Banks using fee changes to make customers bear cost of fixing businesses they broke

IN a new bout of biting the hand that feeds, our mainstream banks are again punishing their customers. Thousands will now be sucked into paying fees for their everyday banking as both Permanent TSB and Ulster Bank are making it much more difficult to qualify for fee-free current account. The latest changes will mean that most banks now make it hard to avoid paying transactions and maintenance fees.

Few things make consumers more furious than banks that broke their own businesses imposing the cost of repair on loyal customers.

Ulster Bank is to introduce transaction charges for operating its current accounts. It comes weeks after bailed-out bank Permanent TSB said it was changing the rules for those with its older current accounts, which would force many to pay fees.

Currently, Ulster Bank charges its current account customers a monthly maintenance fee of €4, but it has no transactions charges for the likes of ATM withdrawals or for paying with a debit card.

It now plans to reduce the monthly maintenance fee to €2, but will charge customers transactions fees for using the current account for their day-to-day banking.

The bank will impose a 20c charge for the likes of direct debit payments, point-of-sale transactions, and electronic payments into and out of the account using online, telephone and mobile banking.

Customers will be able to avoid the transaction charges if they keep a balance of €3,000 in their account. But they will not be able to avoid the €2-a-month maintenance fee.

Permanent TSB drew the ire of loyal customers when it said its new terms and conditions will make it harder to qualify for fee-free banking on its older current accounts.

Customers who do not qualify for free banking will have to pay €18 a quarter. This works out at €72 a year.

Unless you are a pensioner, most banks have made it more difficult to qualify for fee-free banking despite massive competition from fintech operators N26 and Revolut.

They offer low-cost debit cards which are proving popular with Irish people, particularly those in their 20s and 30s. Revolut claims it has 200,000 customers here. It is reported to be opening an office in Dublin and planning to offer loans and overdrafts.

Younger people are opting in their droves for the new digital operators.

But sure why wouldn’t banks punish us with higher charges for operating current accounts when just 1pc of those with a existing current account ever switch banks? The banks are cynically exploiting this inertia.