Struggling households, especially those on low incomes are paying an estimated $163 million in bank fees that they could avoid.
Many of Australia's banks including the big four of ANZ Bank (ASX:ANZ), Commonwealth Bank (ASX:CBA), National Australia Bank (ASX:NAB) and Westpac Banking Corporation (ASX:WBC) have monthly fees on their transaction accounts, which can be negated by depositing sums such as $5,000 each month. For higher income earners, this isn't a problem, and they don't get charged the monthly account keeping fee, but low income earners will likely have to pay the fee.
Low income earners are also more likely to see direct debits overdraw their accounts or default, resulting in a fee either way.
In an effort to help struggling households, The Australian Bankers' Association (ABA) has launched a new website www.affordablebanking.info to help bank customers shop around for the best deals. That will include basic banks accounts that charge no account keeping fees, fee-free statements, no minimum deposit amounts and no overdrawn fees.
The website also includes a list of accounts that come with access to a debit card at no extra cost and free and unlimited transactions, no matter whether they are conducted by ATM, branch, phone, internet or mobile.
Holders of government concession cards, including pension concession cards, health care cards or Commonwealth seniors health care cards will also be able to access basic accounts specifically for them.
Like many financial products, it pays to shop around to find the best deal, which is where comparison sites such as RateCity can help. Spokeswoman Michelle Hutchison said there was plenty of choice for customers looking for fee-free accounts. "Whether you're struggling financially or not there's no need to pay fees," she said. "If you are on a low income, paying $5 a month will impact you."
Foolish takeaway
Wile $163 million in bank fees is a small drop in the ocean for the larger banks, consumers should strive to pay little or no bank fees. It may only be $5 a month, but over time it all adds up.
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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned.
