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Overview

 

Bank charges for current accounts are an emotive issue.  Acres of media space are devoted to the topic. Government has imposed special legislation to control charges, and regular surveys are published by the National Consumer Agency  In reality, bank charges in Ireland have not been high by international standards. Around about 2005, bank charges in general dropped for many people, but are gradually returning.

 

Most bank charges, where they arise are accumulated for a period of a quarter, and then charged to your account. When a bank offers "free banking" it means that these quarterly charges are not applied.

 

However, there are certain types of charges for bank services which are charged at the time the service is availed of. These charges are applied regardless of the "free banking" status of the account.

 

Bank charges, where applied may take any combination of the following:-

 

  • Pay as you go - each transaction is charged at a specified rate per transaction
  • Fixed charge - a charge per quarter to cover all transactions (Usually there is some limit on transaction numbers in such arrangements)
  • Maintenance Charge - a fixed charge per quarter to which a transaction charge per transaction is added

 

Control of Bank Charges

 

Since the 1970's bank charges have been controlled in Ireland. Initially, the control was exercised through the Prices Commission, later through the Director of Consumer Affairs, then the Financial Regulator, and now by the Central Bank of Ireland. Under the terms of the section 149 of the Consumer Credit Act 1995, financial institutions are obliged to notify every proposal to increase an existing charge or introduce a new charge. The charge cannot be applied until authorised by Central Bank. The banks are required to pay a substantial fee to assess an application under the legislation. Bank interest is not covered by the legislation, but is specifically excluded.

 

In reality, the charges authorised by the Central Bank are maximum charges. Banks frequently charge less than these rates or offer "free banking"

 

"Free Banking" (personal accounts)

 

Most bank charges, where they arise are accumulated for a period of a quarter, and then charged to your account. When a bank offers "free banking" it means that these quarterly charges are not applied.

 

However, there are certain types of charges for bank services which are charged at the time the service is availed of. These charges are applied regardless of the "free banking" status of the account.

 

Services which are normally free on a typical "free banking" package

Services which are charged for on a typical "free banking" package

Lodgements and withdrawals at bank counter

Cheques - issue of cheque books and processing of cheques written

Cards - issue of cards and replacement of cards if lost/stolen

ATM withdrawals in Ireland or Eurozone

Debit Card transactions

Direct Debits & Standing Orders

Online or phone trancactions

Statements

Stop a cheque, direct debit, or standing order

Interest on overdrawn balances

Government stamp duties on cheques and cards

Cheques bounced (either cheques issued by you or payable to you

Standing orders or direct debits unpaid

Cheques paid in excess of overdraft limits

Bank drafts

Duplicate statements

Copy (or original) of paid cheque

Urgent funds transfers

Use of debit card or ATM card outside Eurozone

 

 

 

Most banks have "free banking" packages on current accounts.

 

Some have conditions attached. For example, Bank of Ireland customers can qualify for free account transaction fees by lodging at least €3,000 to their personal current account and by making at least 9 debit payments from that account using 365 Phone and/or 365 Online during the relevant fee quarter; or by maintaining a minimum credit balance of €3,000 in their personal current account throughout the full fee quarter.  Strangely, for this purpose, quarters commence in mid-Feb, mid-May, mid-Aug, mid-Nov - the exact dates in any year can be obtained from the bank.

 

Similarly, AIB customers can qualify for free maintenance and transaction banking on a Personal Bank Account each quarter if they make a purchase using an AIB debit card and use AIB phone and internet banking to make a debit transaction, like paying a bill.

 

Most banks offer "free banking" to all students and recent graduates as well as to customers over 60 years of age.

 

Fee notification

 

If your bank charges exceed €12.70, then you will be notified in advance of the date of charging

 

Surveys of individual bank charges

 

National Consumer Agency conducts and publishes regular surveys of bank charges. These can be accessed at www.itsyourmoney.ie

 

Surveys of individual bank charges

 

Business Banking Charges

 

All business customers should attempt to negotiate their bank charges, while recognising that the banks scope for negotiation is lower given that the banking market is less competitive. There is no longer a single site maintaining a database of business banking charges, but all banks have downloadable schedules of business charges.

 

When negotiating bank charges, one should consider what mix of banking services best suits the business. You may have a need for bank borrowing; or you may have substantial funds available for deposit. You may need other services such as card acquisition or initiation of direct debits. Online services may suit your business best.

 

If you are not confident of such negotiation, or if you need to audit your current banking arrangements, then a specialist adviser may help. Bankhawk Analytics is one such advisor.