New research by financial comparison website RateCity has found that Australians have wasted $413.5 million in the past year on monthly service fees charged on many transaction accounts.
Out of the 135 transaction accounts monitored by RateCity, less than half (40 percent) charged a monthly service fee. The average monthly service fee is $5 per month and can be up to $10 per month.
Damian Smith, CEO of RateCity, is urging Australians to go "fee free" following the surprising amount of money that Australians waste on transaction account monthly service fees.
"There are far too many Australians paying unnecessary monthly fees for their transaction accounts as we estimated over $413 million being wasted on this fee every year," Smith said.
"According to RateCity's database, more than half (60 percent) of transaction accounts available don't charge a monthly service fee so there's no reason why so many of us are wasting our money here."
The RateCity research showed that those Australians that pay a monthly transaction account service fee waste on average $60 per year before they even access start their funds.
"We advise consumers to take control of their finances and put this dead money back into their own pockets," Smith said.
Many Australians who pay a monthly service fee on their transaction accounts believe they receive a better service or superior features but Smith said this is a common misconception.
"It's important for Australians to also understand that fees don't necessarily equate to a better service or increased features on your transaction account," Smith said.
"While transaction accounts are one of the most inconvenient products to switch because you have to manually move all of your automatic debits and credits to your new account, saving on average $60 a year is well worth the effort."
While no service fee options can be better value, Smith warned that some no-service-fee transaction accounts can end up costing more in transaction charges.
"Just because an account has no monthly fees, it does not guarantee that it will be free of all costs," Smith said.
"For instance, 35 percent of the transaction accounts monitored by RateCity, with no monthly fees, charge for every direct debit and EFTPOS transaction.”
In March the Reserve Bank of Australia (RBA) banks make more on transaction account fees than any other product.
In 2009, banks earned a combined $1.64 billion from transaction account fee revenue, compared with $1.24 billion from home loans.
Almost 40 percent of all cash withdrawals in January were from so-called foreign ATMs, as a result Australians were wasting around $53 million a month on fees.
Ninemsn owns 50 percent of RateCity.