The move by the Commonwealth Bank has been blasted as the "worst Christmas present imaginable" by Assistant Treasurer Stephen Jones.
From January 6, customers with a Complete Access account will be automatically moved to Smart Access accounts.
The Smart Access account includes an "assisted withdrawal fee" which slugs customers $3 every time they take out their cash from bank branches, post offices or over the phone.
Changes to one of the CBA's main everyday accounts will come into force in January. (Morgan Sette/AAP PHOTOS)
"This is a kick in the guts for ordinary Australians and the worst Christmas present imaginable," Mr Jones told reporters in Sydney on Tuesday.
The bank said the withdrawal fee would be waived if the customer was under 18, had an age, service or disability pension or a disability that required them to use a branch.
The CBA said it would continue to offer customers free cash withdrawals from its national ATM network.
"Our Smart Access account has a $3 assisted withdrawal fee. This is our main transaction account and the assisted withdrawal fees on that account have not changed," it said in a statement.
"We continue to offer waivers on assisted withdrawal fees for customers who meet certain criteria, including certain types of pension recipients and those under 18 years of age."
Backlash to the change hit social media and talkback radio with Mr Jones, who is also Financial Services Minister, calling on the Commonwealth Bank "to re-think this terrible decision".
"This seems to me to be a tax on Australians who demand the right to use their cash and the government won't stand for it," he said.
"If they want to go in and see their bank branch, Australians should have access to banking services wherever they live."
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