Tiny numbers switch banks despite higher charges
THE number of consumers moving their current account to another bank has fallen to its lowest level since records began.
This is despite a number of banks increasing the cost of operating a day-to-day transactions account.
Just over 1,500 people switched bank accounts in the second half of last year. This was down almost 1,000 on the same period in 2017, according to the Central Bank.
It was the lowest level of switching in the five years since the regulator first started recording switcher activity. Switching accounts can mean savings of up to €150 a year.
It comes as both Ulster Bank and Permanent TSB made it much harder this year to avoid paying fees for day-to-day banking.
The Central Bank said the low number of consumers moving bank accounts is despite a rise in the overall number of accounts and more money being held in them.
Many banks require consumers to keep a balance of up to €3,000 in their current account at all times to avoid being levied with fees.
Central Bank data shows that there are now 5.3m current accounts held by personal customers.
And the amount of money held in these has doubled from €16.2bn in the second half of 2013 to €31bn.
Consumer reluctance to switch comes despite Permanent TSB planning to increase the fixed monthly fee for its Explore current account by 50pc. This will make it more difficult for customers to qualify for free banking.
From August the fixed monthly fee for its Explore current account will rise by 50pc, from €4 to €6.
This means that over a year the new cost will be €72 for operating the Permanent TSB Explore account, up from €48.
The bank came in for strong criticism when decided that from March people on legacy accounts now have to pay the €18 quarterly fee unless they keep a balance of €2,500 in the account every day.
Earlier this year Ulster Bank imposed transaction charges for operating its current accounts, a move that is likely to see thousands of customers hit with higher costs.
Up to April Ulster Bank charged its current account customers a monthly maintenance fee of €4, but it had no transaction charges for the likes of ATM withdrawals or for paying with a debit card.
It has reduced the monthly maintenance fee to €2, but will charge customers transactions fees for using the current account for their day-to-day banking.
AIB and Bank of Ireland require customers to keep between €2,500 and €3,000 in credit in their accounts to avoid fees.
Bucking the trend, KBC is to make it easier for free banking from the end of this month on its Extra Current Account.
Daragh Cassidy of price comparison site Bonkers.ie said the level of current account switching remains chronically low.
“Irish people continue to show huge loyalty towards their banks despite everything that’s happened over the past few years.”
He said the figures relate to the second half of last year, before Ulster Bank and Permanent TSB announced a hike in their current account fees so we might see an increase in switching levels when the next set of figures are released.