That contributed to banks enjoying a five per cent jump in fee revenue in 2023/24 - the first annual increase in fee earnings in seven years, the Reserve Bank said in its January bulletin.
Australians paid 11 per cent more in credit card fees, mainly reflecting a rise in card-holders spending money overseas as international travel rebounded, said RBA analyst Robert Gao, who authored the report.
"With more households using their Australian credit and debit cards at overseas businesses, banks earned more fees on international transactions and foreign currency conversions," he said.
Meanwhile, personal loan fees shot up 34 per cent, reflecting growth in establishment and transaction charges as more Australians took out credit to cover cost-of-living challenges.
The increase in fee revenue came as Australian households saw their real disposable income fall below 2017 levels, battered by high interest rates and inflation.
Many mortgage holders experienced sharp rises in repayments as fixed-rate loans matured and consequently sought to renegotiate a new loan with their existing lender or refinance with another provider.
This led to a five per cent rise in home loan fee earnings, due to charges from negotiating and establishing new loans, as well as discharging previous loans, Mr Gao said.
A reduction in home loan cashback offers further bolstered revenues.
Banks also made three per cent more off deposit fees, reflecting a rise in Australians using debit cards overseas.
Australian banks have previously found themselves in hot water for charging excessive deposit fees.
Financial regulator ASIC found in 2024 that ANZ, Bendigo and Adelaide Bank, CBA and Westpac had inappropriately kept two million low-income Australians in high-fee accounts, and ordered them to refund more than $28 million in fees to the affected customers.
However, the majority of the fee refunds are expected to occur in 2024/25, so the impact of the repayments is yet to be seen in the banks' revenue.
Despite the growth in charges paid by households, they still account for a minority of bank fee revenue.
Large businesses continued to pay around 40 per cent of total bank fees, while medium-sized businesses amounted to a quarter and small businesses 10 per cent.
Fee revenue from business lending increased five per cent as more companies took out lines of credit.
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