The ultimate guide on how to choose a bank account.
If you’ve never chosen a bank for yourself, you need to read this. There are many of you who simply bank with the bank as your parents or never bothered to switch from your kiddie account with the hope that it will be less of a hassle. However, you could end up in a far worse financial situation. Here’s a list of things you need to know when choosing the right bank for you.
A transaction account or demand deposit account is available for frequent and immediate access by the account owner or to others as directed by the account owner. Think of it as an everyday account. If you want to purchase something, you would typically use this type of account.
Here are the common features of transaction accounts.
- EFTPOS facility. This feature allows you to perform transactions via EFTPOS with your linked debit card
- Linked debit card. This is the small plastic card that is linked to your account and lets you spend and deposit your money – usually either Visa or Mastercard.
- ATM access. This feature allows you to make ATM transactions.
- Internet banking. This feature allows you to go online to access your account details and make transactions.
- Branch access. This feature allows you to process transactions in a bank branch.
- Cheque book. This feature allows you to make purchases with cheques.
- BPAY. BPAY is a facility that allows you to pay bills online using an allocated account and reference number. Funds are withdrawn directly from your transaction account and credited to the company that issued the bill.
Special benefits of everyday transaction accounts
There are several special benefits attached to some transaction accounts:
- Earn points for gifts: With a Bankwest Rewards Transaction account, you can earn points so you can choose from plenty of gifts such as Woolworths or Caltex vouchers, to flights, food and wine. You receive five points for every purchase you use your Debit Mastercard and 10 points for some overseas purchase.
- Frequent flyer rewards: Frequent flyer cards have become very popular and suit people who travel often and look for a cheaper way to fly. Each card will have its affiliated airlines. You may be able to gain points while shopping. Some petrol service stations offer frequent flyer points every time you fill up.
- Cash bonus: This is a form of incentive offered to buyers of certain products whereby they receive a cash after depositing in their account. With an ING account, you can get a $75 cash bonus. In order to earn the bonus offer, you’ll need to deposit at least $1,000 into your transaction or savings account.
- Travel perks: Most transaction accounts offer global ATM access, however, there might be fees attached to every withdrawal. With the Citibank Plus account, there are no transactional fees whatsoever. You can access global Citibank ATMs completely free of charge.
- Are there any monthly fees? Check to make sure that you don’t fall into this trap. There are many banks that offer fee-free accounts.
- Does your bank have a large number of ATMs?
- Does your bank have a national network of branches?
- Are you eligible for a student account that does not charge any monthly account fees?
- Eligibility criteria for certain accounts. You’ll typically need to be 18 years or older to open most Australian bank accounts. Other eligibility requirements may include Australian citizenship or permanent residency, a good credit rating and a minimum annual income.
- Currency conversion and International Money Transfer fees. A few banks can charge high fees for a foreign money transfer. If you have to pay these types of fees over and over again, they can add up to a bit of money that you don't have to spend.
- Minimum deposits. Sometimes you might need to make a minimum deposit to start a bank account. Other banks encourage you to make continual deposits in order to keep that account active.
- Does the account include a Visa or Mastercard debit card at no extra cost so you can shop online with your own money?
- Beware of freebies. There’s no such thing as a free lunch. Banks use freebie incentives as the carrot to get you through the doors. If you’re a student or someone new to the banking world, don’t be fooled by the free giveaways.
- Shop around. It’s OK if you don’t find the bank you want right away. It may take some time to sort through all the features of different banks. It’s all part of the process. Banks may have changed since you last used them or if you’ve never used one, it’s a good idea to shop around until you’re satisfied.
The process is very easy – it usually goes as follows:
- Most banks will allow you to open an account through its website. You’ll need to supply identification such as a driver’s licence or any other government ID.
- When your application has been processed and approved, you’ll be notified and given the details of your new account so that you can transfer money into it.
Although transaction accounts differ between providers, they all serve the same basic purposes. Take a look at some of the best transaction accounts available.
This transaction account is designed to make your money easy to manage for day-to-day use. Before you apply for an account, compare the features below with the features available in other accounts.
- Rates and fees. There are no monthly account fees – ever. There are no overdrawn fees and no direct charges when you use NAB ATMs or rediATMs. Owners of other ATM networks (not in the NAB network) may charge you for using their ATMs. In those cases, a message will appear on the screen and show you how much you’ll be charged if you continue with the transaction. There’s a $5 fee for every withdrawal from an ATM overseas. A $0 fee applies for cash withdrawals or purchases in currencies other than Aussie dollars.
- Unlimited access to your money. You can access your account through Internet and phone banking, by visiting any NAB branch, through NAB’s ATM network, by EFTPOS and an optional chequebook.
- Use money easily and safely. Shop wherever Visa is accepted using your own money with a NAB Visa Debit card. You can pay for smaller purchases under $100 using payWave. It’s safe and quick.
- Protection. The security of your account is protected by NAB Defence. This program monitors your account for high-risk transactions and lets you know about suspected fraudulent activity. If you’re a victim of fraud, NAB will reimburse you 100% of any amount taken from your account.
- Deposits. There are no minimum deposits you need to make to keep your account active.
This transaction account is an everyday account with no monthly or transactional fees. Compare the features below:
- Flexibility. You have unlimited fee free transactions and no minimum opening balance.
- Access. Use any Citibank, Westpac, St.George, Bank of Melbourne or BankSA ATMs in Australia free of charge.
- Fees. Fee-free international money transfers to any bank and no fees for Citibank overseas ATM or in-store transactions.
- Debit card. Get a free Debit Mastercard with Mastercard PayPass so you can shop online, in-store or overseas.
- Cashback. Receive 5% cashback when you make a purchase less than $100 with PayPass for four months. You must deposit a minimum of $3,000 each month to earn a capped cashback of $150.
These accounts are especially designed for saving purposes and boosting your personal savings. They give you a higher interest rate compared to transaction accounts. Other accounts put restrictions on your withdrawals so you can actually reach your savings goals without spending your money. As you save more money, you’ll be able to take that holiday you've been wanting or pay off your HECS debt.
There are several types of savings accounts that you’ll need to be aware of before you choose the one that’s right for you. They include regular savings accounts, bonus savers and introductory bonus savings accounts. Here are some of the features to compare before choosing the best suited savings account for you:
- The interest rate. How often is interest paid into your account and for how long does the bonus or introductory interest rate apply?
- Minimum and maximum account balances.
- Fees that apply to account maintenance.
- What interest you lose if you withdraw money and what rewards you get if you deposit money regularly.
- Whether you need to open another account and link it to your savings account (ie, a transaction account).
Bonus savers accounts help you achieve your savings goals even faster than regular savings accounts since they usually have a higher interest rate, but there are usually deposit and withdrawal requirements to adhere to. Compare some of the features of the ING Savings Maximiser account.
This account is designed to maximise your savings so you can reach your savings goals more effectively. Look at the features of the account and compare them to other accounts to find the right one for you.
- Interest rate. You can get a high variable interest rate of 2.80% p.a., no matter how many times you withdraw, if you deposit $1,000 or more each month and have an Orange Everyday bank account. The bonus rate applies to balances up to $100,000. The standard variable rate is 1.50%.
- No fees. There are no monthly maintenance or withdrawal fees.
- Instant access. If you have a Savings Maximiser account and an Orange Everyday bank account, you can transfer cash online, over the phone and via mobile for instant access. You can also visit branches and use Internet banking to access your account.
On the other hand, an introductory bonus saver account will have an interest rate that is set up for a certain amount of time. Although these rates will be higher than usual rates, they won’t last forever, so you’ll need to make sure you can reach your savings goals with the revert rate. That’s the main difference between bonus savers and introductory or honeymoon rates.Back to top
The less obstacles that stand in the way of your savings goals, the more chance you’ll have of achieving them. Online savings accounts are popular because they’re convenient. You can make your deposits from the comfort of your living room. These accounts typically offer competitive interest rates due to the lower overheads associated with online-based institutions.
Encouraging children to start saving early can greatly benefit their financial habits in the future. Many banks offer savings accounts specifically for children. Most require a parent or guardian to open the account on behalf of the child.
If you have a large initial outlay that you want to deposit, usually $5000 or more, a cash management account might suit you. Although these accounts don’t always offer the highest interest rates, you can access your money when you need it..
Super is a form of investment and saving. These accounts are created so you can put aside money for your retirement. Your employer contributes to your super and your super fund invests your money for a greater return.
Christmas has a unique way of bringing out the spender in all of us, and we sometimes end up with large amounts of debt or overused credit cards. Christmas savings accounts help you beat the spending madness. It works as a forced savings account that you generally can’t access until Christmas. One downside is that it may not offer the highest interest rate.Back to top
There are several traps and pitfalls of savings accounts that you need to be aware of:
- Time delay on transactions. At times, the transfer of money may be delayed for one or many business days. This still depends on the bank that you do your transactions through.
- Interest rates. Interest rates depend on your bank and the Reserve Bank of Australia (RBA).
- Withdrawal limitations. There is a standard requirement on the number of withdrawals you’re allowed to make each month. Basic savings accounts usually allow up to six transfers each month.
- Watch out for honeymoon rates. Honeymoon or introductory rates can be enticing. They offer a high interest rate but be warned - this only lasts for a limited time. Usually the introductory rate lasts for six months, then it will revert to the standard rate.