Get Yourself FinLit

Guide to Bank Fees

Bank accounts, we all use them. Stashing cash under your mattress just doesn’t cut it anymore. In fact, there’s a high chance you used your debit or credit card for a small purchase today. But do you know the different fees you can be charged and how to avoid them? Don’t worry; we’ve done all the research to give you a rundown of what fees to look out for when banking and how you can avoid them.

Transaction Accounts

Monthly Fees: Some banks charge a monthly fee for the use of their service, often around $5. However, many institutions will waive this fee if you are a student or under a certain age – for some banks this is 21, for others its 25 years old.

Overdrawn Fee: This is also known as an Honour Fee. This is a fee charged when you buy something or pay someone more than the balance of your account. In short, you’ve gone into the negative. Some banks charge as much as $10, others don’t have a fee at all.

Periodical Payment Fee: Some banks charge a fee when you set up periodical payments to accounts with another bank. This is usually around the $5 mark. Some banks do not charge this fee at all, and others do not charge this fee if the account is in the same name. Usually, periodical payments between accounts within the same bank are free.

Telephone Banking: While some banks offer this free of charge, others charge $1 or $2 for this service. If you can do it online or on your phone, its usually the cheapest and fastest option.

Savings Accounts

Monthly Fees: Monthly fees for savings accounts aren’t common, but do exist. Take this into consideration when choosing a saving account that suits you.

Interest Rate: The interest rate is probably the most important aspect of a savings account, the higher the rate the more return you’ll get! Be careful though, some banks offer great rates as an introductory offer and then revert back to a substandard rate after a few months. Always read the fine print.

Minimum Deposit: Often savings account will have a minimum deposit per month, that is a minimum amount of money you need to put into the account each month. If this minimum is not reached you may have be charged a fee or receive a reduced rate for that month.

Maximum Balance: Most savings accounts have a maximum balance limit. These range from $100,000 to $5,000,000. Obviously reaching this limit is a good problem to have, cause it means you’re pretty baller (congrats). Once you reach the maximum, any amount over the limit simply does not receive the interest rate, so no big deal really.

ATMs and Card Replacement

Domestic Withdrawals: Generally speaking, withdrawals through your own bank’s ATMs do not attract fees, and these days many banks in Australia also offer fee-free withdrawals at other banks' ATMs.

However, sometimes using another bank’s ATM that is not in your bank’s network can incur a fee. Getting cash-out at a supermarket or convenience store can often prevent this – some places will do this for free and others will only allow cash out with a purchase. It might be worth spending $1 on a pack of gum instead of paying for the fees - plus you'll get a pack of gum out of it.

Overseas Withdrawals: The secret’s out: using your card overseas is expensive! Everyone knows this and banks generally offer special travel cards to ease the burden on travellers. However, if you need to use your card at an ATM overseas, expect to pay dearly for it. This will include a fee from your bank for using an overseas ATM, a currency conversion fee and often the local ATM will charge its own fee on top (yikes!).

Card Replacement: Some banks charge a fee to replace your debit or credit card if you lose it, often up to $15. Others will replace your card free of charge. Some advice: if your card is stolen, the bank may waive the replacement fee if you can produce a police report.

Overseas and International

Overseas Telegraphic Transfers: You may need to send money to an account overseas; be aware this is extremely expensive. It’s slightly cheaper to do this online but regardless you are likely to pay fees around $20 or more for the pleasure of overseas transactions. On top of this, you may have to pay an additional currency conversion fee.

Travellers Cheques If you wish to purchase travellers cheques, there is often a percentage fee averaging around 1% of the transaction value.

Foreign Currency Conversion Fee: These fees are applied to transactions that occur overseas, even if the purchase is in Australian Dollars. This fee is usually around 3%, depending on the bank.

Well, there you have it: the lowdown on the most common types of bank fees that you’ll encounter in your day-to-day life. It goes without saying; these fees change from bank to bank. Always check the fine print and Product Disclosure Statement (PDS). If you can’t find the answer to a question you have, have a chat with a bank representative to get a definitive answer!

This information is intended to be general in nature and should not be relied upon for personal financial use.

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