawback is that they lose the discounts offered by all energy suppliers to encourage customers to pay by direct debit.
Enda Kelly, retail manager for An Post’s eastern region said: “It’s simple, free and secure. It can save people a lot of money in transaction fees.”
PLAY YOUR CARDS
Bank customers should think strategically to limit transactions, and therefore charges on their accounts. ATM withdrawals can be reduced by using the cashback facility on debit cards, combining cash and purchases in a single transaction for a single fee.
Cashback on Laser cards allows you to take up to €100 from your account when paying for purchases at supermarkets, filling stations and other outlets that have a lot of cash. It is also available with the Visa debit cards that are gradually replacing Laser. Banks do not charge extra for cashback, although you will pay the usual fee for the debit card transaction.
The National Cousumer Agency (NCA) advises switching more of your spending from debit to credit cards as another way of avoiding bank charges. Most credit cards have no annual fees, apart from the government stamp duty of €30. “You do not pay transaction fees on a credit card and it will give you free credit as long as you clear your bill in full and on time,” the NCA said.
The drawback is that credit card payments can attract surcharges, especially when paying airlines, travel companies and some retailers. The European Union plans to ban excessive surcharges that exceed the cost to retailers of accepting credit cards. This will not happen until 2014.
If you do not have a credit card, the NCA suggests using a prepaid card. Most are riddled with expensive fees though. Simon Moynihan of Bonkers.ie, a price comparison site, said: “The Moneybookers card is a good choice if you need a general purpose prepaid card. It has an annual fee of €10 but there are no top-up fees (for loading value on the card), no usage fees and not inactivity fee (if it is not used regularly).”
OBEY THE RULES
Current account charges can spiral out of control if you exceed the overdraft limit, resulting in interest surcharges and referral fees for direct debits and other payments that are bounced as a result. Cheques should be avoided because they can cost up to 80c – 50c in government stamp duty and up to 30c in bank charges.
According to a study by the Central Bank, a sample customer who writes a lot of cheques and regularly dips into an unauthorised overdraft could run up current account charges of almost €300 per year.
The above is an excerpt from a longer article by Niall Brady which appeared in the Money supplement to the Sunday Times on 27th May 2012.