Kiwibank cuts its credit card fees

Kiwibank said it considered the money remitting business of E-Trans posed too great a risk or burden to it under anti-money laundering rules that came into force in 2013.

Kiwibank says its decision to slash its credit card fees is not connected to pending legal action which claims the major banks are unfairly over-charging their customers penalty fees.

The bank wrote to customers last week to inform them of a number of fee changes including dropping its credit card late payment fee from $15 to $3 and its over limit fee from $20 to $5 for each month the balance exceeds the credit card's limit.

It will also be making internet banking cash advances fee-free instead of charging $2 and has dropped the cost of ATM cash advance fees and overseas currency conversion fees for items bought in foreign currencies.

The fees changes kick in from Thursday.

In November 2013 Kiwibank was named as a target by lawyer Andrew Hooker in its campaign for fair fees.

Hooker is taking on all the major banks in a class-action style suit aimed at clawing back money for customers on past transactions where he believes they have been charged excessive fees.

The case is targeting fees which include late payment and over limit credit card fees, fees charged when cheques bounce and when accounts go into an unarranged overdraft.

Similar action in Australia against ANZ bank initially ruled in favour of the customers for late payment credit card fees but it was overturned in April by the Australian Federal Court.

Lawyers for that action have said they will try and take an appeal to the High Court.

The action is New Zealand has been on hold awaiting the outcome of the Australian case.

Hooker said he was not aware of anything he had done to prompt the Kiwibank move but it was good news from his perspective.

"We are pleased to see Kiwibank reducing its fees."

A spokesman for Kiwibank said the rate changes were not connected to the legal action.

"We assess our rates and fees all the time and make changes where we believe it is appropriate to do so."

The spokesman said there were pending changes to credit laws and the bank believed now was the right time to make the fee changes.

Changes to New Zealand's consumer credit laws came into force on June 6 and include requirements for lenders to be more responsible about giving out money, give a warning on credit card statements about paying the minimum balance, publicly displaying interest rates and fees and ensuring customers are notified about fee changes which could cost them more money.

Read more about the consumer credit law changes here.

As well as the fee cuts Kiwibank is lifting its interest rates from July 6 from 19.95 per cent per annum to 20.95 per cent per annum for purchases and from 21.95 per cent per annum to 22.95 per cent per annum on cash advances for it Air New Zealand Airpoints Platinum mastercard.

The Kiwibank spokesman said it regularly compared its fees to rival banks and was also making the changes to remain competitive.

He said there had a been a "muted reaction" from customers who had received the letters telling them of the changes as most people did not incur those fees.