With interest rates rising in the past two years at a pace not seen in decades, deposit accounts and the offers savers get from financial institutions have come under the spotlight.
However, we tend to overlook the bread and butter current account at our peril.
For the vast majority of us, the bulk of our cash is in these accounts – as long as we have them.
In recent years, the fees charged by banks and other institutions on checking accounts have increased, with some imposing flat fees and other fees on individual transactions.
With decision deadlines quickly approaching, a look at current account offerings should be near the top of your list.
Disruption
Historically, there has been huge inertia among consumers in switching checking accounts here.
Once the bank signs us up, they tend to keep us for life.
Conversion rates have soared in recent years which has presumably been driven by the departure of two lenders – Ulster Bank and KBC – from the market with their customers essentially having to make the switch.
In fact, it is not the most straightforward process. It’s certainly not as easy as switching providers.
Direct debits and standing orders must be changed to the new organization, payroll authorizations must be changed to route payroll to the new account, and there are the usual regulatory hoops a new customer must jump through when signing up for a new organization.
The central bank has a code of practice in place to make the switch as smooth as possible and the new institution will do a lot of the work once it has the details.
However, there are some tasks that must be done by customers themselves.
“If you have direct debts outside Ireland, you will need to notify these providers yourself,” the Competition and Consumer Commission advises.
“Similarly, if you have any recurring payments on your debit card such as music streaming or gym memberships, you will need to notify these companies of your new card details.”
Another thing to watch out for is to make sure you negotiate lines of credit with the old bank, such as overdrafts and credit card limits, with the new provider as they don’t automatically transfer.
Banks
The two major banks have very different current account offerings.
Bank of Ireland, having charged individual transaction fees for some customers until recent years, introduced a flat fee structure in late 2020.
The new system means that those customers who mainly benefited from “free banking” by keeping a certain limit of funds in their current accounts will no longer be able to do so.
The bank now charges a flat monthly account maintenance fee of €6 without any additional transaction fees.
While the bank has been criticized for its slow pace of technological innovation, the feature set offered in its app has improved in recent times.
AIB’s online services and mobile apps are generally viewed as better and more innovative than its direct competitors with all the most popular mobile payment options available – Apple, Google and FitBit Pay.
However, its current account offering is a little more expensive than other providers, depending on frequency of use.
The bank charges an eye-catching quarterly maintenance fee of €4.50, but charges 35 cents per ATM withdrawal and 20 cents per chip-and-pin, self-service, online transaction, direct debit and standing order.
Contactless transactions are free and people who pay their AIB mortgage from an AIB current account can avoid daily fees.
Some of its bank accounts for students and seniors in addition to its basic bank account are free.
Like Bank of Ireland, PTSB charges a monthly account maintenance fee of €6, but the bank’s Explore account offers users the opportunity to reclaim some of these fees.
Customers can earn 10 cents every time they use their debit card to pay for an in-store or online transaction of up to €5 per month.
Users can also earn more money if they are SSE Airtricity or Sky customers with up to 5% cashback if they use the account to pay for these services by direct debit.
Mortgage holders can get 2% cashback on a PTSB mortgage if paid from the bank’s Explore account.
Being also on the back foot in terms of technological innovation, PTSB’s digital offering has improved with Apple Pay and Google Pay now available.
the others
The Post’s current account offering was initially introduced in 2017 and is considered innovative.
However, it is quite expensive with a monthly maintenance fee of €5 plus an ATM withdrawal fee of 60 cents, which drops to 50 cents if the money is withdrawn from an An Post branch with one free withdrawal per week.
There is also a 50-cent fee for depositing cash or checks at the post office.
Other transactions such as direct debit, standing orders, online payments, chip and PIN payment and contactless payments are free.
The credit union current account has also been launched in recent years and has varying levels of fees depending on the branch, but generally has a monthly maintenance fee of €4 per month after which all day-to-day banking is free.
Five free ATM withdrawals are available per month with a 50 cent fee per withdrawal after that.
Direct debit and standing order fees vary from no cost to €2.50, depending on the individual branch policy.
For a very clear account offer without the ‘bells and whistles’, mortgage provider EBS – part of the AIB Group – has an attractive current account product.
Its MoneyManager account has no maintenance fees, daily banking is free and with no minimum funds or monthly residency requirements.
But it has no overdraft facilities, no mobile app, and customers cannot access Google or Apple Pay.
“If you’re happy with the most basic services, this is an account to consider that will cost you almost nothing to run,” recommends Darragh Cassidy, head of communications at bonkers.ie.
However, he warns that the account offering may fall victim to an EBS audit.
“This may lead to it stopping offering savings and current account products and focusing on mortgages instead. So, there is something to consider carefully before switching,” he warned.
United
While more than 90% of people in Ireland do their daily banking via one or more of the banks or other providers mentioned above, a growing number of consumers – particularly young people – are choosing to do their ongoing banking online only via digital apps.
There is an ever-growing pool of providers in the digital space who – because of their smarter, cheaper infrastructure and cost base – can offer lower fees and more innovative product offerings to their clients.
But it’s not free, and the lack of a physical presence on the street can make some banking transactions more difficult and expensive.
The two main providers of digital current account services in the Irish market are N26 and Revolut, although they are not the only ones.
Both have banking licenses and customer deposits are protected under deposit protection schemes of up to €100,000.
Revolut now offers Irish Ibans (International Bank Account Numbers) which should make it easier for customers who may have experienced “Ibans discrimination” with Lithuanian Ibans, which the bank previously offered.
Both Revolut and N26 offer essentially free everyday banking with no maintenance fees, chip or PIN fees, contactless fees and no fees for standing orders or direct debits.
Where services can be a little more expensive is on the expensive side of withdrawing cash.
First, they both charge a fee for providing the physical card.
N26 allows three free ATM withdrawals per month, but after that a fee of €2 per withdrawal applies.
Revolut allows withdrawals of up to €200 per month without fees with a limit of five free withdrawals per month.
After that, a fee of 1 EUR or 2% per withdrawal applies, whichever is higher.
Limited foreign exchange fees make both providers attractive to those who travel frequently.
Both the N26 and Revolut support Apple Pay and Google Pay.
What is the best option?
It largely depends on the client’s needs.
For those who find that the majority – or all – of their banking is done digitally, fintech is worth considering.
For anyone who needs to deposit cash or checks, they will continue to rely on a bank with traditional branch operations.
Daragh Cassidy says the PTSB offer is worth considering with the option of reducing monthly costs through cashback offers.
However, the digital display is its weak point, he says, describing it as “average at best.”
The key is to do your homework and shop.
“There is a choice right now,” Cassidy said.
“You can switch to a better option for you today.”
The question is how many of us will do it. It’s hard to change old habits.