Some 21 service charges on current accounts are to be abolished from next December by Bank of Ireland, which this week announced a major overhaul of the charges associated with operating such an account. There will be a choice of paying charges on a pay-as-you-go or flat-fee structure.
Bank of Ireland is the second major retail bank in the past month TSB was the first to offer customers a choice of how they can pay for ATM and cheque transactions. Gone is the concept of free banking if you keep your account in credit at all times (though free pensioner and student accounts remain).
Gone too are charges for setting up standing orders and direct debits, referral charges for payments made when there are insufficient funds in an account; annual cheque and eurocheque charges and replacement charges for cards or Personal Identity Numbers. It has also eliminated all charges for statements and extra statement copies. Under this new offer the customer opts either to pay 22p per transaction as part of the pay-as-you go system, or a flat fee of £9 per quarter for 90 transactions £3 per month for 30 transactions. Every transaction thereafter is charged at 22p.
According to the Bank, most of its customers make about 36 transactions per quarter. far less than the maximum 90 being allowed under the new offer. at a cost of just under £12 per quarter or £48 per annum. Yet even those customers who now avail of free banking by keeping their account in credit still end up paying for various set-up services like standing orders and one-off instructions. Under the new structure, most customers will only have to pay a maximum of £9 per quarter or even less if they make their usual number of transactions and pay-as-they-go at 22p per item.
The bank expects most of its customers to take the 22p pay-as-you-go option, though for anyone who makes more than 40 transactions per quarter, the flat fee option represents better value.
Customers can switch back and forth between the two systems on a quarterly basis.
The Bank of Ireland current-account revamp is simpler than the TSB's.
The TSB charging structure is still based on keeping your account in credit with lower charges applying, the higher the account balance.
It too brought in a single, flat charge for all transactions, but did not completely limit all service charges such as monthly statements.
Bank of Ireland is writing to customers asking which way they want their accounts to operate from next December anyone who does not respond will be put on the pay-as-you-go system.
The bank says the new accounts are going to cost them millions of pounds, but they also hope giving customers a simpler, more transparent system to work within will ensure their loyalty and extra business in addition to the operation of their account.
