Australian bank fees increase to $12.5 billion
The RBA has revealed that bank fees have risen by 3.5% in the last year.
If you thought your household and business bills were climbing, you weren’t wrong. In an annual report on bank fees, the Reserve Bank of Australia (RBA) announced that households and businesses were charged $12.5 billion in bank fees last year. According to the RBA, this is an increase of 3.5% from the previous year.
Published on Thursday, the report shows that Australia’s 8 million households spend an average of $515 a year on bank fees, with much of the recent growth coming from credit card fees. These household fees have swollen to $4.3 billion in the last year, the biggest annual increase in four years. Bank costs for businesses also continued to expand, increasing by 3.9% to $8.2 billion in the last year.
In the last year, fee income for Aussie banks climbed 6.6% to $1.5 billion, following strong growth of 5.9% in the previous year. The RBA confirms that this growth in credit card fee income was due to customers paying higher fees for some products, as well as an increase in the number of credit cards in circulation. These increased fees have come as a result of changing credit card consumer behaviour.
Despite a higher number of credit cards on issue, the banks are losing profits on interest costs as credit card customers are getting more competent at paying off their debts on time. This means that the banks are having to raise other costs on credit cards to make up for these losses. So, this trend could explain some of the higher annual fees, cash advance charges and other costs that are contributing to the increase in credit card fees over the last year.
If cardholders are paying off their debt before the interest kicks in, choosing a no or low annual fee credit card could help keep your credit card costs low. Also, considering credit card withdrawals are at their highest level in six years, resisting the urge to use your credit card for a cash advance and leaving that for your debit card could also keep your card costs at bay. With some smarter credit card use, that could see household costs drop in the next year.
This information comes shortly after reports that financial hardship was a big factor in determining the affordability of other household costs like electricity and that the average Australian will be paying an extra $1,228 per year in tax.