AIB is to change how it calculates fees on its current accounts, tightening up the criteria customers must meet to qualify for free banking.

From May 28th, customers using the bank's current accounts will now have to keep the balance of their account above €2,500 or face incurring fees.

Prior to this, customers only needed to make at least one purchase on an AIB debit card during the fee quarter and carried out one transaction through AIB phone and internet banking during the same period.

"This change is driven by the need to enhance cost recovery across all AIB businesses, including the provision of money transmission services, the cost of which is significant," AIB said in a statement.

Under the new rules, those who do not meet the criteria will be charged €4.50 per quarter as a maintenance fee. Charges will also apply for other transactions, with the use of a laser card incurring a 20 cent charge and withdrawing cash at a branch costing customers 30 cent each time. 

AIB says 40 per cent of its customers will still qualify for free banking; however, that figure also includes student and graduate accounts, and customers over 60 on AIB Advantage accounts, who will continue to get free banking under the existing terms of their accounts.

"While this was a difficult decision to make, nonetheless it is a necessary one if we are to continue to create the conditions in which we can become a strong and viable entity again," AIB's director of personal and business banking Bernard Byrne said.

The National Consumer Agency (NCA) described the move as "overly restrictive" and disappointing.

"Clearly, many people do not have €2,500 that they can leave permanently sitting in their current account,” the NCA's chief executive Ann Fitzgerald said. "Many consumers will be unable to meet this condition unless they move money from a savings account into their current account, thereby losing out on the interest they would earn."

The NCA called on AIB's customers who met the previous criteria for free banking to use the next two months to review their statements, assess the charges they will be subject to, and to consider switching accounts to maintain free banking services.