With current account fees on the rise, is it time to switch?

As banks increasingly hike how much they charge customers for everyday banking, consumers still have a window in which they can express their disapproval by switching. Whether they will or not however, is another thing.

Despite the widespread application of the switching code, which helps consumers switch accounts quickly and effectively, Irish based banking customers are still reluctant to do so.

"Statistically, you're more likely to change your husband or wife than you are to change your current account", Daragh Cassidy, head of communications with Bonkers.ie, says. Figures from the Central Bank show fewer than 0.03 per cent of current account holders switched in the second half of 2018 (the most recent figures available).

But with costs going up, consumers might finally get the switching bug; here are the options if you do.

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An Post

Free banking? No

The big feature of An Post’s current account offering is that it gives you money back each time you spend with one of its partners, such as Lidl, where you’ll get 5 per cent back on all transactions of €25 or above, or Sunway, where you’ll get 5 per cent back on all holidays.

If Lidl is where you do your grocery shop, it can make sense; for example, shopping of €120 a week will earn you €24 back a month. It has also recently added a host of features, including savings “wallets”.

However, the account has a steep monthly fee of €5, with additional charges such as 60 cent on every ATM withdrawal.

Comparison website Bonkers.ie suggests the typical banking customer would pay €8 a month for the account. So unless you’re a big shopper in Lidl, it doesn’t look competitive. And even if you love Lidl, the account does tie you in to shopping there.

Ulster Bank

Free banking? No

With Google and Apple Pay as standard, and additional features such as "Get cash", which allows you to withdraw up to €130 every day without your bank card, Ulster Bank is looking like a more competitive offering in light of the recent changes to bank charges.

Like AIB, Ulster Bank had also intended hiking its fees earlier this year, including increasing the charge for in-branch transactions fourfold – from 20 cent to 80 cent – but decided not to in light of the pandemic.

With Ulster Bank, customers will have to pay a €2 monthly maintenance fee (€24 a year), but can avoid additional charges by keeping €3,000 in their account at all times.

Of course, the big question with Ulster Bank is whether or not it is going to stay in the Irish market – and whether, post-Covid, it will resurrect other charging plans.

“If it was someone’s mortgage, I’d say ‘don’t worry, someone else would buy the loan and the terms and conditions are the exact same’,” advises Cassidy, “but no-one’s going to buy a block of current accounts”.

This means that if you do switch to Ulster Bank, you could find yourself having to switch again in the not too distant future, depending on its decision.

EBS

Free banking? Yes

It’s one of the few viable options left if you don’t want to pay a bank for your everyday banking needs. Yes, EBS’s Moneymanager account won’t charge you a quarterly fee, and won’t charge you per transaction; in fact, it won’t charge you anything for most of what you’ll need the account for. As Cassidy notes, “it’s cheap as chips”.

While it has imposed a recent limit on deposits – €500,000 – this shouldn't impact most current account customers although, if you like your cheque book, this account doesn't' offer one. Neither does it offer digital payment solutions such as Apple or Google Pay.

Permanent TSB

Free banking? No

PTSB’s Explore account works a little differently from the others. It has a relatively high flat monthly fee of €6 – increased from €4 back in 2019 – but you can offset this fee thanks to cashbacks you earn each time you use your debit card.

Instore and online purchases earn cashback of 10 cent each time, while customers can also earn money back on certain bills paid by direct debit, such as Sky and Circle K.

It means that you could find yourself up in the black, depending on which providers you use and whether or not they are partners of the bank. However, there is a limit of the number of qualifying transactions – 50 or €5 a month – while you may find you’re entitled to no cashback on bills.

Based on typical usage, Bonkers.ie suggests the account will typically cost about €2.50 a month.

Credit union

Free banking? No

More than 115 credit unions, including Drogheda, Killarney and Savvi in Dublin, now offer a current account facility, offering services including a debit card, contactless payments, Google Pay and a mobile app.

You’ll pay a fixed €4 monthly fee for the account, which can keep a check on charges. However, you might face additional charges if you don’t watch out. Make more than five ATM withdrawals in a month, for example, and you’ll be hit with a fee of 50 cent for each extra one.

And you’ll pay €2.50 for a quarterly postal statement and €25 to set up an overdraft should you need one.

AIB

Free banking? No

AIB removed the fee waiver on its current account last Saturday. It had previously allowed customers avoid fees provided that they kept a minimum balance of €2,500 in the account at all times.

It means that customers will now pay a quarterly fee of €4.50, plus a host of fees on everyday banking activities such as ATM withdrawal (35 cent every time); online transactions (20 cent each) and in branch transactions (39 cent apiece).

While those with AIB mortgages, and those with young saver or over 66s accounts, won’t feel the brunt of the charges, those who do will find that they now have one of the most expensive accounts on the market. It might have everything one might hope for in a current account, but you will have to pay for it.

Revolut /N26

Free banking: Kind of

The two new fintech arrivals have made huge inroads into the Irish market in recent years but, as of yet, it remains largely on the payments side. Most customers still seem to be opting for a dual approach – a mainstream current account and a card from either Revolut or N26 for casual spending.

The big advantage of both accounts is the ability to transfer, or receive funds, in real time from contacts using just their email or phone number. Such accounts are also very cost effective for international transfers.

They are also “free” but the “free” option will get you so far.

For example, you only get three free ATM withdrawals a month with N26, unless you consider it to be your main account, and have your salary paid into it, in which case you’ll get five. Every withdrawal in excess of this costs €2 each time. With Revolut, you can withdraw €200 a month but anything over that attracts a 2 per cent fee.

And, when it comes to Revolut, customers need to be aware that their funds aren't covered by the €100,000 deposit protection insurance scheme, but rather under an e-money licence, which isn't quite the same. N26 has a German banking licence so does offer similar protection to AIB or Ulster Bank.

“I personally would begin to question, if you had €20,000 or €40,000 resting there. Maybe that’s not the best place for it,” advises Cassidy.

Another downside is the lack of branches or even telephone lines; if you have a free account with Revolut for example, the only customer service you might get is via a chat bot or an in-app chat, which can make things difficult.

There have also been issues around the IBAN numbers you get from the foreign banks, as some employers/utility providers will only accept Irish IBAN numbers – even though under EU law they should.

KBC

Free banking? Yes

With the KBC Extra Current Account, you can avoid a range of fees by getting €2,000 lodged into your account each month. This is akin to a salary of about €30,000 or more though, according to Bonkers.ie’s Cassidy, the money doesn’t actually have to be deposited all at once to qualify for no fees.

The account, which facilitates Apple, Google and Fitbit Pay, also has a cashback facility on certain purchases, and entitles you to a premium on your savings. You'll also be entitled to a discount of 0.2 per cent on your mortgage, and 1 per cent on a personal loan.

If you can’t lodge enough each month to the account to qualify for the free banking, you will be subject to fees, including a quarterly fee of €6, plus additional charges such as an ATM fee of 30 cent, and cheque lodgement charge of 30 cent. The bank operates cashless hubs, which may not be suitable for you.

Bank of Ireland

Free banking?: No

The bank recently caused a bit of a stir with its decision to replace the myriad fees it charges with a flat fee of €6 a month. The bank says that just 40 per cent of its customers will now pay more but given that Bank of Ireland has about a 35 per cent share of the current account market, this is a sizeable cohort.

In essence, the increases – which won’t affect student or minor account holders and over 66s – will hit those who previously held a balance of €3,000 to avoid monthly charges. It means that their fees will jump from €20 a year to €72.

On the plus side, the bank has improved its offering of late, adding Apple and Google Pay and revamping its app. It also offers everything you might expect of a main retail bank.