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Thursday 18 September 2014

One-third of customers have lost free bank services

Charlie Weston Personal Finance Editor

Published 12/09/2013 | 04:00

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ONE in three people with a current account has lost their free banking in the past year.

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This amounts to roughly 850,000 adults who are now paying fees for their day-to-day banking.

It comes after the largest players in the market, Bank of Ireland and AIB, introduced a string of charges.

Some of AIB's charges have doubled and Bank of Ireland made it impossible to avoid maintenance fees. The two banks have more than two million current account customers between them.

Fee-free banking has also been withdrawn by Danske Bank. Ulster Bank has also introduced fees this year for those who do not meet certain conditions.

Now research commissioned by the National Consumer Agency, and seen by the Irish Independent, shows that 31pc of those with a current account have lost their free banking in the past year.

Eight out of 10 adults have a current account, a basic account where wages are lodged and used to pay bills. This implies that 2.75 million people have a current account, and 850,000 have lost free banking.

The withdrawal of free banking has prompted people to dramatically change how they do their banking.

Large numbers of customers are now taking out more cash when they make a withdrawal. There is also evidence from the study carried out by market research firm Behaviour & Attitudes that consumers are using debit cards less often.

CONDITIONS

Debit cards incur charges every time they are used unless bank customers meet certain conditions.

A little over a third of people have managed to retain fee-free banking, including students and older people. But they will be tempted to switch to a different bank if they lose their low-cost banking, the research indicates.

The key barrier to switching is the hassle of moving accounts. People are particularly worried about direct debits moving to the new bank.

Separate research from the National Consumer Agency, released last week, revealed that just four out of every 100 people have switched bank current accounts in the past year.

Agency head Karen O'Leary said a big factor behind this was inertia.

In the last week Belgian-owned KBC Bank has launched a new current account and is hoping to attract thousands of customers from rivals.

Permanent TSB has attracted 30,000 new customers after offering an account with no requirement for a minimum credit balance.

Customers can get transaction-fee free banking from Permanent TSB if they make a lodgment of €1,500 each month.

Irish Independent

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