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January 30th, 2018
When it comes to saving money it pays to sweat the small stuff. A raft of everyday banking fees could be gouging a hole in your finances.
It pays to get serious about bank fees. We explain what to watch out for to put valuable cash back in your pocket each year.
Fees can start small but they add up over time. If you’re not convinced, Reserve Bank data shows the average Australia household is being whacked with close to $500 in bank fees each year[1]. Add it up over ten years and that’s a massive $5,000 – money you could be spending on yourself or your family.
Here are the key areas where you can save.
If you’re paying a monthly account-keeping fee on your everyday account, you’re wasting money. Plenty of banks have ditched this type of fee altogether but if you’re paying just $5 a month that adds up to $60 annually, or a whopping $600 over ten years – just to manage your money.
If you’re not sure about the fees you’re paying, scour your bank statement for any monthly account service fees or sneaky charges for common transactions like own bank ATM withdrawals. If you’re paying any of these, comparison site Mozo recommends switching accounts immediately[2].
According to Mozo, credit card fees make up the bulk of fee income banks source from households, and there’s no doubt the annual card fee can be an especially lucrative earner.
Research group Canstar says the average annual fee on non-reward credit cards is $42 but the key culprit for fee gouging is reward cards. The average yearly fee for this type of card is $169 but it can be as high as $700[3].
The thing is, there are dozens of credit cards with no annual fee, making it possible for cardholders to rid themselves of this cost altogether.
Figures from comparison site Finder show home loan application fees can range from $200 to $700[4] though Canstar found the average application fee across 2,400 different loans is $502.67[5]. At that rate, loan application fees can be a major cost for first homebuyers and a big disincentive for current home owners to refinance their loan to secure a better deal.
Here’s the thing. Not all banks charge a home loan application fee. That’s a valuable saving – and something worth looking for. However, home loan fees don’t end there. You could also be slugged with ongoing charges either through regular account-keeping fees on the loan or fees that apply each time you use redraw.
Canstar crunched the numbers and found ongoing home loan fees can range from zero through to $750 each year[6]! That makes it a no-brainer to look for a home loan with zero account-keeping charges and free redraw – they do exist.
The bottom line is that with some shopping around, and by making the switch to better-value banking, you could be rewarded with savings worth hundreds of dollars each year.
This article is brought to you by ME Bank. For more information, please visit www.mebank.com.au. Members Equity Bank Limited ABN 56 070 887 679.
[1] https://mozo.com.au/ Media Release: Australian households paying close to $500 in bank fees each year. [2] https://mozo.com.au/ Media Release: Australian households paying close to $500 in bank fees each year. [3]https://www.canstar.com.au/ [4] https://www.finder.com.au/home-loans/home-loan-fees [5] https://www.canstar.com.au/ [6] https://www.canstar.com.au/
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