Customers pay for bailout
Permanent TSB is to increase its credit card rates by 2pc early next month
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Friday November 14 2008
BANKS are making customers pay for the State bailout by passing on higher charges and fees to them.
A string of banks and building societies have hiked the charges and interest rates they impose on customers on credit cards, personal loans, overdraft rates, mortgages and business lending, the Irish Independent can reveal.
The move to jack up fees and charges comes despite two cuts in European Central Bank rates in the past five weeks.
Consumer advocates have accused banks of gouging customers to help fund the cost of the State bailout, and fund the attempts by banks to rebuild their balance sheets.
The State has provided a guarantee for €450bn to cover the liabilities of seven banks.
Now an investigation by the Irish Independent has uncovered that
- Permanent TSB is to increase its credit card rates by 2pc early next month.
- Other banks that have increased credit card rates include AIB, Ulster Bank and First Active.
- AIB will not pass the second of the two ECB cuts to its customers with personal loans.
- National Irish Bank has hiked the surcharge it imposes on customers who have an unauthorised overdraft from 6pc to 9pc.
- Bank of Ireland, ICS Building Society, Permanent TSB and KBC Homeloans are refusing to pass on all of the recent ECB rate cuts to new mortgage customers.
- Businesses are also complaining that they are being forced to pay higher rates on loans.
- Investors who bought buy-to-let properties have been told by EBS and Irish Nationwide building societies that they will not benefit from the lower rates.
- Bank of Ireland has introduced new fees on five of its credit cards.
Banks and building societies have also hit customers by cutting rates on savings accounts.
EBS, Bank of Ireland, First Active, National Irish Bank, Anglo Irish, Permanent TSB and RaboDirect have cut the rates.
Evidence of the higher charges came as Bank of Ireland yesterday said it made profits of €286m from its retail operations in this country in the first half of this year, a drop of 25pc on the same period last year.
Last night vice-chairman of the Consumers' Association Michael Kilcoyne called on the Financial Regulator to stop the banks penalising consumers and small firms.
"The banks have contributed to the state that the country is in and now the State is bailing them out. They are shoving up charges which is penalising the same customers who are guaranteeing to bail them out."
A spokesman for the Irish Banking Federation said banks were being forced to increase fees as they were still being hit with higher costs for funds despite the rates cut.
The spokesman stressed that banks were forced to apply to the Financial Regulator for increases in fees.
- Charlie Weston Personal Finance Editor
