STRUGGLING borrowers could be charged $1000 a year in penalty fees if they fall into arrears on mortgages and personal loans.
Commonwealth Bank, ANZ and National Australia Bank admitted last week they were continuing to charge customers between $35 and $45 a month in "late payment" or "default" fees if they failed to meet their loan repayments on time.
Customers with both a mortgage and a personal loan may accrue up to $90 a month in penalty fees - plus interest, The Sunday Telegraph reports.
The fees are added on top of the arrears, where, in the case of mortgages, they could accrue interest for up to 30 years.
"It's kicking people while they're down," said Katherine Lane, principal solicitor at the Consumer Credit Legal Centre NSW (CCLC).
"All these fees do is create more hardship. Clearly if people can't afford their mortgage or loans they can't afford the fees either."
The fees are charged until borrowers negotiate a repayment agreement with the banks to clear the arrears.
"Australians are proud people," Ms Lane said. "Many don't contact their banks when they hit hard times.
"They try everything possible to stand on their own two feet. But all the while they are being hit with these exorbitant charges."
One ANZ customer who contacted the CCLC had fallen $2000 behind in her mortgage payments after a car crash.
She contacted ANZ for help filling in the hardship-provision forms, but says she was told that if she couldn't fill them in, "don't bother applying for hardship".
She has since seen her arrears increase to $4000 through "fees and enforcement costs".
ANZ is currently pursuing the customer through the courts to gain control of her property.
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