# Average current account fees €90 per year



## Brendan Burgess (7 Nov 2013)

This Indo headline is very misleading. 

Now the bank hits you for €260 in fees 

Here is what it says way down in the article: 



> Next  year the full force of the new fees regime will mean the average current  account holder will end up shelling out about €90 in fees, and another  €41 in charges for the likes of non-authorised overdrafts and bounced  cheques.


So the headline figure of €260 is twice €90 + €41. 

The research was financed by ptsb.  Do they not charge for unauthorised overdrafts or bounced cheques? 

Anyone who switched to a ptsb current account for free banking some years ago and ended up on a ptsb SVR mortgage as a result, has paid a cumulative of 2% extra on their mortgage, or around, €4,000 on a mortgage of €200,000.  At one stage, they were charging an SVR of 6% when AIB and BoI were charging 3%.

And what about people paying huge commissions to investment advisors and ongoing costs to fund managers?  These are the costs people should be focussing on.  Which is why I turn down invitations to discuss bank fees on radio or television programmes.  They are insignificant in the overall context. 

Current account banking is an expensive business for banks and they should charge for it. 

"Mind the pennies and the pounds will look after themseves" must be the most expensively misleading old saying.  Worry about the big costs such as your mortgage rate.  Don't be afraid to pay less than €2 a week to get all the benefits of online banking, access to ATMs and occasional cheques.


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## Brendan Burgess (7 Nov 2013)

Just checked my own charges from AIB for a reasonably active account. I do most of it online and use as few cheques as possible. 

For the last year, my total charges, excluding interest,  were 



 bank charges|€73.80
facility fee|€25
Total|€99
I paid stamp duty of €6.00 as well. Not sure what that was for? A debit card and some cheques? 

I have just been approved for an increased overdraft for a few months to pay my preliminary tax and they will charge me €25 for that increased facility. But that seems like a reasonable charge for the couple of phone calls and the issue of a letter. 

Of course, AIB will also charge me interest when I use the overdraft and will get the benefit of free cash when I have money sitting there.


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## Bronte (7 Nov 2013)

€90 in fees sounds reasonable, the €41 charge for overdrafts and bounced cheques are not necessary and therefore shouldn't be included in the yearly fee.  They are ancillary costs.


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## theresa1 (7 Nov 2013)

http://compare.consumerhelp.ie/CurrentAccountCompare.aspx?i=165,414,


Brendan check this comparison out.


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## Brendan Burgess (7 Nov 2013)

Thanks Theresa

It confirms that ptsb does charge for referred items and unauthorised overdrafts. More or less the same as AIB. 

I don't think it adds much more or takes from my argument that people should not worry too much about current account charges?


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## twofor1 (7 Nov 2013)

Particularly with contactless payments becoming more common, I think many will be paying a lot more than €90 annually in fees. Currently I think most are not charging for contactless payments but will start to charge next year sometime. 

We as a couple with a joint current account average 15 transactions weekly. With contactless payments becoming more common I would guess our average could easily go up to 25 weekly, if we were paying 25 transaction charges weekly with BOI the annual cost would be €260 plus €20 annual maintenance fee.


Anyone that has has savings might consider diverting some to their current account to avoid charges. 

Many of the main banks as stated in the article have deals if you keep a minimum balance in your current account.

BOI for example, if you keep a balance of €3K, you pay no transaction charges, you just pay the €5 quarterly maintenance fee.

If you had €4K in Rabo @ 2% you would earn €80 annually, take off the DIRT and you are left with €47.20.

If you put that €4K in your current account and considered it a nil balance, you would then have unlimited transactions and an overdraft of €1K for €67.20 annually. (The €47.20 you would lose in interest plus €20 annual maintenance fee)

The only downside is if you are not disciplined, forget it, but if you are there is good savings to be made.


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## Jim2007 (7 Nov 2013)

*Bank Charges in Switzerland*

As a comparison here is what I pay for a standard account in Switzerland at the Post bank:



 Monthly Management Fee| 5.00
Debit Card| Free
Monthly Statement per mail | Free
Payment Orders (SEPA) | Free
Standing Orders | Free
Cash Withdrawal at own ATMs | Free
Cash Withdrawal at other ATMS | 2.00
Cash Withdrawal abroad excluding 3rd Party fees | 5.00
Annual Total| CHF 70 - 100 
If you have an average daily balance of 7.5K, a mortgage or a life insurance with them then, you get free banking including cash withdrawals abroad (excluding 3rd party fees)


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## manninp2 (7 Nov 2013)

If you use a credit card for your purchases and clear it by the end of the month you'll only have one transaction charge of €0.20 per month

It is off-putting to use your debit card to pay for something like a cup of coffee for €1.80 and pay €0.20 in a transaction charge!


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## ronaldo (7 Nov 2013)

I have a Halifax account in Northern Ireland and a Danske account in the Republic.

Everyone here knows Danske's fees but Halifax charge absolutely no fees unless, of course, I go into my overdraft - and they actually pay me a fiver a month for lodging my salary. The joys of competition.

All things considered, Halifax are paying my Danske fees


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## Lightning (7 Nov 2013)

I have never paid current account fees in my life. No need to. 



manninp2 said:


> If you use a credit card for your purchases and clear it by the end of the month you'll only have one transaction charge of €0.20 per month



Or open a PTSB account and pay zippo. 



Brendan Burgess said:


> Current account banking is an expensive business for banks and they should charge for it.



Hi Brendan, 

I think one needs to look at this from several respects. 

*1. Interest on current accounts. *
Banks earn interest on lending out the cash in current accounts, which nets to a large portion of the banks deposits, and then paying zero percent to customers. Banks should pay customers interest on balances in their current accounts.  

*2. Automated transactions. *
Banking is becoming more and more automated. Branches are closing across the globe at a fast rate. More and more banking is going online. Banks are saving a fortune due to this. The vast majority of online transactions are STP with no human intervention. The cost to the bank is very low for these transactions. It is understandable for the customer to be charged little or nothing for these transactions. 

*3. Manual transactions. *
Manual old fashioned in-branch transactions are expensive for the bank from a staff cost perspective. It is understandable that the bank will charge for these transactions. 

*4. FX Margin Fees. *
Bank are increasingly recouping the cost of free banking via large FX margins on non EUR transactions. Information on these margins is often hidden, unclear or opaque. Banks need to be more transparent with their FX fees and source and timing and margin of FX rates.

In a nutshell, pay me a fair rate for money in my current account, charge me little or nothing for automatic transactions, be fair with FX fees and I will happily pay for manual transactions.


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## Brendan Burgess (7 Nov 2013)

CiaranT said:


> I
> *1. Interest on current accounts. *
> Banks earn interest on lending out the cash in current accounts, which nets to a large portion of the banks deposits, and then paying zero percent to customers. Banks should pay customers interest on balances in their current accounts.



As I said in my opening post "Of course, AIB will also charge me interest when I use the overdraft and  will get the benefit of free cash when I have money sitting there. 		" 

But I have a 7 day online account now with AIB and I earn interest on that.



> *2. Automated transactions. *
> The cost to the bank is very low for these transactions. It is understandable for the customer to be charged little or nothing for these transactions.


Are they really that cheap? Surely the infrastructure must be very expensive.




> *3. Manual transactions. *
> Manual old fashioned in-branch transactions are expensive for the bank from a staff cost perspective. It is understandable that the bank will charge for these transactions.



I think that they should charge for all transactions according to their costs i.e.  charge a lot more for cheques than for automated transactions. 



> *4. FX Margin Fees. *
> Bank are increasingly recouping the cost of free banking via large FX margins on non EUR transactions.



This is what annoys me most. Banks should charge according to the cost of the service. FX margins should not subsidise free banking.  ptsb SVR mortgage holders subsidised free banking at a huge cost to themselves.


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## Brendan Burgess (7 Nov 2013)

I got a cheque today and went down to my local AIB branch to lodge it.  It's so long since I lodged a cheque, that I couldn't find the quick lodge machine. 

I couldn't figure out the new machine they had either, and I couldn't find a staff member to explain it.  ( I kept pressing buttons on the screen but it went too quick for me. It was actually a video demo of the new machine but I had not twigged that) 

A guy at the machine beside it had a special "lodgement card" so I assumed that I would have to have one of those. 

Then a staff member appeared and told me I could use by own Visa Debit Card. 

It turned out to be a good machine after my initial annoyance. I can put a message on my bank statement telling me what the lodgement was for. 

That must have been an expensive machine to install, but I suppose it gets me to do all the work that used to be done by the staff. 

Brendan


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## Lightning (7 Nov 2013)

Brendan Burgess said:


> I think that they should charge for all transactions according to their costs i.e.  charge a lot more for cheques than for automated transactions.



Agreed. Banks charge per transaction type should be a reasonable margin above cost. 



Brendan Burgess said:


> Are they really that cheap? Surely the infrastructure must be very expensive.



The marginal transaction cost per electronic transaction is pretty close to zero to send the data packet. It is going to get even cheaper, in the future, especially with full SEPA implementation. 

Infrastructure costs should be recouped via periodic maintenance fees.


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## ronaldo (8 Nov 2013)

Brendan Burgess said:


> And what about people paying huge commissions to investment advisors and ongoing costs to fund managers?  These are the costs people should be focussing on.



I definitely agree with this one. If someone focuses all their attention on getting fee free banking, because the fees are so visible in their bank statements, whilst someone else focuses on reducing the charges within their pension a little whilst ignoring banking fees, the bank fees paid by the second person are going to be comparable to a wart on the backside of an elephant come retirement.

Of course, having focused on the other charges, there's no harm then starting to focus on reducing, or eliminating, bank fees.


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## Jim2007 (8 Nov 2013)

CiaranT said:


> *1. Interest on current accounts. *
> Banks earn interest on lending out the cash in current accounts, which nets to a large portion of the banks deposits, and then paying zero percent to customers. Banks should pay customers interest on balances in their current accounts.



Nice theory, but not the case!  Money on current accounts is extremely short term and consequently it is very difficult to lend out, so the best a bank can hope for is placing about 40% of the balances on the over night market.  Add in the costs of operation and is very rarely a winner.



CiaranT said:


> *2. Automated transactions. *
> Banking is becoming more and more automated. Branches are closing across the globe at a fast rate. More and more banking is going online. Banks are saving a fortune due to this.



Costs are actually rising - you replace cheap input clerks with software engineers, risk managers etc... add to that all the costs relating to security, the number of redundant data centers required and so on and you will quickly realise that costs are are not in decline.  As an example at one Swiss bank where I worked, I had two offices, one I worked at and the second was a fall back in case anything happened (main scenario was terrorists crashing an oil tanker into one of the buildings!) and I needed to relocate in a hurry.  In addition we had 3 independent networks connecting each building each differently routed in case one went down.  All of this was not by choice, it was an ECB and US Fed requirement.

And of course the IT out sourcing has gone pear shaped as well because they been unable to really move the stuff off shore.  So the dream of cheap Indians working in Bangalore has turned into a nightmare of expensive Indians working in Frankfurt, Zurich and London just to mention a few...



CiaranT said:


> *4. FX Margin Fees. *
> Bank are increasingly recouping the cost of free banking via large FX margins on non EUR transactions. Information on these margins is often hidden, unclear or opaque. Banks need to be more transparent with their FX fees and source and timing and margin of FX rates.



FX used to be a good business, but that is long gone too!  In fact most large corporate transactions are rarely routed through a bank these days.  And those that are on very tight margins.

Asset Management, wealth management and prop desks used to be the real cash cows for the banks... but these days the prop desks are almost outlawed and all clients want to do is buy ETFs!  We've gone from measuring performance in percentages to base points...    

Any bank that is offering you free banking today has got to make it up some way or they will not be in business in the long run.


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## murphaph (8 Nov 2013)

Hmmm, I'm with dkb.de which is an online only bank that is a wholly owned subsidiary of the Bayrische Landesbank, the state bank of Bavaria. My deposits are therefore guaranteed without limit. I pay absolutely no fees but of course have an almost non existant branch network. Cheques went out of fashion in Germany years ago though so I can't think of a reason a non business customer who isn't lodging cash would actually need to visit a branch. I get superb email support in record time or I can call them if I feel so inclined. I receive interest on my current account balance and can withdraw cash worldwide at any ATM for free.


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## Brendan Burgess (8 Nov 2013)

Jim

That is a really interesting analysis.

The balance on my current account fluctuates between maybe €20k and -20k. When it's -€20k they are getting around 10% interest on it. Is that profitable?  I know that they can't lend _my  _money long-term, but surely they can lend it to others who borrow short-term? 

I presume that Ciarán was referring to Forex for individuals?  I know it's small scale, but the figures are big.

Can banks not make money at all on their personal banking?  You are making feel sorry for them.


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## so-crates (8 Nov 2013)

Jim2007 said:


> And of course the IT out sourcing has gone pear shaped as well because they been unable to really move the stuff off shore.  So the dream of cheap Indians working in Bangalore has turned into a nightmare of expensive Indians working in Frankfurt, Zurich and London just to mention a few...



Possibly the quote of the year! The idea that out-sourcing is cheap is really based on the premise of paying people less purely on the basis that they are in another country where current wage rates are a fraction of yours. It is short-term thinking at its worst.


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## Jim2007 (8 Nov 2013)

Brendan Burgess said:


> The balance on my current account fluctuates between maybe €20k and -20k. When it's -€20k they are getting around 10% interest on it. Is that profitable?  I know that they can't lend _my  _money long-term, but surely they can lend it to others who borrow short-term?



Your €20k balance is a good example, on a good morning there is 20k on your account that they could lend out, however by lunch time it could be say €10k over drawn, so now they are actually down 50k and of course they will have to borrow from the central bank or over night market to maintain the required liquidity ratios.  It is hard to make any kind of serious money in a game where you can't plan.  That is why many European banks do not give overdrafts.



Brendan Burgess said:


> Can banks not make money at all on their personal banking?  You are making feel sorry for them.



By personal banking, I assume you mean retail banking, right?  For banks like BD, SSG, HSBC, CS and UBS, it was well known that retail banking was a loss leader, however it acted as a feeder to get clients on board for wealth management type services.  However most clients only want to buy ETFs these days and it is hard to charge much for selling him an ETF!

Like I said we have gone from measuring performance in percent to base points!


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## murphaph (9 Nov 2013)

Perhaps banks will just have to be satisfied with not making serious money. Banking is after all just an intermediary type business like estate agency, something the internet has also eaten into. Even lending is changing these days with peer to peer lending becoming a reality. Banks will have to keep up or die.


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## manninp2 (10 Nov 2013)

I've wondered if the days of retail banks are numbered. 

Maybe all they'll become is merely personal cash management platforms with things like savings and loans offered through their platform by specialist 3rd parties or crowdsourcing.

I think something like Realex Fire could be the first shoots of the new method of this.


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## karlitob (28 Jan 2014)

I feel I'm no more knowledgeable on whether to switch from BoI to PTSB. 
I have all accounts with BoI. But I hate paying for something thats free in PTSB. 
Help!!!


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## DMcL1971 (28 Jan 2014)

karlitob said:


> I feel I'm no more knowledgeable on whether to switch from BoI to PTSB.
> I have all accounts with BoI. But I hate paying for something thats free in PTSB.
> Help!!!



 Regardless of what happens to retail banking in the future. I would agree with you, why pay BOI for services that PTSB provide to you for free. Providing you lodge 1500 to the PTSB account each month there will be no charges.


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## Lightning (29 Jan 2014)

karlitob said:


> I feel I'm no more knowledgeable on whether to switch from BoI to PTSB.



It is not a difficult decision. You are financially better off with PTSB.

Imagine it was electricity supplies and one provider charged nothing and one charged 100 EUR or so, which one would you choose? The decision is that simple.


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## Lightning (29 Jan 2014)

markd78 said:


> As far as I am aware once  you have minimum of 2,5k keep on your current acc with AIB there the acc and transactions are for free.



Yeah, 2,500 EUR minimum, each and every day which probably means an average balance of circa 3,000 EUR which has an opportunity cost attached to it.


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## theresa1 (30 Jan 2014)

I actually overheard a person in work on the phone the other day saying that balance was now €2,500 and to make sure they would not get hit with any more charges. I felt like running around to them and telling them to switch to PTSB.


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