DAVID and Libby Koch revisit some of their best tips for getting your banking costs under control / File Source: Supplied

Today we revisit some of their best tips for getting your banking costs under control.

SHRED YOUR FEES

Bank fees quietly and insidiously plunder your savings, often without your knowledge.

Australians on average lose $1000 a year to bank fees and it grows about 8 per cent a year. Often we pay those fees because of our own laziness.

We don't know about you, but we'd rather keep that $1000 for ourselves than help the bank make another record profit. Change your banking habits, cut those bank fees and enjoy the rewards.

The sooner you get cracking on this issue the better.

> Assess your banking arrangements.

The first step is probably the hardest and that's understanding your banking and credit card habits. With a day-to-day account, how many transactions do you make, are they electronic, do you need a cheque book or are you happy with internet banking?

The key is to choose the accounts which suit your habits at the lowest cost. Often you can find appropriate products within your current bank, so the first step should be your branch's information section.

Explain your situation to the customer service person and see what they can offer. If it's not much, start shopping around other banks.

The same with a credit card. If you never seem to pay off the balance on the due date, choose a card with a low interest rate and no interest-free days. If you regularly pay the balance off on time, interest-free days are an advantage. Make sure you check out the deals offered by your financial institution. Many of them offer discounted fees for pensioners, students, a range of professions and even members of sports associations.

If you have a couple of products with your bank, such as a credit card, home loan or managed investment, you are an important customer.

> Ask where they can cut your fees to keep you happy.

Some banks also offer their shareholders lower fees on home loans.

> Only use your bank's ATMs to avoid costs.

Plan ahead and visit one of your bank's ATMs for free before you run out of cash.

New rules mean we have a much better idea of how much we are charged to use another bank's ATM.

From now on, when you use an ATM that's not your bank's, a message will come up on the screen telling you how much you will be charged by the ATM's owner. This should be about $2 at an independent ATM or a rival lender's.

On top of that $2, your bank may also charge you a so-called "foreign" fee for using a different ATM. This fee varies from bank to bank.

It's important to note this fee is per transaction. Just say you want to withdraw cash and check your balance at an ATM that doesn't belong to your bank, you could be charged up to $2.50 for each action and $5 in total.

If there are only "foreign" ATMs around, withdraw a larger amount and make it last longer. A $2 fee on a $100 withdrawal is a 2 per cent slug, but on a $500 withdrawal it's just 0.4 per cent.

An alternative to this is to withdraw small amounts fee-free via Eftpos when you're out shopping.

> Don't overdraw.

Some lenders charge up to $50 every time you don't have enough cash in your account to cover a cheque or direct debit payment.

Overdrawing your account may seem a better option than not paying your rent or electricity bill, but the penalties are high.

> Get organised and don't ever put yourself in that position.

If you are hit with a $50 overdrawn fee, complain to the bank and mutter about it being illegal under contract law to make a profit on these types of penalties. British consumers had a big win over the banks on this issue.

Our banks don't want it tested here, and our experience is that they'll cut the penalty if you complain.

> Consolidate accounts.

With some accounts charging regular fees of up to $10 a month, it makes sense to consolidate your accounts.

There's also the extra withdrawal fees, Eftpos fees and other transaction charges.

If you have several transaction accounts, find out who gives the best deal, transfer your money and close the rest. The same goes for credit cards.

> Research all fees before taking out a new loan.

Is there an application fee? What's the penalty if you make late repayments? Do they charge a monthly administration fee?

Keep track of the fees because some lenders have been sneakily increasing annual mortgage fees.

> Avoid your branch.

Suburban branches cost a lot to run, so banks charge for the privilege of using them.

Some banks make you pay up to $5 for withdrawing money over the counter and up to $2.50 for depositing money at a branch. Internet banking is the cheapest way to make transactions.

TAKE THE FIGHT UP TO THEM

The banks have called our bluff in lifting loan rates by more than the Reserve Bank's official increase.

So what are you going to do about it?

Are you going to be a wimp and just cop it on the chin, as your bank is hoping, or are you going to fight back, make a point and save some cash.

The banks assume you'll whinge for a few days, do nothing, move on with your life, pay the extra and add to their profit growth.

The banks whinge about doing it tough but then produce record profits results.

They must think we're stupid. Unfortunately, the reality is they're right. There's more chance of getting a divorce than changing banks.

Our view is that you have no right to whinge unless you're prepared to do something about it.

This is how you fight back:

1. Get the facts. When is the last time you sat down and looked at all the products and policies you have with your bank and how much you pay for the privilege?

The first step is to list all those products loans, deposit accounts, insurance policies, credit cards, superannuation and other investments.

Then look at the statements for the last year and add up all the bank fees and premiums deducted from those accounts.

If you want to really scare yourself, add up all the interest which has been paid. Then, to be fair, add the interest and investment returns earned.

Most people are amazed at how many accounts are on the list and can automatically see which obvious redundant accounts can be culled.

2. Check alternatives. Finding alternatives and doing your comparative financial shopping is so easy online.

Our top sites are infochoice.com.au and ratecity.com.au. Both sites have extensive comparative tables of every type of loan and deposit being offered.

They also provide research on the different products and make recommendations.

These two sites are an absolute must to visit and you'll be amazed at how many options are available.

You'll also be stunned by how much extra you're paying on your current loan.

For example, did you know there are standard variable home loans on offer for between 6.3 per cent and 6.6 per cent from established credit unions and non-bank financiers? Don't forget to read the fine print on some of these low rate loans because they can come with quite hefty establishment and exit fees.

3. Go to your bank, talk to a bank staff member (see them in person rather than over the phone or online) and demand a better deal.

You have the facts. You know how much you pay in fees and what products you have. You've been online and researched other options, now you have to confront your existing bank for some action.

Explain that you're prepared to shift institutions but are quite happy to stay if they sharpen their deal to match what you can get elsewhere.

Banks know it is better (and cheaper) to keep a good existing customer than go and find a new one.

Don't be shy. Be confident, be forceful but be professional.

4. Visit options. It's all very well to talk and research, but doing is totally different for most people.

Contact or visit three other financial institutions to discuss your requirements and the process needed to make a change.

Explain what a good customer you'd be, you're annoyed with your existing bank and how you're ready to change.

But still try for a better deal. Sure, you've been attracted by the advertised rate on offer but still ask whether they can do even better. They can only say no, so it's definitely worth a try.

5. Be prepared to change. Crunch time. You have the facts, researched the options, discussed it with the bank and talked to the alternatives.

The bank won't budge and you're fed up.

It's time for action and that can be scary. But it's mostly in your head. Be confident.

You've done the homework, you know the options available, so back yourself.

FOCUS ON YOUR DEBT

With interest rates likely to continue rising next year, debt management becomes your number one priority.

It's important to understand the different levels, and costs, of the debt and follow some simple steps.

* Pay off the most expensive debt first.

* Use savings to pay down your debt.

* Talk to your bank if you're in trouble and renegotiate the term of the loan to reduce payments.

 POP THE PROFIT BUBBLE

There is a fine line between strong banks and creating a gravy train where they can earn windfall profits at the expense of customers.

That's why we think shadow treasurer Joe Hockey makes a valid point in wanting an inquiry to ensure banks aren't gouging customers and taking advantage of their position.

The banks are in a privileged position and it's we taxpayers who have put them there. So it's now time for the banks to repay the favour.

At the height of the global financial crisis we, quite rightly, came to the aid of our financial institutions. The "we" reference means the Federal Government and the Reserve Bank because they work for us and we fund them.

So "we" guaranteed bank deposits and allowed them to use our valuable Triple-A credit rating to reduce their overseas funding costs.

It was the worst financial crisis since the Great Depression, major international banks were going broke and we had to help. We had to make sure our banks stayed strong.

A weak banking sector can destroy an economy. We could not allow that to happen.

As a result, our banks not only survived but prospered.

Yes, bank profits took a hit in the year of the GFC but that was mainly because the banks made huge provisions that many of their customers would fall on tough times and not be able to repay their loans.

That assumption was wrong and simply artificially reduced (and masked) the real profit the banks made. Because of the strength of the Australian economy, Aussie consumers and business customers stuck by the banks and made their loan repayments.

During that period the banks continued to whinge about the high cost of funds from overseas. It was a valid point. The cost of raising money on overseas money markets (because of higher interest rates) did go up as investors demanded better returns because of the increasing risk of the GFC.

But remember we were easing this pain by allowing the banks to trade off our Tripe-A credit rating so they were able to raise money at a lower cost than other overseas banks.

This was the big excuse the banks have used in the past to lift their interest rates higher than what has been passed on by the Reserve Bank. They've used the hysteria of the GFC and the economic troubles overseas to cry poor.

No more. It's time for the banks to stop crying poor and repay the generosity of the Australian public or face regulatory scrutiny like what is being proposed by Joe Hockey.

Bank profits are now pretty close to being back to pre-GFC levels. Not many other non-mining related industries have recovered so quickly.

So post-GFC, the banks are just as profitable as ever and they're facing less competition because they've been able to gobble up their competitors.

The reality is the Big Four banks are more powerful than ever and they're still complaining about higher funding costs and a desire to put up interest rates by more than the RBA.

This is despite the recent RBA board minutes making the pointed comment that bank funding costs have almost returned to normal. That's polite RBA-speak telling the banks their argument is not valid.

As we said at the start, Australia needs strong banks. But the banks are now starting to exploit their privileged position and their customers.

Re-regulation of the banks and their interest rate policies is probably not the answer. That is a dangerous route.

The answer is to lift competition and transparency in the banking industry.

The boss of the Future Fund, David Murray, has suggested that Australia Post be able to provide financial products either internally or as an agent for others. It's a great way to increase competition.

Another strategy could be to change the rules to make it easier for customers to change banks to chase the best deals elsewhere. Not just change transaction and savings accounts but also loans.