Slash bank fees

Source: No credit

Step 1 - Look into exemptions and discounts

MINIMISING fees depends on understanding what you are being charged for on your account and why. It also depends on having the right accounts for your spending and transaction patterns.

One strategy is to investigate fee exemptions or discount ‘packages’. Most banks offer fee-free accounts to pensioners, students, children and people living in regional and remote areas. They also rebate fees and give serious ‘relationship’ discounts if you buy their home loans, personal loans, credit cards, term deposits etc. Check to see what it takes to qualify.

Even if you don’t qualify for ‘relationship’ discounts, many banks do have low fee option accounts – just ask!

Step 2 - Keep above the minimum balance

Keep your account above the minimum monthly balance to avoid paying over-limit fees. Perhaps consider consolidating some of your accounts into one – as well as reducing the chances of being overdrawn, you may also reduce the regular ongoing fees.

Also consider opening an online savings account if you are saving up for a holiday or home loan deposit. Online savings accounts offer some of the most competitive interest rates around. Some have ATM access and others are attached to your main transaction account at little or no extra cost (compare them at infochoice.com.au or cannex.com.au).

Step 3 - Know what incurs charges

Make the most of what your bank is offering. Check if your account offers any unlimited or fee-free transactions for electronic, telephone and internet banking or branches and use the channels that are free.

Know how many free transactions you get each month and what type of transactions they apply to and bank within your limits.

A quick review of your fee statement will suggest a strategy to cut fees. Internet banking can be fee-free for paying bills and transferring money between accounts, so you don’t have to go to the branches.

Step 4 - Stick to your bank's ATM

Most banks will charge you a fee, ranging up to $2.50, for using another institution’s ATM. They may also charge you to check your account balance. You will be advised of this fee before you complete the transaction, giving you the option to cancel. - you can save a lot of money by only using your own bank’s ATM!

Big banks have the most outlets, but if you can’t find one of your ATMs then try using EFTPOS to get some cash when buying your groceries at the supermarket.

Step 5 – Understand the exception fees

As well as the usual transaction fees that are charged on your accounts, banks may also charge you penalty fees - or “exception fees” if your break the rules. Banks have slashed many exception fees recently, however according to the Reserve Bank financial institutions are still making around $1 billion each year from these charges.

Over the past twelve months many banks have reduced their transaction account penalty fees, such as overdrawn account fees and direct debit dishonours. However they have correspondingly increased their penalty fee revenue from credit cards and personal loans. So make sure you know exactly what exception fees will apply to your various accounts - and stick within the limits.

Earlier this year IMF Australia launched a Bank Fees Class Action on behalf of over 200,000 bank customers, for repayment of exception fees deducted from their accounts over the last 6 years by local and foreign banks. The claims will relate to honour fees and dishonour fees on bank accounts and over limit and late payment fees on credit card accounts. The banks involved are:

• ANZ
• Bank of Queensland
• Bank SA
• Bankwest
• Bendigo Bank
• Citibank
• Commonwealth Bank
• HSBC
• NAB
• St. George
• Suncorp
• Westpac

For more information on the class action log on to www.financialredress.com.au

In general, fee schedules can be tricky to understand as they vary depending on how much banking business you do, so spend some time reading the small print and make sure that you ask your financial institution if you don't understand.