Customers of AIB told to switch banks over new fees

The consumer rights watchdog is urging AIB current account holders to switch banks after the bank announced the end of free banking for the majority of its customers.

Chief executive of the National Consumer Agency, Ann Fitzgerald, called on AIB customers to consider switching their accounts to another bank.

“AIB current account customers who met the previous criteria for free banking should look at their statements, assess what their fees would have been, and work out whether it makes sense for them to switch.”

Ms Fitzgerald said that maintaining €2,500 in their current accounts to qualify for free banking would cost AIB consumers €98 a year in lost interest. She said consumers would be forced to move money out of their savings accounts to meet the €2,500 minimum. Some heavy current account users might be better off doing this to avoid the fees.

The fees mark the end of the era of free banking said Consumers’ Association of Ireland chief executive, Dermott Jewell.

“The era of free banking is all but dead, as far as I am aware, Ulster Bank are now the only bank offering free banking. Consumers need to see what is available to dispel the illusion of competition that exists in Irish banking.”

Ulster Bank is the only bank that offers unconditional free banking to its customers. All other banks have attached conditions to qualify for free banking ranging from maintaining a minimum balance in the account to guaranteeing a certain volume of lodgments per financial quarter. An Ulster Bank spokesperson, Debbie McCaughey, confirmed: “Ulster Bank currently offers transaction-fee free banking across our current account products.”

Yesterday, AIB said that, in order to qualify for free banking from May 28 onwards, customers would have to maintain a balance of €2,500 in their current accounts. AIB described the decision to introduce fees as difficult but necessary.

Director of personal and business banking at AIB, Bernard Byrne said: “Free banking offerings across the industry have changed significantly in recent times. While this was a difficult decision to make, nonetheless it is a necessary one if we are to continue to create the conditions in which we can become a strong and viable entity again.”

The new charges will apply to all AIB current account holders except for AIB Advantage (over 60s), student accounts and graduate accounts. This leaves 60% of account holders facing possible transaction fees and account maintenance charges.

A bank leaflet advises customers that they are responsible for making provision for any debit transactions that could bring the account balance below €2,500. It said that if a customer’s current account falls below €2,500 at any point during the banking quarter, the customer will be liable for all transaction fees and maintenance fees the account has incurred during that quarter.

Fees will be applied to debit card transaction at 20c per transaction.

Withdrawing cash from an AIB branch will cost 30c per transaction. Cash withdrawals made from ATM’s with AIB banklink cards and AIB debit cards will have a charge of at least 20c per transaction.

AIB will also be adding a €4.50 per quarter charge on top of the various transaction fees.