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Sundaytimes

How to let your cash run free

Rises in bank charges make it more important than ever to consider switching your current account, writes Mark Channing

Current account customers with the leading banks have been left reeling after the announcement of a string of new fees and charges.

On July 1, Ulster Bank introduces a €4 a month maintenance fee on current accounts. Account holders must either lodge €3,000 to their account each month or maintain a minimum balance of that amount to avoid the fee.

The news is worse for Bank of Ireland customers. From August 19, the bank will charge an account maintenance charge of €5 every quarter. The fee will be impossible to avoid for ordinary current account holders, with only the over-60s, students and recent graduates escaping.

Alongside the new account maintenance fee, Bank of Ireland said it is lowering its transaction fees from 28c to 20c. The bank says this will result in a drop in the cost of 95% of all transactions. At the same time the bank is withdrawing the option for customers to pay a flat quarterly fee of €11.40 for 90 transactions. Bank of Ireland admits this will result in transaction fees going up for some customers.

From August 31, it is the turn of Allied Irish Banks (AIB) to increase fees. In a move it described as “unwelcome”, the bank said ATM charges are increasing from 20c to 35c while paper/staff-assisted transaction costs are going up from 30c to 39c. Ordering a duplicate statement will cost ¤3 per page.

The bank already charges a quarterly account maintenance fee of ¤4.50 to current account customers who don’t maintain a credit balance of €2,500 in their accounts.

The apparent ease with which banks have been getting approval to increase fees has been criticised by consumer advocates.

Paul Joyce, senior policy researcher with the Free Legal Advice Centres, said: “There doesn’t seem to be any way for consumers or consumer organisations to object to new charges, or increases in charges. It seems to be a closed process between the institutions and the Central Bank of Ireland.”

Meanwhile, the National Consumer Agency (NCA) has said the speed at which banks are hiking fees and charges is creating uncertainty in the market and acting as a deterrent to switching. A spokesman for the NCA said: “The frequency of the changes in charging structures is of concern as it gives switchers absolutely no certainty of the likely costs of a particular account on an ongoing basis.” We compare the banks’ basic current account offerings after the latest round of fee increases and suggest ways to avoid fees altogether.

BANK OF IRELAND

From August 19, it will no longer be possible for ordinary current account holders to get free banking with Bank of Ireland. Under the new fee schedule, all active current accounts,  with the exception of students, recent graduates and the over-60s, will have to pay a €5 quarterly account maintenance fee. Fees for most transactions will cost 20c. You can still avoid transaction fees but only if you keep your balance above €3,000 throughout the fee quarter. The bank pays no interest on credit balances. Its overdraft rate is 16.2%.

AIB

You can still qualify for free banking with AIB but you have to maintain a minimum credit balance of €2,500 in your current account per quarter. If not, you will be charged a quarterly account maintenance fee of €4.50 as well as transaction fees. From August 31, AIB is increasing many of its transaction fees. The new fees include 35c for ATM charges, 20c for self-service/automated transtransactions and 39c for each paper/ staff-assisted transaction. The bank pays no interest on credit balances. Its overdraft rate is 11.85%.

DANSKE BANK

It is not possible to qualify for free banking with Danske Bank. Its current account charges a flat quarterly maintenance fee of ¤5. ATM and telephone transactions cost 25c each. In-branch and internet transactions cost 34c each. No interest is paid on credit balances. The overdraft rate is 12.50%.

EBS

EBS Money Manager account holders qualify for fee-free banking if they maintain at least €500 in their accounts throughout the whole calendar month or make lodgements of not less than €1,500 during the month. The account pays 0.3% interest on a credit balance. It has no authorised overdraft facility.

PERMANENT TSB

You can get free banking with Permanent TSB’s current account if you lodge at least €1,500 to your account every month. The account pays interest of 1% on credit balances up to €1,500. The  overdraft interest rate is 16.30%. PTSB has said it has received exceptional levels of interest from current account switchers in recent weeks.

ULSTER BANK

From July 1, to qualify for free banking with Ulster Bank and avoid its ¤4 a month maintenance fee, you must either lodge ¤3,000 to your account each month or maintain a minimum balance of €3,000 during this period. No interest is paid on credit balances. The overdraft interest rate is 15.55%.

KBC BANK

KBC has said it intends to enter the current account market, but as yet has not announced any details of what its offer is going to be. A spokesman for KBC said: “We are currently engaged in product testing and research with a view to launching our new current account later in the year.”

SWITCHING

Banks must follow a statutory switching code of conduct aimed at allowing you to easily switch current accounts. Under the code, your new bank must have your new account up and running within 10 working days of the date you start the process.

Your new bank contacts your old bank and arranges to have your direct debits and standing orders connected to your new account as well as transferring over your credit balance.

The Central Bank doesn’t publish information on the number of bank switchers but in 2011, as part of a review of the switching process, it found the level of switching activity to be low.

Of four banks reviewed during the period October 2010 to June 2011, just over 6,000 current account holders switched banks. This represented 0.16% of all current accounts held in the banks inspected.

Consumers’ reluctance to switch current accounts is playing into the hands of banks, say industry observers. Simon Moynihan of price comparison site bonkers.ie said: “Banks are counting on the fact that people are afraid to switch. Bank of Ireland is doubling fees because it knows it will probably suffer very little fallout.”

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