If you’ve ever felt like your money is disappearing, and you have no idea where it’s going, then you’re not alone. Excessive and unnecessary fees attached to our financial products eat into our income and often go unnoticed by many Australians.
If you have had the same mortgage, credit card and even transaction account for years you might not even remember what fees you agreed to pay when you first signed up. Use the checklist below to help you work out where you can cut out or save money on fees.
1. Credit card annual fees
If you’re paying an annual credit card fee, switching your card to one of the over 60 options on offer with a $0 annual fee is the smartest move. Even if you justify your annual fee by the rewards you have access to, it might be time to weigh up if having the cash in your pocket is worth more.
2. Ongoing home loan fees
Some home loans may charge you a small monthly fee that, over the life of the loan, will add up to thousands in wasted cash. While you shouldn’t pick a mortgage based solely on fees (as the interest rate and features are also important) there are almost 2000 home loans without any fees on the market to consider.
3. Mortgage switching fees
In 2012, the Federal Government banned exit fees on mortgages and RateCity data shows that there’s over 1000 loans on the market with no upfront fees at all, removing one of the last financial barriers to switching.
4. Transaction account fees
Paying to access your everyday bank account each month is a cost that we can all do without. Whether it’s $6 or $30, the fees do add up over time and with plenty of free options available it’s time to say no to this money-draining cost.
5. Superannuation fees
While all super funds incur some sort of fees, the amount you pay can vary wildly from just over $300 a year up to over $1500 a year, based on a $50,000 investment. While a fund’s long-term performance is what will really matter in the end, you may be able to find a fund that has similar performance results for less fees. Also, if you have more than one super account, consolidating them into one will instantly save you money.
6. ATM fees
We have all been guilty of using another bank’s ATM when we’re stuck for cash and paying that pesky $2 fee. Try and make it a goal to never pay this fee again and by saving $2 a week on ATM transactions throughout the year you could end the year $104 richer.
7. Car loan fees
You can save around $7 a month by choosing a loan that has no account keeping fees which can add up to a fair bit of cash over the life of your loan. Making sure you pick a product that doesn’t penalise you for paying it off early can also save you up to $800.
8. Overdrawn fees
Overdrawn fees are charged on your transaction account when you accidentally take more money than what’s in it. Typically, the fee ranges can climb as high as $40 and although they are less common than they used to be, we haven’t quite seen the back of them entirely. Download your bank’s app to keep track of how much you have in your account so you don’t get caught out.
9. Balance transfer handling fees
One way the bank makes money with balance transfers is through a handling fee that will be a percentage of the amount transferred, usually around 2 per cent but can climb as high as 3 per cent. There are over 100 cards on the market that won’t charge you this added fee, so shop around for the best deal before handing over more of your money to the bank.
10. Overseas card fees
The cost of travelling overseas doesn’t have to be added to with currency conversion fees and international ATM fees if you plan well before you go. Compare cards and you will find that there are credit and debit options available that cut out the usual travel fees that can end up adding hundreds to your holiday bill.
So how much do your fees add up to?
Of course, much like death and taxes, some fees are simply unavoidable but that shouldn’t stop you from shopping around. Finding competitive fees and interest rates and avoiding the fees you don’t have to pay will help keep your bank balance in good shape.
