Summary: Australia's 8 million households spend an average of $515 a year on bank fees - including fees for simply keeping accounts open or being accidentally overdrawn, as well as excessive fees for late payments, statements, card reissuance, "exceptions" and all manner of other things.
Yet, it isn't necessary to pay any bank fees whatsoever:
- Firstly, you need to stop using credit cards (except for international travel and obtaining free travel insurance)
- Secondly, you need to close all unnecessary bank accounts and rely principally on doing your banking with UBank (owned by NAB) and NAB which are virtually fee-free.
Gain: ~$150/yr for transaction and savings accounts. Much more for credit cards, loans, mortgages.
Time: ~3 hours to open UBank and NAB Classic accounts and set them up optimally. And a few hours to close out other unnecessary bank accounts and products.
Related Posts:
> Start using the best on-call savings account and linked transaction account (UBank)
Details:
1. NAB really did break up with the other banks over unfair fees and practices but most consumers never got the memo
In 2009, NAB started eliminating unjustified bank fees, beginning with monthly account keeping fees. In 2011, NAB launched a high-profile "breaking up with the other banks" campaign centered around eliminating unfair fees on all of its products (credit cards, loans, etc). Yet, in 2016, the majority of Australians still have bank transaction accounts that charge monthly account keeping fees and overdrawn fees. And they use other bank products (savings accounts, credit cards, loans, mortgages, etc) that have many unfair, hidden and excessive fees, penalties or conditions.
Even in 2016, NAB is the only bank that is guaranteed to provide common banking services that have no unfair or unjustified fees. Comparing the basic transaction accounts that every Australian has to have is the easiest example:
Australians only need two transaction accounts and neither requires paying any fees:
- A UBank Ultra account - linked to a USaver account (best on-call savings interest rate)
See: Start using the best on-call savings account and linked transaction account (UBank)
- A NAB Classic transaction account. UBank is online-only so for services you need via a branch the NAB Classic account is necessary. Also to take advantage of the USaver bonus interest you need to automate monthly deposits of $200 from a different bank account - which you can use the NAB Classic to do.
2. In choosing any bank product, select only the most fee-free (NAB products will always be better on fees than ANZ, Commonwealth and Westpac; Some online-only banks like ING Direct and Rabodirect are also worthwhile as long as they don't involve complicated qualifying conditions for bonus rates)
Unfair and excessive fees, penalties and conditions apply even more to other bank products like credit cards, loans and savings accounts.
On this blog, I will keep updated specific posts recommending the best bank for each type of necessary or useful product (savings accounts, debit and credit cards, international travel).
However, when doing your own research you should always:
- Use a comprehensive comparison site like Mozo to efficiently compare the fees and conditions yourself (listed in a consistent table on the product details page).
- If looking for a shortcut, start with the most recent top-rated bank products. E.g. Mozo Experts Choice.
- Remember that some banks (e.g. ME Bank, Bank Australia) may win awards for "best rate" products that have qualifying conditions that are hard to consistently meet. And they often require use of other bank products that charge unfair and excessive fees.
ME Bank won Mozo's 2016 award for Australia's best bank due mostly to it's market-leading savings account interest rate. However, this account pays a terrible 1.55% rate if you miss a weekly tap & go purchase or if you had an ME Online Savings Account prior to 10th August 2015 and don't contact ME Bank to request the same bonus as newer customers are getting!
ME Bank also requires you to use its Everyday Transaction Account which has unfair fees for being overdrawn or having insufficient funds to make a payment.
Further Info:
NAB
> Classic Bank Account
Mozo
> NAB Classic Banking Account
> Fee-free bank accounts
> Aussies stung by $12.5 billion in bank fees last year
> Experts Choice - Australia's Best Banks
Finder
> NAB Classic Banking
Choice
> Top fee-free bank accounts
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