Banks cutting fees in effort to win customers

Monday August 3, 2009

Australian banks are trying to win back the confidence of their customers in a fit of fees cutting following the successful of National Australia Bank's effort to cut their overdrawn accounts fees. Last week the National Australia Bank announced that it would cancel its $30 overdrawn account fee from its transaction and personal accounts as of 1st October 2009, a move predicted to cut $100 million from the bank's bottom line. It also received support from its banks customers, consumer groups and Prime Minister Kevin Rudd.

Today, Westpac and St George have announced that they too will be cutting their overdraft fees for all accounts, dropping the fees from around $45 to $9, again taking effect from 1st October 2009. This cut to $9 is supposed to cover the costs to the bank whenever an account is overdrawn or when a bounced cheque is processed.

The fees cut will affect several of the banks accounts including outward dishonour fees, credit card missed payment, account overdrawn fees and over-the-limit fees. The bank stated that it expects to improve the banking system for over five million personal and business customers. For the bank, it expects to lose between $200 million to $300 million a year from reducing its fees.

No word yet from ANZ or Commonwealth banks regarding their charges, with both sitting at $35 and $30-$35 respectively.

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