Revamped bank charges: It pays to shop around

Traditional banks are starting to feel the heat from online banking platforms and act accordingly — but the new regimes will not suit everyone
Revamped bank charges: It pays to shop around
Bank of Ireland said the new pricing structure will be more transparent.

Bank of Ireland has revamped its charging structure, meaning most customers will pay less under the new regime, although some estimates suggest that up to 40% of customers will end up paying more — so be mindful it pays to be cautious and shop around.  

From November 23, Bank of Ireland is eliminating individual transaction charges for personal account customers and replacing them with a flat maintenance fee of €6 per month. Individual bank charges for things like debit card contactless transactions, debit card chip and PIN transactions, ATM lodgements, and even over-the-counter in-branch transactions will end.

                            Individual bank charges for things like debit card contactless transactions will end. File Picture: Bloomberg
Individual bank charges for things like debit card contactless transactions will end. File Picture: Bloomberg

In addition, penal charges for unpaid direct debits, unpaid standing orders, unpaid cheques, or referral items will also go. In all, fully 26 charges will be decommissioned and replaced with a flat maintenance fee.

In a statement, the bank said that the new pricing structure was "simple and transparent, and responds to customer feedback that the current range of charges is complex and hard to keep track of".

It goes on: "It also means that all customers will pay the same flat fee regardless of how much they have in their account. Our ‘no transaction fees’ offer — where personal current account holders with a minimum balance of €3,000 for an entire fee quarter are not charged account transaction fees — will end on 23 November.’

However, customers with low levels of transactions in their accounts — some 30% according to estimates — will end up paying more for their banking under the new arrangement. Under the old regime, customers who keep a €3,000 balance don’t pay transaction fees, but do pay a maintenance fee of €20 per annum. In November, that will rise to €72.

The bank said that it will continue to provide free banking for seniors, students, and graduates.

Darragh Cassidy of independent price comparison and switching site said he broadly welcomes these changes as he believes that the traditional banks are starting to feel the heat from online banking platforms like Revolut and N26, which charge almost no fees whatsoever. Starling Bank, another digital, mobile-only bank based in London, is also planning to enter the Irish market.

“Up until today,” says Cassidy, “BOI’s fee structure, along with AIB’s, was particularly poor value. And as more and more of us have moved to card payments over cash due to Covid-19, continuing to charge individually for services like contactless payments was always going to be difficult for banks to do as the optics look so poor. There was rightly uproar when AIB tried to introduce a 1 cent fee for contactless earlier in the year.”

He points out that the ‘all-in-one’ free structure makes sense and that it makes the bank’s charges far easier to understand and more competitive. The removal of fees for branch-assisted transactions is likely to be of benefit to older customers, particularly those who may not be as comfortable with online banking as the younger generation.

In particular, Cassidy zeros in on the removal of what the banks call ‘referral fees’ for unpaid direct debits and standing orders.

“This was previously €12.70 per item, among the most expensive of all the current account providers in Ireland, and bore no relation to the actual cost of the service to the bank. At a time when many people’s finances are under pressure and income has become less regular due to the pandemic, not being hit with such a large fee every time you miss a scheduled payment will be comforting. However, customers still need to be aware that missing scheduled payments may still affect their credit rating and should be avoided where possible, even though there may no longer be a fee.”

Although the news means most BOI customers should see themselves paying less each month going forward, it’s important for consumers to compare the market as there may be cheaper options out there.

Permanent TSB gives cashback on certain bills paid from its Explore account.
Permanent TSB gives cashback on certain bills paid from its Explore account.

Permanent TSB also charges €6 a month but will pay you back 10 cent every time you use your card in-store or online, up to a max of €5 a month. This means that you could end up keeping your fees as low as €12 per annum. Moreover, PTSB also gives cashback on certain bills paid from its Explore account, meaning that account holders could save even more.

KBC also waives most fees if you lodge €2,000 to the account every month, while the credit union’s new current account has a monthly fee of just €4. And the aforementioned online banks, N26 and Revolut, charge almost nothing whatsoever and have excellent apps.

In addition to revamping its charging structure — and again, with one eye on the growing digital banking sector — Bank of Ireland has made applying for a current account much easier. They say that customers can complete applications digitally and upload supporting documentation in less than 10 minutes using their mobile phone.

In the same vein, Bank of Ireland has finally introduced Google Pay, which allows Android smartphone users to make contactless payments for point-of-sale transactions using their phone.

In a statement, Gavin Kelly, CEO of Bank of Ireland’s Retail Ireland division, said: “We’ve completely overhauled our digital account opening process to make it easier and quicker than ever to open an account with us. We’re also making banking charges easier to understand by doing away with 26 different fees and charges and replacing them with a simple flat fee, a similar pricing model to Netflix or Spotify subscriptions where you pay the same every month and consume as much as you want.”

AIB is under pressure to follow suit on its charges.
AIB is under pressure to follow suit on its charges.

Darragh Cassidy, meanwhile, points out that in total, there are now 10 current account providers in Ireland, so there has never been more choice.

“I would also expect AIB to respond with its own improved offering over the next few months as its fees and charges are now hugely out of line with all the other providers.”

The two pillar banks are finding themselves in an increasingly competitive, fast-moving market. Two weeks ago, the aforementioned Revolut became the first mainstream financial services provider to provide instant EU money transfers to Irish customers.

Instant money transfer is made possible through the implementation of what's called SEPA Instant Payment technology and is not yet available through any other Irish bank. The new SEPA system will be of particular interest to Revolut customers who want to send money to someone in Europe who is not a Revolut customer.

Up until now, customers and businesses had to wait for one or two days for traditional money transfers to clear, and even longer at the weekend.

More in this section

The Business Hub

News and analysis on business, money and jobs from Munster and beyond by our expert team of business writers.

Sign up
News Wrap

A lunchtime summary of content highlights on the Irish Examiner website. Delivered at 1pm each day.

Sign up
Cookie Policy Privacy Policy FAQ Help Contact Us Terms and Conditions

© Irish Examiner Ltd