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Matt Wade
Australian households and businesses forked out $11.64 billion in bank fees last year, equivalent to about three-quarters of a percentage point of gross national product.
Households' share of the total - $4.14 billion - was 2.3 per cent higher than in 2012, the Reserve Bank’s annual report on bank fees said. This increase, which reversed several years of decline, was driven by growth in fee income from credit cards and personal loans.
Credit card charges, the biggest source of bank fees from households, rose by 4.1 per cent to $1.36 billion. The report attributed this to growth in the value of credit card transactions and a small rise in the number of credit cards on issue. This drove an increase in income from credit card account-servicing and other fees, especially foreign currency conversion fees.
Tom Godfrey, the spokesman for consumer group Choice, said the new data showed fees on cash advances through credit cards had been steadily increasing.
“High cash advance fees means it will often be cheaper to pay with a credit card than withdrawing cash to spend,” he said.
Mr Godfrey urged consumers to consider the full cost of loan products.
“Many people only compare the interest rates on loans but don't forget to look at annual and penalty fees,” he said.
Bank fee income from household deposit accounts rose in 2013 following four consecutive years of decline. This increase was driven by a jump in “exception fees” which include overdrawn account and cheque dishonour fees. These fees grew strongly for the second year in a row after declining from 2009 to 2011. The growth in exception fee income was driven by a rise in the number of times the fees were charged, rather than the level of fees.
The detailed report on bank fees is published each year in the Reserve Bank’s June quarter Bulletin.
Bank fees levied on businesses by banks rose 2.8 per cent to $7.5 billion. Merchant service fees charged to businesses to cover the provision of credit and debit card transaction services by banks rose by 8 per cent to $2.23 billion. This was driven by an increase in the number of credit card transactions.
Chief executive of the Australian bankers Association, Steven Münchenberg, said the increase in the total fees paid by households last year was in line with the increase in economic growth and the resulting increase in demand for banking services by individuals.
“It is also less than the growth in average wages,” he said.