There’s no point denying it—banking fees and commissions in Austria—and many other offshore financial centers—are substantially higher than in the United States. Fortunately, there are some ways to reduce them.
One important reason fees are higher is because Austrian lack an important source of revenue U.S. banks have—the ability to share customer information, including transaction data, with affiliates and even third parties. Austrian bank secrecy law strictly prohibits such data exchanges.
Intentional violations of bank secrecy may be punished by imprisonment up to one year, or a monetary fine. Bank employees involved in the breach are subject to dismissal, and if a bank is found to systematically be violating bank secrecy, Austrian authorities may revoke its license.
Here’s a rundown of the most common fees you’ll experience in an Austrian bank—and some ideas on how to reduce them.
Account package fees. At minimum, you can expect to pay a quarterly fee (Gebühr or Entgelt) for maintaining whatever account package (Kontopaket) you choose. These range from €1 to €15 or more per quarter, with the lowest fees reserved for accounts for students and seniors. Private banking departments may charge an administrative fee based on assets deposited, generally around 0.25% annually. Some banks will waive this fee if the account generates sufficient fees or commissions in securities trades or other transactions.
Statement fee. Austrian banks also charge for producing account statements, although you can eliminate this charge if the bank doesn’t mail you statements. €3-€5 per statement is typical. In banks that provide account access over the Internet, your statement can be viewed and printed online at no charge. If you’re visiting Austria and have an account at a commercial bank there, you can also print out a bank statement at its local branches.
Foreign exchange fees. There may or may not be a commission due when exchanging U.S. dollars or another currency for foreign currencies. However, the bank will take a cut of the buy/sell spread to generate income from the transaction. Depending on the market, the currency, and the amount converted, this can range from 1%-3%.
Debit card fees. If you have a debit card to draw against the account, you’ll need to pay an annual fee—generally €50 or less. Within the euro-zone, you can use your debit card from an Austrian (or other EU-based) bank to withdraw money from a euro-denominated account, without incurring withdrawal fees or foreign exchange fees. Outside the EU, there may be a convenience charge associated with using the card. You’ll also pay foreign exchange fees and commissions for withdrawals in any currency other than euros.
Securities commissions. Except for the very smallest trades (where minimum fees apply), fixed fees per trade don’t exist, but are rather imposed as a percentage of the transaction. These fees range from 0.25%-1.25% of the trade. Lower commissions apply for stocks and commissions for bonds are lowest of all. For larger accounts and larger transactions, commissions may be negotiable. Commissions may also be reduced for online trading. A strategy to lower commissions on bond purchases is to hold bonds to maturity to avoid paying a commission upon sale.
Custodial fees. Safekeeping fees (Verwahrunggebühr) for securities or precious metals held by Austrian banks range from 0.2% of the assets held per year to 0.75% per annum, depending on the bank, the asset held and the type of custody used. Custodial fees are calculated based on the market value of your securities (plus 20% VAT for EU-resident clients). As with commissions, custody fees are negotiable for larger customers. You can save on these fees if you take possession of the securities yourself, if they’re available in certificate form, and keep the certificates in your safety deposit box or private vault. This strategy is appropriate only for securities (or metals) that you anticipate holding for an extended period.
Tips to save money operating your Austrian bank account are only a few of the "Austrian money secrets" I reveal in my new book, Austria Money Secrets.
Copyright © 2007 by Mark Nestmann
