Key Points:

Most people are paying much more than they need to in bank fees and some could get away without paying any, say industry analysts.

If anybody's paying more than $5 a month, there's probably a problem, according to Massey University banking expert David Tripe, and it's unnecessary if customers investigate the products their bank offers. Most banks have some sort of free product depending on the customer's needs.

"Do you ever need to write cheques? How many eftpos transactions do you need to do a month? Do you need to use other banks' ATMs?"

People need to ask themselves these questions in relation to how they organise their banking, he says.

Consumer NZ research manager Belinda Allan says banks make about $2 billion in profits every year, and the fees you pay contribute to this. Westpac New Zealand this month revealed a 12 per cent net profit rise to $244 million in the six months to March 31, and ANZ National has posted a profit of $610 million for six months, up 7 per cent on the previous year.

It's easy to get stung, says Allan. "With monthly base fees, cheque fees, eftpos and ATM fees, fees for banking at the branch and fees for banking by phone or internet, you could be paying hundreds of dollars a year."

It's money you probably don't need to spend, she says.

For example, some people with a mortgage negotiate with their bank to have no account fees. With the range of fees banks charge for the same thing - some banks charging nothing, others charge up to $20 for the same service - Allan says obviously there's potential for overcharging. "The big range makes us think banks are charging too much."

BNZ has just hiked its ATM recovery fees from 50 cents to $1 on transactional account activity at other banks' ATMs, and its cash advance withdrawal fee on credit card account cash advances made at non-BNZ ATMs from $1 to $2.

Last week it reported its half-year profit result of $239 million - up 14.9 per cent compared to last year.

Greg McNeill, of BNZ, says the $2 charge brings the bank into line with what the other big players are charging. Westpac, for example, charges the same fee for that service, while ANZ and National charges a hefty $3.

Tripe says charges are supposed to reflect a fee for service - but are not always priced correctly. He refers to honour fees some banks charge as examples of overpriced fees, as well as the $2 charge by BNZ for using another bank's ATM, which he suspects is "profiteering".

Interestingly, some banks charge the lowest fees in some areas, and in other areas the highest, so it's a matter of looking at what services you use and going for the lowest fees in that area, says Tripe.

Kiwibank, for example, markets itself on very low fees, but in some instances has the highest.

In many cases bank customers pay too much, he says, because they aren't organising their banking so as to minimise their fees.

"It's amazing the extent of people using other banks' ATMs when there's an ATM that they can use free 50 metres away," says Tripe.

One of the things people need to do, he says, is find out what their account fees are and see if some of the transactions are priced differently.

For example, if an online bill payment is cheaper than paying in some other way, use it.

There is a tendency to ignore fees being charged, says Tripe, but they can add up significantly - he hears hard-luck stories of people paying $20 or $30 a month in bank fees.

"I think, get a grip of your life - look at what you're being charged fees for and sort it out."

People in this situation, Tripe says, are those who don't examine what fees they're being charged. There may be account types or packages that will change what they pay.

Massey University banking expert Claire Matthews says customers who are not on any special packages are likely to be paying about $200 a year on average. This is considerably more than the $60 Tripe says people should be paying.

Tripe advises people to review their bank statements.

If they approach their bank to find out what they can do to reduce their fees, they then have the basis for getting assistance.

"The biggest problem is that some people don't actually know what their bank fees are - they don't pay attention to what they're doing.

"There's a certain inertia that says, 'Is this a big problem in my life and can I do anything about it?"'

If you're worried about fees, says Tripe, do something about it. In many cases, this won't involve haggling, but investigating what product or combination is best suited to your needs.

The good news, says Godfrey Boyce, of KPMG Financial Services, is that in the past year major banks have adopted low-fee transaction accounts and low-interest rate credit cards to lure customers from competitors.

In part, he says this is a reaction to the fact previous banking "minnows", such as Kiwibank, TSB Bank and Rabobank, are now strong enough to be noticed by the major banks.

"Pressure from the smaller banks and the intense competition for customers has led the major banks to package deals to attract new customers," says Boyce.

"Now a customer with straightforward banking needs can have them met with a bank account with fixed annual fees of $60 and a credit card with a 12 per cent interest rate.

"Deals like this tap into the widespread suspicion and dissatisfaction with bank fees and credit card rates that are typically around 20 per cent."

Boyce says ANZ started the ball rolling in August with its Everyday account, which provides unlimited transactions for $5 a month, fol- lowed soon after by Kiwibank, BNZ, ASB and Westpac with their own versions.

BNZ's McNeill says its MyMoney account provides unlimited transactional banking for $5 per month.

Its TotalMoney product allows parents and children to help each other by pooling their funds to achieve better interest rates, or offsetting TotalMoney variable home loans to reduce the interest charged.

A monthly fee of $10 covers all transactions, email and text alerts and the set-up and amendment of automatic payments and bill payments online, on up to 10 accounts within a group. The accounts also pay credit interest with the rate calculated from the pooled balance of all the accounts in the group.

Kiwibank's Bruce Thompson says its electronic Free Up account has no transaction fees if customers need to use a branch from time to time.

If you have a home loan and/or a deposit with a total value of more than $50,000 at the National Bank, you're eligible for a Thoroughbred Benefits account, which includes all transactions for a flat fee of $5 per month.

ANZ's Wayne Besant says if you have a relationship with your bank that involves a large amount of money, such as a mortgage, term deposits and/or a significant savings balance, ask for the best available deal. These requests are assessed on a case- by-case basis, he says, and may not apply to everyone.

What is it costing you a month to do your banking? asks Tripe.

Be willing to take an interest in looking after your own affairs, he advises. "That's the challenge that is all too often ignored."

* CASE STUDY

Fatima Advic has been an ANZ bank customer for eight years, since moving to New Zealand from Bosnia.

She owns her own home, and has a mortgage, credit cards and savings accounts with ANZ.

She recently calculated her total bank fees and found she was paying $400 a year.

Avdic decided it was the time the bank recognised the value of her business, and asked her personal banker to waive all fees on her accounts.

Now she pays no bank fees.

"People need to be willing to spend time sorting this out with their bank, it won't happen by itself." If a bank isn't prepared to be flexible on fees, Avdic recommends shopping around.