Banks will be forced to cap current account commission or ‘admin charges’ to just €3 a month by March 25 in a welcome move introduced this week by Spain’s national government.
Depending upon where you bank, charges can vary from €1.50 to over €12 a month on each and every account, meaning it is not worthwhile setting up separate ones for bills, holidays, car expenses and so on.
Even at €3 a month, banks will still be netting €36 per year per account, but with the high-street finance industry being forced more and more to become competitive and offer customers good reasons to stay, some are opting to reduce or even axe commission altogether.
Unfortunately, many banks continue to demand a minimum average balance of around €2,000 to €3,000 a month to waive commission – amounts unlikely to be maintained by the ordinary wage-earner and high enough that €36 a year in admin fees would not make much of a dent.
The difference now is that the €3 a month maximum must cover credit and debit cards, meaning charges for renewing expired ones must be included, and up to 120 annual withdrawal or payment operations within the entire European Union, not just Spain, to include direct debits, standing orders and transfers.
Once these 120 transactions – averaging 10 per month, which is very low for a current account used for everyday expenses – have been exhausted, banks are still not permitted to increase commission beyond their usual amounts for these operations to compensate for any losses by the €3 cap.
This means if a bank does not normally charge for withdrawals, payments or standing orders, it will not be able to do so once 120 transactions in a year have been made.
Transferring money between accounts held at different banks will be amended by the new requirements, making them much easier – and, in most cases, free of charge.
Banks are also required to tell customers about the best deals they can offer on accounts and commissions, whether or not this information is requested.
The €3 cap will be reviewed every two years by the Bank of Spain, meaning it may go up, or even down, depending upon various macro- and micro-economic factors.
Once details of the new law are published in the State Official Bulletin (BOE) on March 25, they will go live within 20 days and banks will be required to comply.