Are you one of the millions of Aussie paying too many bank fees?
A report by the Reserve Bank of Australia found that Aussie households are spending on average a massive $515 a year on bank fees!
Convenience is turning out to be very costly and that’s exactly what many banks are hoping for. With all of the banking options available today, there should be no reason why you should ever have to pay a bank fee or at least greatly reduce them. With a little planning you could make a huge difference to your bank balance and boost your way towards financial independence (FI) that much quicker.
Finder.com.au found that more than 50% of readers surveyed withdrawing money from a foreign ATM (i.e. not one belonging to their own bank). That is coming at a cost of nearly $800 million dollars per annum! If there was a lazy tax award, I’d say this would take home first prize.
This is one of the easiest fees to avoid. Know where the closest bank in your network is, or if you are somewhere new utilise banking apps or ATM finders to point you in the right direction. Walking around the corner could save you on average $2 a pop! There are no excuses in large towns and cities. For regional areas, choose a bank you know has an ATM network in your area, or choose a bank with no ATM fees such as ING Direct.
Approximately $600 million dollars a year goes to paying late fees in Australia; again, more money that could be in your pocket (or invested). The best way to avoid these fees it to pay on time. That sounds too simple I know, but being on top of your finances is super important if you are going to reach FI. If you are worried you’ll forget to pay your credit card, loan or mortgage payment on time set up an automatic direct debit to avoid any fees here.
Account Keeping Fees
The first time I saw an account keeping fee show up on my bank statement I called the bank to find out what on earth this was for? At that point in time I was a student and $4 a month just seemed preposterous. The way I saw it, I do all of my banking online, not needing to use a branch, and by having my money sitting in their transaction account – earning a paltry interest rate – I was doing them favour as it allowed them to lend out more money to others and make their profits elsewhere. Luckily being a student they were able to waive the fees for me, however that also sparked in me a need to find accounts that have no account keeping fees.
That was many years ago and these days many banks will waive the fee if you get your salary directly paid into your account each month, or even better ING Direct have no account keeping fees at all.
I don’t have an overdraft option on my account as it is basically the same as having a line of credit, you pay for the convenience. Instead I suggest you plan when your direct debits will come out and make sure you have the money available in your account before that date. If you get paid on a Tuesday, don’t have the money scheduled until Wednesday, or even Thursday to ensure you are covered if there is a delay for some reason.
The average Home Loan Application Fee is currently $449, with some institutions charging nearly $1,400. At a time when you are getting your first Home Loan or switching lenders any extra costs can take away from the great rate you’ve just negotiated! The best thing to do here is to just ask. Most lenders will happily waive or heavily reduce the fee in order to get your long term business.
Why I recommend ING Direct
They aren’t Australia’s most recommended bank for no reason. ING Direct offer fair and transparent banking with some of the best features in the market – my favourite being that I can use any ATM in Australia for FREE! I also have my ‘Stash’ account (savings/emergency fund) linked to my everyday account so I attract a bonus interest rate, currently sitting at 3%, much better than the big banks. If you sign up through my referral link and use code CNJ708 you not only get to benefit from no ATM fees (if you deposit $1000 per month), and no everyday account fees you also get a $75 cash bonus! What’s not to love? If you are reading this after the promotional end date, please sign up anyway if it suits your needs, I absolutely recommend ING, despite any promotions they may be running at the time.
The Bottom Line
If the average Aussie is spending over $500 a year on fees I’m happy to say I am well below average in this area. Take a long hard look at your bank and make sure you are getting the best deal. You may need to make a few tweaks; open a new account, manage your direct debits or stop using just any ATM (unless you join ING and then you really can use any ATM for free!) but at the end of the day, the savings you make will ultimately be worth much, much more.
Are you paying unnecessary bank fees? What small changes can you make to avoid handing over your money to someone else?