Beware of bank fees

Reporter: Laura Sparkes
Broadcast Date: June 20, 2007

Consumers are being urged to fight the banks with two of Australia's leading consumer groups targeting financial institutions.

Choice and the Consumer Action Law Centre are launching a campaign against hefty and unfair penalty fees charged mainly by the banks.

Banks are charging penalty fees and they have no right to do it according to finance analyst Michael Pascoe.

"Banks are entitled to recoup any cost they incur, one line on your credit card statement might cost $2," he said.

"Charging $30, charging $50 for overdrawing a cheque account by a couple of dollars is just gouging, it's profiteering of the worst order."

Finance author and Smart Investor Editor Nicole Pedersen-McKinnon was outraged over the penalty fee the bank withdrew from her account.

She knew the fee was unfair so she phoned her bank.

"It happens to the best of us, a direct debit came out of my account, I didn't have enough money to cover it so I went into the red and they slugged me with a $30 fee," she said.

"I explained the situation I had never done it before, I'd endeavour it wouldn't happen again and they waived it."

Choice and the Consumer Action Law Centre (CALC) have started a Fair Go on Fees campaign, encouraging consumers to lobby their banks demanding refunds on penalty fees.

Nicole Rich from the CALC has been campaigning against the penalty fees for years.

"We want to let everyone know that these fees are unfair, excessive and quite possibly unlawful," she said.

"If the bank had to write to you and ask you to pay the fees, we don't think they'd be able to get away with it."

Nicole pointed out the banks penalty fees are a rort and we should fight back.

"Under contract law, if you make a mistake or default the bank is allowed to recover their costs for dealing with that, they're not allowed to fine you or punish you or make a profit from you," she said.