Westpac follows BNZ, cuts overdrawn account fees in move costing NZ$50 mln (Update 1)

Westpac New Zealand announced it would reduce exception fees on credit card, savings and transaction accounts for both personal and business customers from October 1. Fees will be cut from between NZ$25 and NZ$30 to NZ$9, Westpac said. (Update 1 includes ASB comment.) BNZ announced last week it was abolishing dishonor fees on overdrawn personal and business savings and transaction accounts. Westpac has not abolished the fees completely, but has gone further by cutting credit card dishonor fees. Interest.co.nz broke the story on Monday about Westpac looking at reducing its fees, although it said then the review could take a "few weeks". Westpac Australia announced its fee changes earlier this week, following hard on the heels of BNZ's parent in Australia, National Australia Bank. Exception fees are charged when a customer has insufficient funds available to make a payment, when an account is overdrawn without an overdraft facility in place, or, in the case of credit card accounts, when a due payment is late or an account goes beyond its agreed limit. Westpac said honour fees, which are currently NZ$25 would be removed entirely, and that an unarranged line of credit charge will be applied when a customer becomes overdrawn without a pre-arranged facility, with the charge to be at NZ$9. An honour fee is charged when the bank clears the payment even though the account is over the limit or has no overdraft. Westpac said the fee reductions will cut the fees it charges by NZ$50 million a year. BNZ's fee reductions were thought to be costing it NZ$25 million. "(I)t had become clear some of the fees were contributing to a negative perception of banks, as well as proving a particular burden for a small number of customers having difficulty managing their finances," Westpac CEO George Frazis said. "Recognising these challenges, and as part of our commitment to customers, I'm pleased to be able to announce across-the-board changes that will help many customers avoid exception fees altogether, and for those that do face them, to ensure they are at a much reduced level," Frazis said. "It is appropriate that we continue to apply a fee for service in some instances, which will help ensure we don't encourage customers to overdraw their accounts and pay additional interest rate charges," he said. An ASB spokeswoman said that, quite independant of the recent moves, ASB already had underway a full review of all its fees, which should be completed by the end of August. ASB has never had an honour fee, the spokeswoman said.