Revealed: The bank fees you need to avoid

So, the rip-off $2 ATM fees have been ditched by the Big 4 banks – but there’s a whole host of other exorbitant bank fees that you should be aware of.

Australians are forced to stump up a whopping A$4.4 billion in fees on home loans, credit cards, savings and bank accounts every year, RBA data has shown.

Although the banks may not scrap some of these fees anytime soon, many of these exorbitant charges can be avoided by shopping around, advises RateCity money editor Sally Tindall.

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Last year, over $1.5 billion was paid out in bank credit card fees, $1.24 billion in charges on home loan and just over $1 billion in transactional bank account charges, according to RateCity analysis of RBA’s fee data.

Individually, the average mortgage holder forked out almost $500 on banking fees in the last year, including an estimated $240 in home loan fees and almost an equal sum – $231 – in credit card charges.

“There’s no need for Australians to be laboured with fees on their credit cards, home loans and transaction accounts when there are a range of fee-free alternatives on offer,” says Tindall. These include fee-free credit cards, bank accounts and also, its vital to know what the fees for each financial product are – so ask your bank for run down of them.

COMMON FEE TRAPS

Credit card annual fees

There are over 31 credit cards on the market that have absolutely no annual fees, so there’s really no reason to be coughing up this extra money year after year. Rewards cards in particular attract the biggest fees – the highest being an unsightly $1,200 a year.

Average fee: $130, maximum: $1,200.

Ongoing home loan fees

It may surprise you but paying ongoing fees on your home loan is far from inevitable. While the average annual fee is $339, there are almost 1980 products that don’t have any.

Home loans are full of hidden fees, so before you take one out, ask your lender for a complete rundown of the fees you’ll be expected to pay over the life of the loan. Knowing they exist up front will help avoid a nasty surprise later.

Average: $339 a year; maximum: $849 a year.

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Transaction account fees

Sometimes transaction accounts will sneak in a monthly account keeping fee which is small enough that it slips by relatively unnoticed. However, these fees are entirely optional – there are plenty of no-fee options available with the same functionality as their fee-based counterparts. The transaction account with the highest monthly fee in RateCity’s comparison chart comes in at $35 per month, so by switching to a no monthly fee account you could be saving up to $420 a year.

Average: $55 a year; maximum: $420 a year.

Overdrawn fees

Overdrawn fees are charged on your transaction account when you accidentally take more money than what’s in it. This is most likely to happen for a scheduled direct debit so it’s wise to set up a reminder at least two days beforehand to check you have enough cash to cover it.

Typically, the fee ranges can climb as high as $40 and although they are less common than they used to be, we haven’t quite seen the back of them entirely.

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Average: $11; maximum: $40 (every time you go over).

Balance transfer handling fees

If you’ve racked up some debt on your credit card, then a 0 per cent interest rate balance transfer card can be a way to buy yourself a bit of time.

What’s important to remember with these cards is that one way the bank makes money is through a handling fee that will be a percentage of the amount transferred, usually around 2 per cent but can climb as high as 3 per cent.

There are 148 cards on the market that don’t sting you with this additional fee, so be sure to check whether prospective lenders include this before signing the dotted line.

Average cost on a 10K balance transfer: $165; maximum: $300.

Overseas card fees

There are currently eight credit cards charging no currency conversion fee. Do your research before you leave and you’ll have spare cash to splash elsewhere overseas.

Average: $29; maximum: $36 (per trip, based on a $1,000 spend on your credit card and use of the ATM four times).