AIB charges end ‘era of free banking’

The era of free banking is dead — the head of the Consumers’ Association of Ireland, Dermott Jewell, has said after AIB announced a raft of new charges.

Consumer groups have also advised customers to shop around for a better deal.

From May 28, AIB will begin charging customers — who do not maintain a minimum of €2,500 in their current accounts — transaction fees and maintenance charges.

The charges include:

* 20c for every debit card transaction;

* 30c for every paper and staff-assisted transaction including cheques, counter withdrawals and lodgements, and staff-assisted transactions at any AIB branch or in the post office;

* 30c for withdrawing cash at the counter;

* 20c for every cash withdrawal from ATM’s with AIB banklink cards and AIB debit cards.

AIB will also be adding a €4.50 per financial quarter, or €18 a year charge on top of transaction fees.

Bank of Ireland require customers to maintain a minimum of €3,000 in their account or lodge at least €3,000 and make nine payments using Banking 365 during the quarter to avoid fees. If a customer is subject to fees, these can either be paid at 28c per transaction or a flat fee of €11.40 per quarter for 90 transactions.

The withdrawal of free banking facilities at AIB is an effort to turn the State-owned bank into a viable business again, according to the director of personal and business banking at AIB, Bernard Byrne.

“Free banking offerings across the industry have changed significantly in recent times,” he said. “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 are expected to hit as many as 60% of the bank’s customers.

AIB Advantage (Over 60s), Student Accounts and Graduate Accounts will not be subject to the charges.

“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,” said Mr Jewell.

The introduction of fees and charges has led the chief executive of the National Consumer Agency, Ann Fitzgerald, to call on consumers to consider moving to rival banks.

“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 maintaining a balance of €2,500 in an account which does not pay interest is the equivalent of paying €98 a year.

“In addition, with no interest paid on credit balances, this means that consumers are losing out on up to €98 a year in interest that they could earn if this money was on deposit, depending on the type of deposit account chosen. Many consumers will be unable to meet this condition unless they move money from a savings account into their current account, thereby losing out on the interest they would earn,” she said.

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