Truths (and Myths) About Bank Fees: Everything You Need to Know

Bank fees account for only 0.6% of the total assets of the banking sector in Spain, according to data from CECA.

In this life, almost nothing is free. It sounds very obvious, but every sector of the economy, without exception, charges for the services rendered. What happens is that the name given to this remuneration usually differs depending on the sector and type of service. It suffices to review some of our recurring expenses to verify this.

When, for instance, we subscribe to an online television platform, we say that we pay a monthly fee. When referring to the payment we make to the town hall for trash collection services or the property tax, we use the term rate. The same occurs when we issue a national ID or renew a driver’s license. Conversely, when we hire the services of a lawyer or go to a notary, we pay fees, which are the established prices by those professionals to carry out a specific task.

The same happens in banking. Like any service provider, credit institutions charge a price for the work they perform for their clients. They do this when managing an account, issuing a credit card, exchanging currencies, assessing the feasibility of a loan, or making a transfer. In the banking sector, this payment is referred to as a fee.

Regardless of the terminology, it is important to understand that a fee is an amount—either fixed or percentage-based, and one-time or recurring—that clients must always pay for the requested service. In Spain, bank fees account for only 0.6% of the total assets of the banking sector. “When we look at the fees charged by our institutions for cash withdrawals, transfers, or current account maintenance, we see that they are clearly below the European average,” states the spokesperson for CECA, Alberto Aza. This banking association comprises nine financial entities (CaixaBank, Kutxabank, Cajasur Banco, Abanca, Unicaja Banco, Ibercaja Banco, Caixa Ontinyent, Colonya Pollença, and Cecabank).

The share of income from fees on the total gross margin in the Spanish banking sector reaches 26%. This figure is quite far from the 41% in Italy and Germany, the 36% in French banks, or the 34% in the banking sectors of Belgium and Austria.

CECA insists that fees help maintain and improve the services provided by banks. For example, the charge for maintaining an account helps cover the costs of technological infrastructure, customer service personnel, or finance the necessary investments to ensure the security of banking operations and the protection of user data.

Each institution can freely set the amount of the fee it deems appropriate—except for those that are clearly limited by a regulation, such as with the early cancellation of a mortgage or a consumer credit—based on various considerations that may be commercial or strategic. One common criterion, as occurs in many other sectors, can be the degree of connection of the clientele with their financial institution.

In our country, for instance, banks do not charge maintenance fees to their most loyal customers. They also did not charge customers for withdrawing cash using debit cards from any national ATM during the state of emergency declared in Spain due to the Covid-19 pandemic. However, there are differences in the fees that banks stipulate for their products. “This happens because our banking sector is one of the most competitive in Europe, and that ensures that users can choose the best service at the best price,” asserts Alberto Aza.

In fact, the Bank of Spain cannot deny or limit the amount of bank fees. The regulator does remind that financial entities must publish all information regarding the fees they apply to the services offered to their clients, both on their websites and in their commercial establishments. The institution also insists that the bank has the obligation to inform the user about the fee before collecting it, and that this must be expressly or tacitly accepted. To avoid surprises, it is best to inform oneself well with one’s personal advisor before acquiring any financial product. And, in any case, to keep in mind that fees must always correspond to services rendered that have been requested or accepted.