Banks react to NAB fee cut
(14 August 2009 – Australia) Part of the Australian banking market has reacted to NAB’s decision to cut overdrawn account fees late last month, but not all banks have done so.
Over two weeks on from NAB’s market leading decision, CBA, Westpac and St George have all made public their decision to follow suit and cut some of these large penalty-type fees.
But the reality is not so simple, as no two banks made the same volume or depth of fee-cutting decisions.
While NAB was the brave market leader, the bank made the decision to only cut the $30 overdrawn account fee on personal transaction and savings accounts. Importantly and uniquely, NAB cut the fee totally.
Westpac and St George were next in line, announcing a significant reduction on all exception fees for both retail and business accounts, including credit cards, down to $9.
The two banks, unsurprisingly, mirrored each other, including reductions to the account payment honour fee, outward dishonour fees and credit card late payment and over limit fees.
The other bank to make an open move on fees was CBA, announcing that it will reduce exception fees across a range of personal and business transaction accounts.
CBA will reduce dishonour fees from $35 on business and personal transaction accounts to $5, and overdraft fees from $30 to $10. It will also reduce the late payment fee on Home and Personal Loan accounts from $45 to $25.
Unlike Westpac, CBA will not reduce exception fees on credit cards, but instead will introduce functionality next month that allows customers to put their own stop on transactions that will exceed their credit limit at the point of sale.
ANZ is developing a strategy to ensure a better understanding of fees, although it, as well as the regional banks, have not yet made any announcement on fee reductions in reaction to NAB.
But the reality is not so simple, as no two banks made the same volume or depth of fee-cutting decisions.
While NAB was the brave market leader, the bank made the decision to only cut the $30 overdrawn account fee on personal transaction and savings accounts. Importantly and uniquely, NAB cut the fee totally.
Westpac and St George were next in line, announcing a significant reduction on all exception fees for both retail and business accounts, including credit cards, down to $9.
The two banks, unsurprisingly, mirrored each other, including reductions to the account payment honour fee, outward dishonour fees and credit card late payment and over limit fees.
The other bank to make an open move on fees was CBA, announcing that it will reduce exception fees across a range of personal and business transaction accounts.
CBA will reduce dishonour fees from $35 on business and personal transaction accounts to $5, and overdraft fees from $30 to $10. It will also reduce the late payment fee on Home and Personal Loan accounts from $45 to $25.
Unlike Westpac, CBA will not reduce exception fees on credit cards, but instead will introduce functionality next month that allows customers to put their own stop on transactions that will exceed their credit limit at the point of sale.
ANZ is developing a strategy to ensure a better understanding of fees, although it, as well as the regional banks, have not yet made any announcement on fee reductions in reaction to NAB.
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