The Commonwealth Bank of Australia (CBA) is the latest big-four lender to cut its charges and lower penalty fees.

CBA yesterday said it would slash its late payment fees on mortgages from $45 to $25, while overdraft fees will be reduced from $30 to $10.

It will also cut dishonour charges on business and personal transaction accounts from $35 to $5, but retain the penalty fess credit cards.

CBA’s retail banking services group executive, Ross McEwan, said customers would also benefit from a new ‘safety net’ aimed at helping customers avoid incurring fees by sending SMS and email balance alerts.

“We want to provide significant fee reductions while retaining a positive incentive for our customers to help them avoid any exception fees”, Mr McEwan said in a statement.

CBA’s reductions of late payment charges come after National Australia Bank last week announced that it would abolish its $30 overdraft fee.

Westpac and St George followed suit and reduced late payment charges on credit cards to $9, while ANZ Bank has indicated that it is working on penalty charges model that would allow customers to select the costs that they would be prepared to pay.