Australians are still paying too much in bank fees, with banks raking in over $4 billion in 2010 from bank fees on household accounts alone, according to financial comparison website RateCity.

Figures released by the Reserve Bank of Australia (RBA) on June 16, 2011 show a $14 million drop in total bank fee revenue in 2010 compared to 2009 (including both household and business banking), which was the first recorded total decrease since the RBA first began collecting the data in 1997.

But Damian Smith, RateCity’s CEO, said that Australians are still paying too much in bank fees.

“It’s great to see that bank fee revenue is falling and Australians are paying less than they were in 2009. But households still paid $4.25 billion in bank fees in 2010, that’s $506 per household – and these figures don’t include interest charges,” he said.

The drop in total bank fees by $834 million from households in 2010 compared to 2009 was largely due to the abolishment of exception fees by many institutions. Exception fees include charges for over-the-limit and late payments on credit cards, and dishonour, default and overdrawn transactions on everyday transaction accounts.

Exception fee revenue from households was down by about 50 percent in 2010 compared to
2009. However, it still made up $652 million in 2010, which was 15 percent of all household bank fee revenue.

Mr Smith said that home loan fees were another area where many households could be wasting money every year.

“Despite a drop in total household bank fees, banks still increased their revenue for home loan fees by $26 million last year. This is quite surprising because the number of home loans taken out in 2010 – including refinancing – was 21 percent less than in 2009.

“While application fees have generally remained unchanged over the past couple of years, we’ve seen a big lift in the cost of ongoing fees. For example, in 2009, RateCity recorded an average ongoing fee out of all residential home loans that charge this fee was $165 – this has almost doubled to an average of $240 per year.

“Ongoing fees will seriously add to the cost of a home loan. If you are paying a 7 percent interest rate with a $240 annual fee for instance, you‟re basically adding an extra $6,000 to your 25-year mortgage or increasing your interest rate by 10 basis points.

“Most Australians can easily save at least $500 in fees if they simply compare their financial products to what’s on the market,” he said.