Hidden bank charges charged to private individuals – what you need to know!

Tax regulations, types of banking transactions, the commercial policies of certain banks… Few people realise it, but there are many factors that can cause the bank charges levied on individuals to vary (and therefore increase). 

It is therefore best to keep yourself informed about the main bank charges (which can sometimes be hard to spot), as you might unfortunately only realise what they are once they have been debited. As the saying goes: ‘forewarned is forearmed’!

Rather than compiling a tedious and incomplete list of Swiss bank charges, this article aims to help you gain a clearer understanding of certain practices that are far from being as transparent or advantageous as banks would have you believe.

Few individuals actually compare the costs associated with banking services

According to a study on currency exchange in Switzerland carried out in 2016 – which remains largely relevant today – of the 72% of individuals who transfer half or more of their salary to France, nearly 59% regard the cost of currency exchange as a key factor when choosing their bank.

However, very few retail customers actually compare exchange rates, spreads and direct or indirect bank charges… According to the same study, 35% of retail customers surveyed have never compared the charges for different services, and only 11% do so before each transfer.
Yet the potential savings are huge: with average fees of between 3% and 3.8% when using a bank, a private individual earning a salary of CHF 5,000 would save between €900 and €1,200 in exchange fees per year by using an online currency exchange service such as b-sharpe, rather than their traditional bank.

Costs associated with having a bank account abroad

In recent years, a great many individuals have noticed a significant rise in their bank charges; a rise that affects virtually all areas of expenditure. 

For regulatory and supervisory reasons, the automation of the exchange of tax-related information between Switzerland and France has caused a sharp rise in the administrative costs associated with account management.

Charges such as ‘fees for non-Swiss bank accounts’, ‘non-eurozone bank charges’ and ‘tax statement fees’ have thus been levied on a massive scale. Whilst there is no question that these charges are justified, they are, above all, highly volatile and vary from one institution to another.

Do you need to manage a multi-currency personal budget? Discover our 6 tips for managing your international income and expenditure!

Following the introduction of the exchange of tax information between Switzerland and the European Union, banks have had to deal with additional administrative and regulatory requirements for their clients who are resident abroad. 

Most Swiss banks therefore charge additional fees to customers domiciled outside Switzerland (including Swiss nationals living abroad). This means that, in addition to the ‘standard’ account maintenance fees and bank card fees (for debit or credit cards), there are also direct debit fees.

Once again, although the banking sector is highly regulated, particularly by the Swiss Financial Market Supervisory Authority (FINMA), each bank remains free to set its own management fees and margins. It is entirely up to them to make these clear to all their customers…

Example: For some banks or banking institutions in Switzerland, expect to pay between 300 and 480 Swiss francs in tax each year for each Swiss account (for customers resident abroad).

In this specific case, taxes are levied on each client, regardless of their wealth or country of residence. However, it is important to note that these taxes are calculated per account based on payment transactions, rather than per banking relationship.

In addition, the fees associated with a salary account or current account also depend on:

• the amount;
• whether or not they have a savings account;
• whether or not you have a 2nd or 3rd pillar pension scheme;
• whether or not one has assets.

Please note: Once a certain threshold is reached (which varies depending on the bank), the fees are reduced or even waived entirely.

Inclusive fees for individuals working in Switzerland

Although we have tried, like many researchers before us, to compare the fees for Swiss franc bank accounts, it seems that all the players in the sector are working very hard to make their offerings difficult to compare!

These are all the more difficult to compare given that some institutions use:

• all-inclusive packages;
• loyalty schemes;
• plans with the first year free…

In fact, to best identify the various bank charges you may be incurring without realising it, please pay close attention to the following:

• collaborations between banks and insurance companies, 
• to loyalty schemes offering discounts, 
• the costs associated with the various payment cards, 
• the costs associated with international bank transfers…

Bear in mind that these offers are available for a limited time only. Not to mention that switching banks is often so complicated that many of us would prefer to stay put. As you can see, for individuals working in Switzerland, the fees – far from being free – are in fact ‘built in’.

The margin on foreign exchange transactions

As you know, currency exchange transactions aren’t free. Yet some financial institutions still rely on slogans worthy of telecoms operators, promising that these transactions are free!

Monito, a website that compares and reviews money transfer services, highlighted the practices of banking operators, which use carefully crafted and somewhat misleading slogans such as: “free money transfer home”, “transfers to France with no fees, no commission”…

However, exchange fees, or even commissions, are systematically applied to the official interbank exchange rate; these are generally visible and clearly stated.

Need to make a SEPA transfer? Discover 3 ways to avoid paying receiving charges!

Are online banks and neo-banks more transparent?

Competition does not necessarily mean transparency, even following the arrival of online-only banks – these new generalist banking players, which operate entirely online and are referred to as ‘neobanks’.

Are ‘100% free’ banking offers really as good as they seem? Whilst all basic banking services – such as withdrawals, payments and online account access – are advertised as completely free, some of these services actually come with a charge when you look more closely.

What’s more, special services come at a high price: requests for duplicate documents or PIN codes can quickly drive up the bill. Similarly, inactivity can prove very costly with an online bank account, as fees are charged automatically and progressively if the customer does not carry out enough transactions each month.

You now know all about the bank charges (some more justified than others) that many people pay without ever realising it… We hope this article will help you manage your costs as effectively as possible, making it easier to manage your budget.

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