Keeping bank account in order pays off

PEOPLE WHO neglect their personal bank accounts are likely to pay almost 300 per cent more in bank charges than those who keep their affairs in order.

The results of a report from the Central Bank will hardly come as news to many people, although the scale of price differential may be something of a surprise.

The research, published yesterday, found a person who mismanages their account will pay €150 more than a customer who operates within agreed parameters when late fees and transaction charges are included.

The average annual cost of personal current account banking for a person who managed their account effectively was €86 a year.

However this rose to an average of €231 for those who had “out-of-order” accounts – unauthorised overdrafts, unpaid direct debits and over-limit or referral fees.

The survey found that more than 70 per cent of bank customers incur fees of less than €120 per year for their current account.

The research found that the majority of those facing annual costs of over €120 per annum had high numbers of out-of-order transactions.

The research compared current account charges with similar charges applied by a selection of banks in Britain and Northern Ireland. It found customers who keep their accounts in credit are paying slightly higher fees than customers in the UK.

Customers whose accounts go out-of-order are paying much lower fees in the Republic when compared with the UK.

“Our research is evidence that out-of-order charges are the greatest driver in pushing up the cost of running a current account,” said director of consumer protection at the Central Bank, Bernard Sheridan.

Mr Sheridan said it is “important that, where possible, consumers limit the instances of out-of-order activity on their accounts”.

However he advised that people who find themselves frequently straying into an unauthorised overdraft position or are being charged a number of out-of-order charges, should “engage early with their banks to agree a more suitable and less-costly approach”.

The Irish Banking Federation said the report illustrated the importance of efficiently managing accounts in order to keep costs to a minimum.