RateCity Shows How to Avoid Paying Exception Fees
Australians slapped $1 billion in bank fees.
Sydney, Australia, July 25, 2009 --(PR.com)-- Figures have been released by the Reserve Bank of Australia (RBA) that banks have earned $1.15 billion in exception fees during the 2008-09 financial year, fees which are mostly avoidable.
Exception fees are disclosed in the account terms and conditions and include over-the-limit fees and late payment fees on credit cards; and dishonour, default and overdrawn fees for transaction accounts.
The $1.15 billion equates to 10 percent of all bank service fee revenue. Of this figure, the majority – $954 million – was paid by households and $201 million was paid by businesses.
“The amount of money people have paid in exception fees is ridiculous,” said Michelle Hutchison, Consumer Advocate of RateCity, Australia’s leading financial comparison web site.
“And as almost $1 billion was paid by households compared to $200 million by businesses, it shows that companies are being much more careful in watching their expenses than most people.”
Half of household-paid bank fees went towards overdraft, default and dishonour fees on transaction accounts, which was $475 million or 0.11 percent of all transaction deposits.
“If you have an automatic payment plan for bills or an etag and you are five cents short of the payment amount, banks can charge you up to $40 in an overdraft fee. If you have three separate payments due, that could mean $120 in fees in one day,” said Mrs Hutchison.
According to the RBA, exception fees have fallen as a proportion of household deposits over the past five years as more people have acquired credit card debt rather than using overdraft. Credit card debt has increased by 163.5 percent over the past five years, from $27 billion in April 2004 to $44 billion in April 2009.
“Many banks offer packages with a transaction account and a credit card or have a credit-debit card included, which is evident in these figures that more people are using credit debt rather than going into overdraft,” said Mrs Hutchison.
“However, regardless of whether it is a credit card account or a transaction account, most of these exception fees can be avoided.”
Tips to avoid paying exception fees include:
· Keep track of your bank balance and transactions. There are more options than ever to check your balance: by phone, online, at ATMs even by phone 24 hours a day.
· Always keep a ‘savings buffer’ or surplus money in your account.
· Many bank accounts offer you the opportunity to link your account to an overdraft line of credit, which is usually less expensive provided you pay back the extra amount you spend.
· Find out if you can choose not to have overdraft protection. Eligible low income earners should ask their bank about accounts that do not charge exception fees as all.
· Ask if your bank offers automatic notifications if your balance drops to a certain level.
· Shop around and compare savings accounts from hundreds of banks and institutions at RateCity.com.au. See what services are offered and how much they charge for fees.
About RateCity
Launched in December 2006, RateCity.com.au is the website where Australians can easily find, compare and apply for over 13,000 financial products from over 250 institutions. It spells the end of travelling from website to website and the beginning of discovering the very best value product for you. Our job is to take the hassle out of finding the right financial product - saving our users both money and time.
RateCity.com.au is a private company with an AFS Licence (AFSL: 316 710), powered by CANSTAR CANNEX, in partnership with ninemsn.
Disclaimer
To the extent that any RateCity Pty Limited data, ratings or commentary constitutes general advice, this advice has been prepared by RateCity Pty Limited ABN 21 122 743 542 AFSL 316710 and does not take into account your individual investment objectives, financial circumstances or needs. Information provided on and available from this site does not constitute financial, taxation or other professional advice and should not be relied upon as such. RateCity Pty Limited recommends that, before you make any financial decision, you seek professional advice from a suitably qualified adviser.
Product Disclosure Statement relating to the product should also be obtained and considered before any decision about whether to acquire the product.
Please refer to RateCity's FSG on its website for more information.
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Exception fees are disclosed in the account terms and conditions and include over-the-limit fees and late payment fees on credit cards; and dishonour, default and overdrawn fees for transaction accounts.
The $1.15 billion equates to 10 percent of all bank service fee revenue. Of this figure, the majority – $954 million – was paid by households and $201 million was paid by businesses.
“The amount of money people have paid in exception fees is ridiculous,” said Michelle Hutchison, Consumer Advocate of RateCity, Australia’s leading financial comparison web site.
“And as almost $1 billion was paid by households compared to $200 million by businesses, it shows that companies are being much more careful in watching their expenses than most people.”
Half of household-paid bank fees went towards overdraft, default and dishonour fees on transaction accounts, which was $475 million or 0.11 percent of all transaction deposits.
“If you have an automatic payment plan for bills or an etag and you are five cents short of the payment amount, banks can charge you up to $40 in an overdraft fee. If you have three separate payments due, that could mean $120 in fees in one day,” said Mrs Hutchison.
According to the RBA, exception fees have fallen as a proportion of household deposits over the past five years as more people have acquired credit card debt rather than using overdraft. Credit card debt has increased by 163.5 percent over the past five years, from $27 billion in April 2004 to $44 billion in April 2009.
“Many banks offer packages with a transaction account and a credit card or have a credit-debit card included, which is evident in these figures that more people are using credit debt rather than going into overdraft,” said Mrs Hutchison.
“However, regardless of whether it is a credit card account or a transaction account, most of these exception fees can be avoided.”
Tips to avoid paying exception fees include:
· Keep track of your bank balance and transactions. There are more options than ever to check your balance: by phone, online, at ATMs even by phone 24 hours a day.
· Always keep a ‘savings buffer’ or surplus money in your account.
· Many bank accounts offer you the opportunity to link your account to an overdraft line of credit, which is usually less expensive provided you pay back the extra amount you spend.
· Find out if you can choose not to have overdraft protection. Eligible low income earners should ask their bank about accounts that do not charge exception fees as all.
· Ask if your bank offers automatic notifications if your balance drops to a certain level.
· Shop around and compare savings accounts from hundreds of banks and institutions at RateCity.com.au. See what services are offered and how much they charge for fees.
About RateCity
Launched in December 2006, RateCity.com.au is the website where Australians can easily find, compare and apply for over 13,000 financial products from over 250 institutions. It spells the end of travelling from website to website and the beginning of discovering the very best value product for you. Our job is to take the hassle out of finding the right financial product - saving our users both money and time.
RateCity.com.au is a private company with an AFS Licence (AFSL: 316 710), powered by CANSTAR CANNEX, in partnership with ninemsn.
Disclaimer
To the extent that any RateCity Pty Limited data, ratings or commentary constitutes general advice, this advice has been prepared by RateCity Pty Limited ABN 21 122 743 542 AFSL 316710 and does not take into account your individual investment objectives, financial circumstances or needs. Information provided on and available from this site does not constitute financial, taxation or other professional advice and should not be relied upon as such. RateCity Pty Limited recommends that, before you make any financial decision, you seek professional advice from a suitably qualified adviser.
Product Disclosure Statement relating to the product should also be obtained and considered before any decision about whether to acquire the product.
Please refer to RateCity's FSG on its website for more information.
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Contact
RateCity.com.au
Michelle Hutchison
+61 2 8917 8005
www.ratecity.com.au
Michelle Hutchison
+61 2 8917 8005
www.ratecity.com.au
Contact
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