FAMILIES will pay €260 next year in bank charges alone as lenders turn the screw on their own customers.
The escalating cost of current accounts means that a household with just two accounts will pay hundreds of euro to their bank to handle their wages, pay bills and operate payment cards.
In many cases families would have paid nothing for those services just two years ago.
Now credit unions have been cleared to start operating electronic payments – a move that will eventually see them offering full current accounts.
The decision will be a boost to hard-pressed consumers as eight out of 10 people have underestimated the amount they are charged by banks, according to research by Amarach and Dr Michael Dowling of Dublin City University.
Most people think they are paying half of what they are actually spending on charges and fees imposed by their bank.
It is the first time that research has been done on the cost of consumer banking since Bank of Ireland ditched free banking and introduced fees and charges in 2012, with AIB and Ulster Bank following suit with their own consumer charges.
Dr Dowling said the three banks held about 3.3 million current accounts.
The banks account for almost eight out of 10 personal current accounts in the market.
Retail banking took a massive hit this month with ACC handing back
its banking licence and Danske Bank saying it would stop offering consumers banking services.
The research, funded by Permanent TSB, found most people who opened a bank account with their First Holy Communion money were still with the same bank.
But consumers may soon have an alternative to retail banks, with credit unions given a licence yesterday by the Central Bank to operate electronic payments.
This will mean people will be able to have their wages paid into their credit union and make payments electronically out of their credit union accounts. It is the first move before the locally owned lenders offer full banking services such as debit cards.
A total of 169 credit unions throughout the island have signed up for the initiative, with Danske providing the payment infrastructure. There are 147 credit unions in the Republic.
The Danske move confirms that it intends to stay in wholesale and corporate banking, despite recently ditching retailing banking.
A new body, owned by credit unions has been set up to handle the payments. Credit Union Service Organisation for Payments will facilitate the transfer of payments from bank accounts, wages or social welfare offices directly into credit union accounts.
CEO Kevin O'Donovan said the new payments service would be running by February, with debit cards set to be rolled out after that.
Banks have been upping the fees they charge throughout this year. Next year the full force of the new fees regime will mean the average current account holder will end up shelling out about €90 in fees, and another €41 in charges for the likes of non-authorised overdrafts and bounced cheques.
Dr Dowling used Central Bank research to work out that the average person with a current account ends up paying a total of €133 each, yet most people were unaware of this.
"For every four people you see queuing at the ATM, at least three of them are being unnecessarily charged fees for withdrawing cash and at least one of them is desperately unhappy with their banking provider."
He said that rather than being loyal to their bank by not switching to a better-value account, consumers were guilty of inertia.
AIB charges €4 a quarter and up to 39c per transaction unless €2,500 is kept in the account at all times. Bank of Ireland requires a credit balance of €3,000 at all times to avoid transaction charges of up to 40c each. But even if €3,000 is kept in the account, it has been charging a maintenance fee of €5 a quarter since August.
Ulster Bank introduced a €4-a-month maintenance charge for its customers during the summer unless they lodged €3,000 a month or kept a balance for the same amount.
KBC Bank has a €6 quarterly charge, with charges of up to 30c per transaction if the balance falls below €2,000.
Permanent TSB offers fee-free banking if €1,500 is lodged to the account every month.