‘Big 4’ bank profits soaring at your expense

The pandemic and the cost-of-living crisis have resulted in most of us searching for ways to tighten our belts. You would think banks might be sympathetic, but given recent increases to bank fees, you’d be wrong.

There’s nothing inherently wrong with increasing bank fees, particularly in times of high inflation, such as now. If a fee increase helps your business survive through a tough period, most of those bearing the brunt will understand.

The thing is, though, Australia’s major banks have not been doing it as tough as most of us have. Since the arrival of COVID, ‘Big 4’ banks’ profits have soared rather than tanked.

Last financial year (2021-22), the Commonwealth Bank recorded a net profit after tax of $9.673 billion. For the ANZ, the figure was $7.12 billion, the NAB $6.891 billion, and for Westpac the figure was $5.694 billion. Between the ‘Big 4’, that’s a total of more than $29 billion.Yes tThat’s billion, not million.

So surely it’s fair to ask: “Why increase your fees when your profit is healthy?”

It would seem that the answer, at least partly, is that bank fees are significantly contributing to profits. According to a new report from consumer advocate CHOICE, Australians paid $3.2 billion in bank fees in the 2021-22 financial year. That’s more than 10 per cent of banks’ overall profits.

What is concerning – perhaps even galling – is that many of those bank fees are hitting the poorest hardest.

Bank fees – stealing candy from babies?

I have a close friend Harry (not his real name) who, like me, is a freelance writer. The pandemic has seen his writing gigs dwindle, as many who used his services looked to cut costs. As a result, his financial circumstances became very tight.

This led to some serious juggling of bill payments and a fair bit of stress. As good a juggler as Harry is, he sometimes dropped a ball, and a bill went unpaid.

Like many of us, most of Harry’s bills are paid via direct debit. His bank account does not allow his balance to go into overdraft. If there’s not enough in his account to cover a direct debit, the transaction is reversed.

That’s fair enough, but one wonders about the fairness of the next step in the process. An immediate $5 bank fee. Over two years from July 2021, Harry copped this ‘unpaid payment fee’, as the Commonwealth calls it, 25 times.

More often that not, the overdrawn amount that triggered the fee was small, sometimes only a few dollars. Regardless, Harry was charged $5 every time, taking his bank balance further into the red.

Could Harry have done more to ensure that didn’t keep occurring? Of course, and ‘usual Harry’ would have been more proactive. But Harry’s mental health was affected by his circumstances. His anxiety levels rose and he struggled to cope.

Could banks do more?

At the time Harry’s troubles began, July 2021, a large billboard on Hoddle Street in Melbourne featured a Commonwealth Bank ad. Beside a photo of a happy grandmother pushing a happy baby on a swing were the words, ‘Heart lives here’. Harry might have believed that then, but he doesn’t now.

Harry doesn’t expect the bank to give him a free pass, but believes it could have done more. When a customer is going into overdraft more than once a month, shouldn’t that raise a flag with the bank? In these days of automation it would be simple.

Simpler still, and far more profitable, is for the bank to ignore this customer’s potential hardship and slug him another $5 bank fee. Given that this whole process is automatic, that’s an exorbitant fee. It’s hard to imagine the processing cost to the bank for each such transaction is more than a few cents.

Fees please

Harry’s case is perhaps not very common, but the use of credit cards certainly is. The big banks are not missing out there either. Take for instance the 94-year-old whose Commonwealth Bank “low-fee” Mastercard fees rose to 24 per cent. The increase was communicated to her on page three of her statement. Commbank cards also charge a $20 bank fee for late payment, on top of interest already being paid.

Those who can least afford it are often the ones paying those fees. A recent ASIC review found that some Indigenous customers are paying up to $3000 a year in overdraw fees.

Australia is certainly going through a tough period financially. Of some comfort is that those of us impacted are not alone. All of us are feeling the pinch. Well, most of us, anyway. Thanks in part to bank fees, the big banks seem to be weathering the storm quite well.

Do you pay regular bank fees? Do you consider them to be fair and equitable? Let us know via the comments section below.

Also read: Big four banks caught up in law firm data breach

Disclaimer: All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for the ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.

Written by Andrew Gigacz

Andrew has developed knowledge of the retirement landscape, including retirement income and government entitlements, as well as issues affecting older Australians moving into or living in retirement. He's an accomplished writer with a passion for health and human stories.


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  1. No I don’t pay excessive Bank Fees. I’m not an Idiot. Many years ago I had a Commonwealth Bank Account which I rarely used and had only a small amount of money in it. Without any advice from the Bank, to my displeasure, they were deducting $5 a month due to the low balance. I eventually noticed this after five or six months and contacted the Commonwealth Bank immediately. They explained that this was their regular practise for accounts with small amounts and after some discussion, they refunded my $25 or $30. The following day I close the account and open a similar account with another bank. Bye Bye CBA. I have no problem with upfront fees, Banks are not Benevolent Society’s, they have Shareholders and are expected to make a profit. I find most fee’s suffered by bank customers are their own doing, such as poor old Harry. People should take more responsibility for their own fiscal ignorance and not whinge when they received various fees, which in most cases are clearly set out in their agreements with the Banks. As for the Mental Health Card it’s taken over from the Race Card. Poor Me Boo Hoo. Toughen up and take responsibility for your own actions, stop wanting handouts for every mistake you make. It’s simply akin to a Gambler going into a Casino, losing his money and wanting it back because he can’t afford to lose. However, he can afford to win apparently. Sorry, can’t have it both ways. Finally, your comment of some Indigenous Customers paying $3,000 a year in overdrawn fees made me chuckle. Have a look out the window, if anybody was paying those fees, (which would more than likely be written off by the Banks, Anthony ABOanese would see to that) it would be the taxpayer, the man/woman in the street who goes to work everyday and does his/her job to cement the Society in which we live. Jacka.

  2. Must say I am inclined to agree with you Jacka. Bank fees are usually avoidable, especially overdrawing fees. And $5 is way less than they used to be. If you can’t keep track of your account balance, and limit your spending to provide for Direct Debits, maybe you need a simpler type of account?
    I have a CBA credit card, which requires me to spend a certain amount each month to avoid the $35 per month fee. (That’s right, $35 per month!!!) They recently advised me that they were about to almost double the required spend amount, to an amount higher than my monthly income, so I went into my local branch, and arranged to transfer to a different type of credit card. They also refunded me the 3 fee deductions I had paid in the previous 4 months, a total of $105, which was a nice little bonus.
    Not always possible in remote and regional areas, but staying in touch with your bank is a good way to avoid fees.

  3. Here’s a tip, you can put credit onto your Credit Card and with a little practice and discipline, never have to pay interest on your purchases. I do this on a No Annual Fee Credit Card and the occasional few cents of interest are far less than any of the Low Annual Fee Credit Cards costs.
    If the profits of your bank irks you, buy some shares. They pay far better than any of their Term Deposits. The drawback is that generally that dividend is paid just the once every year and if you found yourself short and needed that money, you may have to sell at a less than optimum time.

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