Banks quick to drop charges

Fee cutting is now well-entrenched in the competitive armoury of retail banks. A wide range of fee reductions that banks announced last year have been taking effect in recent months and new products, such as ING Direct's Orange Everyday account, focus as much on the fees as the features.

In September, National Australia Bank cut out overdrawn fees on all personal transaction and savings accounts. The bank said the fees affected about 700,000 of its customers a year.

A month later, the bank took the surprising step of announcing it would abolish monthly account fees on a number of transaction accounts, taking effect from January 22. The accounts covered by the change include NAB's Classic and eBanking personal transaction accounts, Clear Banking accounts and passbook accounts. The change covers 97 per cent of NAB personal transaction account customers.

The bank cut its credit card late-payment fee from $30 to $5 and introduced a free opt-in SMS payment reminder service that alerts customers when credit card payments are due.

NAB has received plenty of kudos for its changes. The consumer group Choice said it was the frontrunner among its banking rivals and would save customers $110 million in fees a year.

In a statement issued last October, Choice said: "Over the past three months we have seen real movement in the area of penalty fees."

A banking analyst at CLSA Asia-Pacific Markets, Brian Johnson, believes the changes made by Westpac are more significant. Westpac reduced exception fees from $30 to $9 but the change was applied to consumer and business credit-card users - a wider sweep of the customer base.

In October, Westpac cut all its exception fees to $9. This includes account overdrawn fees, outward dishonour fees and credit card missed-payment and over-limit fees. The bank's group executive for retail and business banking, Peter Hanlon, said the changes would affect 5 million customers.

Commonwealth Bank cut dishonour fees from $35 on business and personal transaction accounts to $5 and overdraft fees from $30 to $10. It reduced the late-payment fee on home and personal loan accounts from $45 to $25.

ANZ took the unusual step of increasing the monthly account service fee from $5 to $6 on its main transaction account, Access Advantage. But the change, which took effect on December 15, was accompanied by a number of cuts to exception fees.

Source: SMH