“Does your bank have crazy fees?”

What the hell is a cash handling fee? Or how about an overdrawn fee? Even a fee if someone else’s cheque bounces (inward cheque dishonour fees).

Yes, the banks have been doing it for years. Looking at ways to increase their revenue and profits and screw us the consumer. I’m sure they have meetings where they discuss ways to add fees to their products while trying not to upset consumers.

In fact in 2009, banks were paid just under $1 billion from fees. That’s around $45 per every man, woman and child. This does not include building societies or credit unions.

What really got me interested in this subject was something that happened around a month ago. I walked into my local branch and deposited $6000 cash into my business account. This total transaction with the teller took less than 2 minutes.

However then I received my statement which showed that I was charged a cash handling fee. Yes you read correctly, a cash handling fee. Calling my bank for an explanation they informed me that: If you deposit any amount over $5000 of physical money you get charged 0.25% of the total amount.

For example if you deposited:
$5000 it would be $12.50
$10,000 it would be $25.00
$15,000 it would be $37.50
$20,000 it would be $50.00

I was informed this fee is to cover the wages of the teller and the costs of running the branch. This does not sound right to me. Surely they make enough money to cover these costs on the interest they earn on my deposited money. What about the monthly $10 fee that I have to pay just to keep my bank account open? Or the interest on the home loan that they have lent to me? Why do they need extra money on top of the money they are making?

It’s like if you order a pizza to pick up. Once paying you have to pay an extra 0.25%of the total cost to help pay for the staff and rent. Pizza places don’t do this because their price for pizzas covers this cost. Just like 99% of all businesses; however not banks.

Just to recap, this fee is to deposit your own money INTO the bank! You like me probably thought that the banks wanted you to deposit as much money as possible into their bank. This fee suggests otherwise.

Inward cheque dishonour fees are another even crazier example of a ridiculous fee. This fee no longer exists, however it worked like this. You sell a boat to a friend for $5000. Your friend writes a cheque to pay for the boat. You deposit it into your account and the cheque bounces due to a lack of funds in your friend’s account. Guess what, you incur a fee and so does your friend.

I can understand your friend getting a fee, as it was his responsibility to make sure the money was there to cover the cheque. But why are you getting charged? You had no knowledge of what is going on in your friend’s bank account. You have taken the cheque in good faith.

This is just one more example of banks pushing the envelope.

What really upsets me more than anything, are the fees that are too high for things that banks pay very little to solve. For example, you can pay as much as $40 for being one day late on a credit card payment.

$40 is a huge amount to pay to miss a deadline by 24 hours. What has this cost the bank by you missing this deadline? Absolutely zero. They have not lost a cent. However you are out of pocket by $40. The funny thing is you might owe less than $40 on the entire card.

It’s in the bank’s interest that you miss this deadline. They want you to be late; it’s money in their pocket each time you are late.

Believe me banks don’t budge on any fee. If you cop a late fee, cash handling fee or any other crazy fee, try and get it reversed. This can be as hard as trying to swim the English Channel. They fight tooth and nail not to give you back your money. Sometimes you will have a victory in fighting it. However, most times you will just have to learn your lesson and move on.

My advice is to learn your bank fees inside and out. And then get organised to avoid them.

Thanks
Adam Goulding (Also known as Mr Home Budget)
www.mrhomebudget.com.au