Bank Charges To Rise Next Month

Press, Volume CVII, Issue 31501, 16 October 1967, Page 1

Bank Charges To Rise Next Month

I rading banks have announced a new system of cheque account charges to operate from November 1. Inland exchange will be abolished, the basic fee will be increased, there will be a ledger activity fee and a clearance fee of three cents a cheque.

From December 1 there will be an unused limit fee on overdraft limits of more than $40,000.

The new charges will be: | A base fee of $1.30 a half year ($1 at present) on all cheque acounts at present subject to half-yearly-charges. A ledger activity fee of 4 cents a ledger entry except that a customer will be entitled to the first 100 entries each half year free. A clearance fee of 3 cents an item on all cheques and other items, but not cash, paid in for credit to an account except that the first item on any one day will be allowed free. This will be collected by the teller. A customer cash-; ing his own cheques will | do so free of charge. I A credit transfer fee of 5 cents will be charged on money deposited for transfer to the credit of an account of another branch or bank. Inland exchange was paid I on fewfer than a quarter of] all cheques issued and customers who paid the charge

were subsidising many other cheque users, the ehairman of the New Zealand Bankers’ Association (Mr J. Mowbray) said in a statement yesterday announcing the changes. Free Service Accounts of churches, charitable societies and certain non-profit organisations would continue to be free of current account fees, Mr Mowbray said. “About 75 per cent of customers, including almost all private account holders, have fewer than 100 ledger entries a half-year and so will pay no fee for ledger activity other than the $1.30 base fee,” he said.

“The first item paid into an account on any one day is free of the clearance fee. This means that if only one cheque is lodged, say a salary cheque or dividend warrant, no clearance fee will be charged." ■ Mr Mowbray said the new [system was introduced after [extensive research and testing. It would result in no in'crease in bank revenue. The

new fees would continue to be among the lowest in the world.

On the overdraft fee, Mr Mowbray said the small number involved—about 1 per cent of borrowing customers throughout New Zealand—would be notified Individually of the details. In effect, it was a charge of | per cent a year on the unused portion of the limit, less certain rebates, and would be charged at the end of each half-year. Early in 1965 the trading banks proposed to abolish inland exchange and the 10s a half-year fee and to institute an activity fee of 4d on each entry, with a minimum charge of 5s a quarter. There was to be a rebate of 15 free entries for every full £250 in an account throughout each quarter. There were widespread public protests. The Retailers’ Federation called on the Prime Minister (Mr Holyoake) to grant cheque facilities to the savings banks and the Auckland Trades Council I pressed trade unions to withdraw accounts from trading banks and place them with the Post Office or trustee savings banks. Eighteen days after the banks had announced the new charges on February 27 they were to come into effect on April I—the Bankers’ Association said introduction was to be deferred “for a month or so.” This was done at the request of the Reserve Bank, which wanted to examine some aspects of the new system. On April 1 the association said the examination would take months.

Inland exchange was introduced last century to cover the risks and costs of transferring cash from one part of the country to another and also to provide recompense for the time involved in clearing cheques. The banks say it has become increasingly inappropriate and anomalous under modem conditions, and the .trend would countinue as the introduction of computers sped the clearing of cheques: but it remains one of the banks’ main sources of revenue for cheque account services.