Wednesday 18 July 2018

Switching to a new current account? Here are all your options - and the costs - involved

Smash the myths...here's what's involved and where you should go

Smash the myths...here's what's involved and where you should go
Smash the myths...here's what's involved and where you should go
Sinead Ryan

Sinead Ryan

It might not be top of your Christmas wish list, but you don't need Santa to bring savings in the form of a new current account for 2018.

Most of us aren't bothered enough to switch. This is a pity, because there are huge benefits, especially if you're with one of the pillar banks who charge more than anyone else to mind your money.

There are 5.2 million personal current accounts in Ireland, valued at €25.5bn. However, in the first six months of 2017, only 2,715 people switched from one bank to another. Given that 99pc of switches are simple and occur within the 10-day limit, it's baffling.

So, to smash the myths, today I'm looking at what's involved and where you should go. The table shows a summary of costs for each.

They must, under the switching code of the Central Bank, make it easy. They have to handle all your direct debits, bill payments and outgoings as they change over. All you need to do is sign the forms and tell your employer where to pay your salary.

They really do want your business. Current accounts are profitable for banks, and they know the low level of switching means they get to keep you and flog you products like loans and insurance.

Another myth is that it's too expensive. It isn't - in some cases it's free, and you'll end up saving in the long run. Running a current account costs around €90 a year. Switching to a low-cost one might return at least half, or more of that. So, what's out there?

Bank of Ireland

This is boring banking at its best. You're paying high maintenance and transaction charges. To qualify for free banking, you must leave €3,000 languishing in your account. On the plus side, there are lots of branches, but they limit how much you can deposit/withdraw. BoI has a basic account which is free in year one (no overdraft or cheque book), but as this is under the Payment Account Directive, so do most of the others.

AIB

Has upped its game digitally, and has Android/Apple Pay, a snazzy household budgeting tool and great app. AIB also introduced a rewards scheme for shopping in certain stores, but on the downside it's expensive, with quarterly maintenance and transaction charges that are only avoided by leaving €2,500 sitting there.

Ulster Bank

Flat fees of €48 a year mean at least you have fixed charges (there are no transaction fees). Ulster also has Apple/Android Pay, but otherwise all is a little dull. There are plenty of branches and they're not as fussy as others about you going in there.

Permanent TSB

The Explore account allows you to earn rewards with partner companies and just using your ATM card. You can earn a maximum of a fiver a month, but if you do this you can even make a profit of €12 on your account fees by year end. Avoid charges by lodging (not keeping) €1,500 a month.

EBS

Fairly basic offering here, and the online app isn't great, but the good news is that the Money Manager account is free if you don't need anything fancy.

KBC

The Belgian bank has decided to fully embrace digital technology and has tons of trendy stuff. You can open an account in five minutes by app and there's a free current account, but you'll pay €24 a year on the regular one; KBC has Fitbit in addition to Apple and Android. There aren't many on-street branches, though.

An Post

There's a basic current account (no cheques or overdrafts), but it's expensive, at €60 a year. However, the rewards programme is nice, including 5pc cash back on expenditure in Lidl of more than €25. There's a great bill pay service over the counter for utilities.

Tips on Using Your Account

*Using your accounts properly can really help with budgeting. Deposit accounts are free, so set them up, name them for specific goals and get busy on your banking app to move funds between them.

*Use cash back facilities in the supermarket when you can. There is stamp duty of 12c for each withdrawal at an ATM machine in addition to the bank's own charge for this.

*If you can avoid a credit card, do. They cost €30 in stamp duty and it's too easy to build up debt. All debit cards work online now.

*If you're over 65, get free banking; likewise for students in full-time education.

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