With Tina Leonard
Banking charges and switching banks
We pay around €120 a year on banking charges; clocking up the charges each time we take money from the ATM or make a lodgement.
With transaction charges from Bank of Ireland, Allied Irish Bank and Danske Bank only introduced in the past year, many people are still coming to terms with these new charges and wondering if the days of free banking are well and truly over.
Well, one bank - Permanent TSB - has just shaken up the market by introducing free banking.
So, now is the time to assess just how much you pay in banking charges and to see if you should switch banks to save.
Tina Leonard is here to explain.
This time last year we discussed current account bank charges in light of the re-introduction of current account charges by Bank of Ireland, Allied Irish Bank and National Irish Bank (now Danske Bank).
One year on, while the charges for current account transactions with those banks remain, the general landscape does looks different. Permanent TSB has introduced free banking and Ulster Bank is set to introduce fees from 1st July.
So it’s time, once again, to review and consider how much you pay in banking charges and whether you should switch banks to save.
If you are a student or over 60 you should be availing of free banking on offer with accounts in all banks. If not the following are your options.
Two banks now offer free banking. They are Permanent TSB, who introduced now charges from the start of April and Ulster Bank.
However, Ulster Bank had planned to introduce charges last summer but postponed that move following the IT fault that paralysed their payments system last year. But they are now introducing charges from 1st July this year.
Ulster Bank’s new charge will be a fee of €4 monthly. There are two ways of avoiding this: 1) lodge €3,000 to your account in a calendar month or 2) have a cleared balance of at least €3,000 in your account.
So, this leaves Permanent TSB who launched their no fees banking on 1st April.
With Permanent TSB the only condition is that you lodge at least €1,500 to your account each month. You don’t have to maintain that balance and it does not have to be lodged in one lump. Once you do this, there are no fees for transactions etc, or monthly or quarterly fees. In addition 1% interest is payable on balances to €1,500.
Note that if you are an existing PTSB customer you will not automatically be switched to free banking. You must actively sign up so do that as soon as you can.
Banks that charge (with more stringent criteria)
Allied Irish Bank
No charges if you maintain a balance of €2,500. If not debit card transactions 20c; ATM cash withdrawal 20c; paper / staff assisted transactions in branch inc. cheques, counter withdrawals and lodgements 30c; quarterly fee €4.50 or €18 per annum.
Bank of Ireland
No charges if you maintain a balance of €3,000 in your current account or lodge at least €3,000 and make nine payments using Banking 365 in one quarter to avoid fees. Otherwise it’s 28c per transaction or €11.40 per quarter for 90 transactions.
There are three current account types; the basic ‘24/7 package’, ‘Easy Plus’ and ‘Prestige’.
‘24/7 package’ costs €5 a quarter plus 25c for any debit card payments or ATM withdrawals. Other current accounts are Easy Plus for €18.75 a quarter and Prestige at €31.25 per quarter, and these latter two have no common transaction charges.
If you lodge at least €1,500 to your account each month and a minimum balance of €500 is maintained monthly you get five free withdrawals per month. Otherwise, it’s 30c per ATM withdrawal or in-branch transactions.
Are there any other fees to consider?
Yes there are. ‘Free banking’ essentially means free day-to-day banking when it comes to transactions, i.e. ATM withdrawals and card payments, lodgements etc. So while Permanent TSB now offers free banking there are still other charges you might incur exactly as you would with the other banks.
For example, if a cheque is returned unpaid or a standing order is unpaid that costs €10 with PTSB. The equivalent costs are €3.30 and €12.70 with BoI and €4.44 and €10 with AIB.
Similarly there are still costs for a ‘stop payment’ instruction (€5) and getting a duplicate statement will cost you between €2.50 to €3.80 depending on the bank. Setting up or renewing an overdraft will cost you €30 with BoI, €25.39 with AIB and €20 with PTSB. Bank of Ireland charges €8 to replace a lost or stolen card, that is free with AIB or PTSB. And there are other charges too.
So, know that these additional charges associated with your current account still exist, whether you fulfill the criteria to avail of ‘free banking’ or not.
What you should do to save
Look at a few statements from your current account and check how much you’re paying in fees. The average amounts to €100 to €120 per year.See if you can reduce this. Can you make less transactions, for example less visits to the ATM to cut down on charges. Carry out more online and phone transactions to cut on charges; these are free with all main current accounts mentioned above apart from AIB where the charge is 20c per internet or phone transaction.What about missed standing orders or direct debits. This is where the charges really add up as the fee for a bounced cheque or unpaid standing order can be as much as €12.70, overlimit fees could be €3.50, €5.50, €10 or more per item and a stop payment instruction could cost around €5. You can see how it all adds up so make sure you have enough cash to pay the standing order, don’t go over limit and so on.Switch banks to reduce transactional charges.
The bank you are switching to arranges with your existing bank to transfer everything over, cash, standing orders and direct debits, so they do the work. But you will have to provide them with your banking information and help in deciding on a switching date.
Due to their introduction of free banking Permanent TSB has a dedicated switching team that will remain in place. In the month since they introduced free banking they report a 55% increase in new accounts opened compared to the previous month. They say customers are mainly in the 20 to 35 age bracket and with an even spread of BoI and AIB customers.
You should also know that there is a Central Bank Code of Conduct on switching current accounts, which all banks must comply with as it is a statutory code. It was designed to make switching easier and quicker.
What you do:
Choose the provider
Once you choose what bank you’re switching to you should be provided with a switching pack that contains a description of all the current accounts and what you need to do to switch to them.
You should also receive a copy of the terms & conditions; full details of any fees and charges; details of any interest that applies; a point of contact for any assistance.
If you have an existing overdraft don’t forget to ask about transferring it. If the new bank will not allow this you’ll have to talk to your existing bank about clearing it first.
Fill out the application form
You fill out an application form and supply documents to prove your identity and address (even if you already have an account with the same bank).
For your identity you’ll need a valid passport; current Irish drivers licence; ID form with a photo signed by a Garda; documents issued by Government departments showing your name and verified by a person in a position of responsibility (i.e. doctor, solicitor, social worker etc), who must accompany you to the bank.
To prove your address you need a current utility bill; a current car or home insurance policy showing your address; a document issued by a Government department that shows your address; a current balancing statement from the Revenue Commissioners; a letter from your employer or licensed employment agency stating that you have recently arrived in Ireland and have started work but cannot yet provide evidence of your Irish address (you will have to provide evidence of your address at a later date). You also need to supply a PPS number if the account pays interest.
Choose the switching date
You’ll need to agree a switching date with the new bank and it is crucial that you choose a time when there is least activity on your account.
You have to complete an account transfer form and your new bank will send this to your old bank, who will supply all details of direct debits, standing orders, transfer the balance etc.
Under the Code the new account must be up and running within ten working days of the switching date and it might be less, say seven days for example, but bear this switchover time frame in mind.
During this period you’ll need to make sure that you have access to cash, and that no standing orders or direct debits are due from your old account. The bank you are switching to will help and advise on all this and give you your switching date and send you a new banking card.
You do have the option of keeping your existing account open and you may want to do this for a further couple of weeks to make sure that mortgage payments and direct debit payments for phone, electricity, TV subscription etc are paid, in order to avoid any risk of a short window where one account is closed and the other not yet in operation and a payment is missed.
Don’t forget also to give your new bank details to your employer.
For comprehensive information and comparisons on banking charges go to the personal finance section of the National Consumer Agency’s website www.nca.ie.
If the bank has refused your application ask first to speak to a senior staff member of branch manager. If the response isn’t satisfactory you should write a letter of complaint and if you’re still unhappy with the response, you can complain to the Financial Services Ombudsman www.financialombudsman.ie.