KBC takes on lenders with plan for free banking
Competition among banks is stepping up after KBC Bank said it would offer current accounts without fees.
The change comes as post offices are set to challenge banks with a new payments account, and Bank of Ireland is restricting its cash services.
Belgium-owned KBC will not charge any transaction fees or maintenance charges on its new KBC Extra account, as long as people put at least €2,500 of their salary into it every month.
This is in contrast to its standard current account, which has a €6 fee every three months and charges of 30c for ATM withdrawals.
Along with free banking, those who open the new account will also be able to opt for a bonus of 2pc on the new Extra regulator saver account. This means the annualised rate on this account rises to 4pc.
Customers who sign up for the Extra current account can also get a 2pc discount on personal loans, avoid fees for setting up an overdraft, and get cash rewards on grocery and online purchases for a short period when they open a credit card account.
They also qualify for a discount on their variable mortgage rate on the new current account.
Free banking was a feature of the market before the financial collapse, but banks reacted to the downturn with incremental increases in fees and charges.
This means it costs up to €120 a year for day-to-day banking services for customers of AIB and Bank of Ireland.
Head of retail banking at KBC Dara Deering said she expects the new offer to prompt thousands of people to switch their bank accounts to KBC.
Meanwhile, Permanent TSB is understood to be planning to introduce rewards and incentives on its current account early next year. Credit unions are also attempting to offer day-to-day payment accounts.