Business Personal Finance

Sunday 8 December 2019

How to survive without a costly bank account

Illustration by Tom Halliday
Illustration by Tom Halliday
Louise McBride

Louise McBride

In five days time, it will become almost impossible for Ulster Bank's 600,000 customers to dodge current account fees.

Like most other banks, Ulster Bank charges account maintenance fees - and unless you can consistently keep a wad of cash in your account from this Friday, you won't avoid them.

Between higher bank charges and the technical glitches which have locked hundreds of thousands of people out of their bank accounts from time to time over the last couple of years, you might well be asking yourself if you could get by without a current account. So can you?

The answer is yes - but only if you're prepared to put up with a bit of donkey work. Here's how.

Get paid by cheque or in cash

Most employers ask for your current account details when you start working for them - and it is into this account that your salary will be paid. Although cheque usage is falling, see if your employer can pay you by cheque instead. You could then lodge your pay cheque into a standard An Post or bank deposit account - though it will typically take a few days for the cheque to clear.

Getting paid in cash would be even easier - though most employers have stopped doing so. Remember, you'll still need somewhere secure to store your money should you get paid in cash. Consider lodging it in a savings account which you can withdraw money from at any time.

Get your salary paid into a savings account

Some banks, such as Ulster Bank, said that it would not be possible to get a monthly salary paid into a savings account. However, AIB and Permanent TSB said otherwise.

"In general, funds can be transferred in (to savings accounts) or lodged from anywhere including external accounts," said a spokeswoman for AIB. "However, some accounts do not allow mid-term lodgements and some older regular savings accounts have a monthly maximum lodgement amount. Where a lodgement is allowed, a customer can lodge their monthly salary - we normally would not be able to tell what type of lodgement it is."

A spokeswoman for Permanent TSB said you could get your salary paid into a savings account. "Demand account offering would be most appropriate, such as the Booster Bonus Account," she said.

The advantage of getting your salary paid into a savings account is that you would cut down on the fees you would otherwise be hit with on a current account. Remember however, you could be restricted from withdrawing money from a savings account, particularly if you must give a certain amount of notice to take out money or if you are only permitted a couple of withdrawals a year. For this reason, savings accounts which allow you to withdraw your money at any time are best if you are considering getting your salary paid into one.

You're unlikely to be able to set up direct debits on a savings account. Most banks allow you to transfer money from a savings account to another external account however. You can also usually accept money transfers with a savings account.

Remember you may be hit with a charge if you transfer money from a savings account - particularly if it is an international transfer.

Join the credit union

You may be able to get your salary paid into a credit union account. In November 2013, credit unions got a licence to provide electronic payments services. "The service allows credit union members to have their wages, salaries or any payments from a bank, employer or social welfare office paid directly into their credit union by electronic transfer," said a spokeswoman for the Irish League of Credit Unions (ILCU), which represents credit unions.

You can also set up direct debits with some credit unions - as long as they have signed up to an electronic fund transfer (EFT) service.

You will need to check directly with your credit union to see if you can get your salary paid into your account or to set up direct debits. Only a small number of credit unions currently offer these services. A full roll out of direct debit services is expected to start this February, according to the ILCU spokeswoman.

"Currently, most credit unions do not charge for EFT services but it is best to check with your own credit union," added the spokeswoman.

The ILCU also said there are plans to introduce debit cards for credit union members in mid-2015.

Remember, many credit unions already offer a 'Budget Account' which allows members to pay all their household bills, such as mortgages, ESB, house insurance, and phone, through the one account.

Pay your bills through An Post

You cannot get your salary paid into an An Post deposit account. However, you can pay many bills in cash at an An Post branch or through Postpoint (a subsidiary of An Post). There are more than 3,000 outlets offering Postpoint across the county. So for this reason, you don't need to have a current account or debit card to pay certain bills - as long as the bill can be paid in cash at your local post office or through PostPoint.

An Post also has online bill paying services known as mybills.ie and billpay.ie. However, you need a debit card to pay your bills through these.

Sacrifice your debit card

You won't be able to get a debit card without a current account so if you want to survive without a current account, you will have to sacrifice your debit card.

Pay your credit card bills in cash

You don't usually need a current account to get a credit card. AIB, Bank of Ireland, and KBC said you don't need a current account to open a credit card with them for example. However, Permanent TSB said you would need a current account. Having a current account could also make it a bit easier to get a card. "We do require evidence of income and outgoings as part of the credit decision - normally this would be done by providing statements from a current account," said a spokeswoman for AIB.

Some banks, including Ulster Bank, Permanent TSB and AIB, allow you to pay your credit card bills over the counter in cash. This means you may not need to set up a direct debit or standing order to pay your credit card bills - and so, you could pay those bills without having a current account. With KBC, you can settle your credit card bills by electronic funds transfer, standing order or cheque. Bank of Ireland does not accept over-the-counter cash payments for credit cards.

 

FOR THOSE WHO CAN'T LIVE WITHOUT CURRENT ACCOUNTS

Getting by without a current account can be tricky so if you feel you can't live without one, the EBS Money Manager account is one of the cheapest.

Money Manager is the only current account which does not charge maintenance fees. However, it is also the only account which you cannot set up an overdraft on. All the same, if you are not inclined to go into the red and can restrict your withdrawals to five a month (the first five withdrawals are free if you lodge at least €1,500 into your account each month), this is the cheapest current account.

AIB's personal current account is also worth considering - but only if you can keep at least €2,500 in your account. You'll pay €18 a year in maintenance charges but you can avoid these fees - as well as transaction charges - by maintaining a minimum balance of €2,500.

At €48 a year, Permanent TSB's current account has the highest maintenance fees. However, it is easier to avoid these fees than it is with the other banks. As long as you lodge €1,500 a month into this account, you can avoid account maintenance fees and transaction charges with Permo.

Ulster Bank and Bank of Ireland offer some of the most expensive current accounts.

Ulster Bank charges €48 a year in maintenance fees. From this Friday, you can only avoid these fees by keeping at least €3,000 in your account. (Previously, you could dodge the fees if you lodged at least €3,000 into the account each month). Were you to lodge that €3,000 into KBC's Interest Upfront account (which pays one of the best interest rates on a €3,000 lump sum) instead, you would earn about €33 a year in interest after tax.

Bank of Ireland's current account costs €20 a year in maintenance charges - and up to €33 in lost interest to avoid extra fees. You can't avoid account maintenance fees but you can escape transaction fees, such as ATM withdrawals or direct debits, by keeping at least €3,000 in your account.

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