BREAKING: OTP Bank shocks customers with fee increases
In July 2023, Minister Gergely Gulyás announced that Hungary’s financial transaction tax (FTT) would increase starting from the 1st of August 2024. The tax for non-cash transactions is set to rise to 0.45%, capped at HUF 20,000 (EUR 49), while cash transactions will face a steeper 0.9% rate. The primary goal is to curb the growing budget deficit driven by substantial public spending.
According to Telex, the government’s ambitious investments in infrastructure and energy have stretched budget limits, pushing for measures like the FTT hike. While this tax was initially framed as a burden for banks, it is becoming clear that the impact will likely trickle down to everyday citizens.
In an attempt to delay immediate consequences for consumers, the government has prohibited banks from shifting these increased costs onto customers until the end of 2024. However, with no plans to extend this ban, banks are gearing up to raise their fees in early 2025. Per current regulations, financial institutions must provide a 60-day notice to customers about any rate changes.
The first bank to announce the fee increase: OTP
OTP Bank has already taken the lead by announcing fee hikes set for January. Transfer fees will go up by 0.15 percentage points, reaching 0.45% for transfers within the bank and 0.5% for transfers to other banks, according to Telex. Although the fee-free threshold has increased from HUF 20,000 (EUR 49) to HUF 50,000 (EUR 122), the cap for maximum fees has jumped sharply from HUF 14,522 (EUR 35) to HUF 25,000 (EUR 61).
The changes don’t stop there. OTP’s cash withdrawal fees are also seeing adjustments: domestic ATM withdrawals will now cost HUF 159 (EUR 0.3) + 1.79% instead of HUF 159 (EUR 0.3) + 1.49%, while foreign ATM withdrawals will rise from HUF 1581 (EUR 3.8) + 0.6% to HUF 1581 (EUR 3.8) + 0.9%. Foreign cash withdrawals will face a hike from EUR 3.68 + 0.6% to EUR 3.68 + 0.9%.
The rising financial burdens
According to financial expert Péter Gergely, OTP’s move signals a broader trend, with other banks likely to announce similar fee hikes starting January. Legislation even allows for additional rate increases by spring, reflecting the previous year’s inflation rate.
Hungary’s FTT, in place since 2013, has seen multiple increases over the years. What started as a relatively minor charge aimed at bolstering state revenues has steadily transformed into a significant burden, particularly for individual consumers and smaller businesses. Initially justified as a way to ensure that financial institutions contribute more to public finances, the tax has evolved into a tool that impacts everyday financial transactions.
Over time, as the tax rate has increased and caps have been adjusted, the cumulative effect on personal and business budgets has become more pronounced. This trend has raised concerns about financial accessibility and equity, as many worry that continued hikes will disproportionately affect lower-income individuals and those who rely heavily on financial services.
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Can someone please explain this to me?
Hungarian wages are increasing 15, 20, 25% every year, also due to Governmentpolicies.
Therefore, people have more money to spend.
And when they do, they are driving the growing budget deficit?
“The primary goal is to curb the growing budget deficit driven by substantial public spending.”
I’m at a loss.