And then there were six. Not so long ago Irish consumers had a feast of choice when it came to choosing a current account provider: Halifax/Bank of Scotland, Postbank, Danske Bank and ACC Bank were just some of the options.
Indeed a staggering 14 institutions signed the Irish Banking Federation’s (IBF) switching code for current accounts back in 2006.
Now however, the market has shrunk considerably, leaving just six providers for consumers to choose from.
Not only that, but one of these, EBS, is actually owned by another, and doesn't offer typical current account services such as an overdraft, while the future of another, Ulster Bank, remains a little hazy. So what's a consumer to do?
Well, if you’re one of the 100,000 personal banking customers at Danske Bank, or the 6,500 at ACC Bank, you will be in the market for a new current account provider. And if your bank is still in business but you’re fed up with the raft of charges imposed in recent times, you might also be looking to switch from your current provider.
If you are a Danske Bank customer, you will need to start making a change soon as the Danish bank is set to phase out its personal banking services during the first half of 2014.
Somewhat surprisingly however, the bank told The Irish Times that to date, customer queries in relation to its announcement have been quite low. The same is true at ACC Bank, where at the time of writing no current account switches have been completed.
So why aren’t customers rushing to switch? Perhaps it’s because the options out there aren’t all that enticing.
Free banking
Not so long ago all the banks had easily accessible free banking options. Now you'll really have to search them out.
Best of the bunch at present is Permanent TSB. Yes, you will have to commit to certain transactions on your account, but the level is considerably lower than at other institutions.
If you deposit at least €1,500 a month into your account (your pay-cheque for example) you will qualify for free banking, thus saving yourself a quarterly transaction fee of €12.
Ulster Bank is perhaps next best: you can either lodge, or deposit, at least €3,000 a month to save yourself a quarterly fee ranging from €12-€42.
AIB also offers free banking, but to avail of this you'll need to keep €2,500 in your account at all times – a figure which may just be out of reach for many, particularly considering you won't be paid interest on it.
Bank of Ireland does offer free transactions if you keep €3,000 in your account - but there's no avoiding its €5 quarterly maintenance fee.
The fees
Over the past 12 months or so, banks have been following each other in lashing on new fees and charges to their current account offerings. And these can add up.
Take Bank of Ireland for example. Whatever you do, you’re going to be stung for €5 every quarter, or €20 a year. If you can’t keep a balance of €3,000 in your account (and this will earn 0 per cent in interest) you will also have to pay transaction charges.
Based on 40 transactions a month, you’ll pay €8 a month, or €96 a year. Throw in a couple of additional transactions such as cheques, setting up an overdraft and statement printing and you could be looking at the guts of €150 in yearly charges.
Perhaps we have only ourselves to blame. Irish banking customers tend to be loath to switch – a survey from Permanent TSB showed that almost three-quarters of those who opened a bank account with their First Holy Communion money are still with the same bank – and banks know this.
Indeed almost half of all under-35s bank with the same institution as their parents. With such an apparently captive audience, increasing fees and charges won’t send customers flocking to a new bank. Or at least not until now.
Golden years
Current accounts for the over-60s is another area where banks have been quick to impose charges. Those aged 60 and over are currently enjoying free banking with Bank of Ireland for example. However, from next February, you'll have to be 66 to get charges such as the quarterly €5 fee waived.
Over at AIB, those aged 60 and over are still enjoying maintenance and transaction free banking, as well as other incentives such as commission free foreign exchange, while Permanent TSB operates a similar policy.
Overdrafts
If you regularly need to avail of an overdraft, opting for the bank which offers the keenest rate might be the best option – if of course they agree to it.
Ulster Bank, for example, offers an interest-free overdraft on up to €1,000 as part of its ufirst gold current account. However, you will incur charges of €14 a month on this account, which also gives you worldwide annual travel insurance and mobile phone insurance.
AIB offers a rate of 11.85 per cent on an authorised overdraft, but be careful about going overdrawn without warning.
For a State-owned bank, AIB’s combined interest rate of almost 23 per cent on unauthorised overdrafts – in addition to a €25.39 set-up fee – is a little hard to swallow. Indeed as our table shows, this is the highest rate levied on unauthorised overdrafts.
If you’re looking to move an outstanding overdraft or loan from either ACC Bank or Danske Bank, it’s not yet clear how this will work.
A spokeswoman for Danske Bank says it will be in touch with customers in due course to explain the options, while ACC Bank, which has 2,000 customers with overdrafts on their current accounts, will assess these on a “case by case basis”. According to a spokeswoman for the bank, some may be offered term loans to work out the overdraft.
Consider a credit union?
Given the raft of charges imposed by banks, opting to set up a current account with your local credit union might be a more palatable alternative.
While the recent experiences of Newbridge Credit Union, which was forced to be acquired by Permanent TSB given its financial difficulties, might make people think twice about credit unions, many remain in robust health and as such, it could be a real alternative.
From February next year, credit unions will be able to make payments into their accounts by electronic transfer.
According to the Irish League of Credit Unions, this means that a credit union account will offer a real alternative to a current account.
However, the service will be rolled out over time, so while the first credit unions may sign up from February, you may to wait a little longer for your own credit union to offer the service.
Switching accounts . . . what to expect
The Irish Banking Federation in association with the Irish Payment Services Organisation has set up a step-by-step guide for those looking to switch.
1 Ask your new bank for a switching pack. This will take you through the process, step by step and explains what to expect along the way, who is responsible for what, how long it will take and exactly what you have to do.
2 You don’t have to close your existing personal account when you switch – except perhaps in the instances of Danske Bank and ACC Bank which are no longer providing the services.
3 Your new bank should have your account up and running within 10 working days once they have approved your application.
4 Your “old” bank will provide your new bank with information on your standing orders and direct debits in order to complete switching your account. As soon as the new bank sends a signed transfer of account form, this switch will be completed within seven working days.
