Yes you are paying more in fees.

Interesting to note an article in the Financial Review saying Australia's five biggest banks raked in a combined $6.34 billion from fees and charges in the past year. This represented an increase of $617 milion or up 10% on the previous year.

As we have previously stated margins on home lending have dropped to a level where unless the banks undertake a major restructuring of their distribution and processing operations the level of return is not attractive at all. Therefore to recoup this “lost” income it appears that fees and charges are being used as a revenue raising tool rather than just to cover costs.

This reduction of interest margin income has not only affected the major banks. Your Credit Unions, Building Socities and regional Banks have also suffered, and probably to a greater degree than the major banks, given their traditionally high reliance on home loan interest income to bottom line profits.

Whilst the majority of this group have been havens (and proudly promoted it) to those in the public that won't cop fees and charges it would appear that they too may have to bite the bullet and introduce or increase fees and charges in order to sustain their bottom line.

So at the end of the day whilst you are still far better off with the current low interest rates remember that there is no such thing as a free lunch and shareholders still require a return on their investments. Accept that fees and charges are going to continue to increase, even more so once cost cutting measures such as branch closures and staff redundancies reach critical mass, and if you want to keep them at a minimum review you spending and banking habits and look for products with free transactions per month or loan plus savings account packages and salary pay-in features.

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