Australia’s banks are still raking in over $4 billion in fees from households, despite recording the first fall since 1997, financial comparison website RateCity says.
RateCity CEO Damian Smith says while the $14 million drop in fees – for both household and business banking – during 2010 reported by the Reserve Bank last week was welcome, households were still paying on average $506 a year, not including interest charges.
But he says with so many options available, "there is no reason for each Australian household to be paying over $500 per year in fees".
The fall in total fees was largely due to the abolishment of exception fees, such as charges for over-the-limit and late payment on credit cards, and dishonour, default and overdrawn transactions on everyday transaction accounts.
"Despite a drop in total household fees, banks still increased their revenue for home loan fees by $26 million last year," Mr Smith said.
"This is quite surprising because the number of home loans taken out in 2010 – including refinancing – was 21 per cent less than 2009."
Mr Smith said while application fees have generally remained unchanged over the past couple of years, there has been a big lift in the cost of ongoing fees which seriously add to the cost of a home loan.
"If you are paying a seven per cent interest rate with a $240 annual fee for instance, you’re basically adding an extra $6000 to your 25-year mortgage," he said.
"Most Australians can easily save at least $500 in fees if they simply compare their financial products to what’s on the market."
He said households can make savings by budgeting so they don’t go into the red and default on transactions, and they should regularly check their balance online or over the phone to keep track of their accounts.
He also recommends setting up automatic payments so a bill is never missed, and always use their bank’s own ATM network as "foreign" ATM fees quickly add up.