Bank fees reduced or even dropped as competition bites

Photo / Michael Craig

Some banks have reduced fees, while others have wiped some completely.

Mortgage rates have also been a source of competition in recent months with interest rate reductions, although ASB yesterday announced a range of interest rate rises.

Banking experts say that despite the range of fee cuts and cancellations, most changes won't affect most customers.

"When you look at the overall panoply of changes I don't see any particular advantage of rushing from one bank to another," said Massey University head of banking studies David Tripe.

He said most of the fee reductions were for when customers exceeded their balance or bounced cheques - fees that wouldn't apply to most people.

He believed the changes banks had made were a sign of competition that was largely "Australian-driven" by parent banks.

"So having Australian-owned banks is not necessarily all bad."

Dr Tripe said Australian banks had reduced fees after the threat of regulatory intervention by the Government and it was possible they feared the same threat here.

The banks maintain that the fee reductions came about after feedback from customers.

Charges for honour and dishonour fees have sent a steady source of complaints to the Banking Ombudsman's office, with many customers finding the fees unjust and unnecessarily high.

In July, BNZ became the first to announce penalty fee cuts for when customers go over their banking limits.

BNZ chief executive Andrew Thorburn said then that the bank processed a million transactions a year that incurred the fees and the fees were its number-one source of complaints.

"What it takes is a lot of our staff's time to then work through with [customers] and solve it and refund it, or whatever we do."

BNZ's move sent a ripple effect through the banking industry. By the time National bank announced its changes on Tuesday, it was claiming to have gone one better, by removing "self-service" banking fees.

IT PAYS TO SHOP AROUND WHEN LOOKING FOR A BANK

Banking experts say choosing the best bank is a difficult task that depends on each customer's needs and financial situation.

However, those spoken to by the Weekend Herald provided a picture of the kinds of things to keep an eye on when making a decision.

Claire Matthews, a senior lecturer at Massey University's Centre for Banking Studies, said the difference between banks was minimal, with each bank offering essentially the same service.

But Mrs Matthews said most customers should check where their local branches were, what hours they were open and how friendly the service was.

Customers should also check the fine print of any bank to ensure they would receive the service they needed, she said.

Consumer NZ finance writer Susan Guthrie said people should shop around when looking at interest rates, because they were subject to change suddenly and were currently quite competitive.

She said to check whether a bank's internet banking had all the required features, how clear the statements were and whether there was an option to download statements for budget analysis.

Opening hours could also be a factor in a person's decision because many mortgage customers preferred face-to-face service, she said.

Ms Guthrie advised anyone investing money to make sure the organisation had a good credit rating.

And she said anyone investing over the next 12 months should ensure any organisation they gave money to was covered under the Government's retail deposit guarantee scheme.