Free banking at AIB will disappear for many at the end of May unless you maintain a balance of €2,500, something the National Consumer Agency has condemned.

It would be impossible for most to maintain a balance of that sum in their current account, and if someone moves money from a savings account to their current account in AIB to avail of free banking, they would then lose out on interest payable – up to €98 per year.

However, if you’re a very heavy bank user, maintaining this balance might save you more money on charges than you would earn on deposit.

While this has received much publicity, the truth is that almost all banks levy charges for various transactions on current accounts.

At the moment, Ulster Bank is the only bank that offers free banking, but that too may be set to change.

So it's worth shopping around.

Tina Leonard has a look at what is on offer

Allied Irish Bank

Currently to qualify for free banking you need to make a purchase using your AIB debit card and use AIB phone and internet banking to make a debit transaction, like paying a bill.

From May 28th: Debit card transaction 20c; paper / staff assisted transactions in branch inc cheques, counter withdrawals and lodgements 30c; ATM cash withdrawal 20c; quarter fee €4.50 or €18 per annum. No charges if you maintain a balance of €2,500.

Bank of Ireland

You must 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.

National Irish Bank

Fee free banking ended earlier this month. There are three current account types; the basic ‘24/7 package’, ‘Easy Plus’ and ‘Prestige’.

‘24/7 package’ costs €20 per annum, Easy Plus €75 and Prestige €120. However, for the latter two are no transaction charges and other benefits such as free travel insurance and access to the airport lunge. For the ‘24/7 package’ it costs 34c for a manual cash withdrawal / cheque; 30c for a manual credit / cheque lodge and 25c for any automated transactions.

EBS

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. Online and phone banking have no fees.

Permanent TSB

No transaction fees on some accounts. A quarterly fee of €12 applies unless you lodge at least €3,000 and make at least 18 card purchases and at least one financial transaction via online or phone banking. There are many current accounts available and other may attract a much smaller quarterly fee and some transaction fees.

Ulster Bank

There are no transaction fees on any current account.

RaboDirect

This online only savings bank does not provide current accounts but ‘on demand’ savings accounts and term deposit accounts for which there are no transaction fees.

How the charges can increase further

It is important that you know what quarterly fees or transaction charges you have to pay and to see if you can find a way to limit those charges or switch to a bank with lower charges.

You should also know that there may be no fees or smaller fees for carrying out transactions online or by phone, and that there are always choices of current accounts from each bank that may levy different charges and be more or less appropriate depending on whether you are a light or heavy bank user.

However, the charges will mount up if you have other transactions such as unauthorised overdrafts, returned cheques, unpaid standing orders or direct debits, referral fees and even requests for duplicate statements for example.

In fact in December the Central Bank published findings on current account charges and found that these ‘out of order’ charges were the greatest driver in pushing the cost of running your current account. They found that for a ‘standard profile’ the average yearly cost is €86 but that average costs of more than €120 would be paid by those with higher numbers of ‘out of order’ transactions.

When you consider that 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. This is what you much watch out for.

How to switch

The first thing you should know is 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:

1. Choose the provider

If you’re unhappy with service or fees charged you should check out the fees (there is a useful comparison on www.nca.ie) and choose what bank/building society you want to open a new account with.

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.

2. Fill out the application form

You’ll have to 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.

3. Choose the switching date

You’ll need to agree a switching date with the new bank and you should choose a time when there is least activity on your account.

Under the Code the new account must be up and running within ten working days of the switching date, so bear this time frame in mind. It is a helpful exercise to write down all the dates that any standing orders or direct debits go from your account, to work out the most suitable time.

You 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.

4. Account transfer

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.

Your new account will be open within ten working dates of the switching date.

Complaints

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).