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Trying to Save Some Dollaroos

27 October, 2013

Trying to save some dollaroos


Transaction accounts are something we all have. After all, you need a place to put your money (that shoebox in the closet gets full quickly). Transaction accounts usually come with a debit card so that you can buy stuff without having to carry cash around. Everyone should have a transaction account and everyone should have one that is free.

I’m sure some of you have/had ‘student-only‘ accounts when you were in school or university which are great. Most of these accounts have no fees because the banks usually realise students are really really poor! Banks offer these student accounts so that you get familiarised and locked into their brand. They hope this will stop you from changing banks once you’re no longer a student and have to pay fees. This is similar to the way that Microsoft offers a version of Microsoft Office® for free/cheap to students.

Something that needs to be mentioned is for those with a home loan and an attached offset account. If you do, then that account will usually be the best transaction account for you because it will be reducing the interest on your home loan. This will be delved into deeper when we talk about home loans. 

There are different things we look for when choosing a transaction account. Listed below are my main criteria:

Fees

Fees are one of the ways that banks make money. The monthly fees for transaction accounts are usually under $10 per month. However, I don’t know too many people who like paying fees for a product if they can get one for free. I think that no-monthly fee transaction accounts are what most people should be looking for.

There are quite a good number of products on the market that fit this criterion. Some require you to deposit a certain amount of money every month to waive the monthly fee while others are free from the get-go. Sometimes there are little sneaky fees involved such as withdrawing money in branch with a teller (rather than using an ATM) so it is important to read the fine print.

ATM and branch locations/availability

Commonwealth Bank/BankWest has the most ATM locations followed by the rediATM network which includes NAB and many other financial institutions such as credit unions. In these modern times, I don’t think branches are quite as important but the big 4 banks (Commonwealth, NAB, ANZ and Westpac) have the most branch locations. ING does things differently by not having an ATM network at all but refunding any ATM withdrawal fees (provided you deposit a $1000 into your transaction account every month). This means you can use any ATM you wish. It is important to remember that you can always ‘cash-out’ or make a withdrawal for free at all supermarkets and other certain shops.

Other banking products that we already have

Some people have other banking products with a certain bank already and like to have all their banking done with the one institution which is perfectly fine. A lot of the time if you have a loan or credit cards you may be able to have the transaction account monthly fees waived just by asking or as part of a package.

Ways to access money

Telephone, internet and mobile banking is almost a necessity these days. I don’t personally use telephone banking so I’m not too familiar with different institutions but I would assume most banks would be pretty similar.

Internet banking and mobile apps are come in all sorts of quality and designs. There are definitely some better than others on the market. A lot of the times it can just be a matter of preference so it is up to you to try out different systems and see which ones you prefer. This is where the brand familiarity comes into play with student transaction accounts.

Some apps offer fingerprint logins rather than needing PINs or passwords, and Commonwealth and Westpac even offer cardless ATM withdrawals These can definitely be useful for those who mainly use their smartphones for banking. Personally I find the Commonwealth Bank mobile app to be really clean and user friendly and I really enjoy the fact I can carry one less card in my wallet.

Special transaction account features

ING and ME bank offer cash-back for purchases ranging from 2-5% per purchase. I think these are great for those customers who don’t use credit cards because you’re literally getting some money back every time you buy something with your debit card. More money = winning

Bankwest has some quirky transaction accounts which allow you to earn ‘rewards points’ or frequent flyer points by keeping a balance in them rather than in savings accounts. I don’t think these are particularly useful because you earn interest by parking your money in savings accounts which = more money. More detail can be found in the savings account section.

When travelling overseas you should have at least a few ways to access money. A debit card can be used to withdraw money from an overseas ATM. You don’t want to accidentally lose all your cash and have no backup surplus funds when stuck in a foreign country! Changing money at ATMs is usually closer to the actual exchange rate when compared with money changers. The Citibank Plus transaction account doesn’t charge foreign exchange transaction fees or foreign ATM withdrawal fees which makes it perfect for travellers. The overseas ATM may still charge their own small usage fee but at least Citibank won’t. If you can find an overseas Citibank ATM then there will definitely be no fees for a cash withdrawal at all.

The ideal transaction account should therefore have:

  • No monthly fees
  • Good ATM and branch network
  • Free unlimited withdrawals from ATMs and branch tellers
  • Cash-back
  • No foreign transaction fees
  • No 3rd-party ATM withdrawal fees
  • Cardless cash withdrawal from ATMs
  • Bonus perks for having money in the account

Unfortunately this account doesn’t exist but below are the 3 transaction accounts which get closest

TL:DR

My personal recommendation is to have a couple of transaction accounts.

The Citibank Plus transaction account is free and like I have mentioned above, doesn’t charge foreign exchange transaction fees or foreign ATM withdrawal fees. It isn’t perfect though because the Citibank internet banking interface and mobile app are terrible when compared to the competition. That being said, it is very useful when going on holidays overseas and the perfect transaction account for international purchases.

For domestic purchases, it is a personal choice between 2 products.

Commonwealth Bank has the most ATMs and branches, one of the best internet and mobile app interfaces, and the added special feature of cardless cash withdrawals. The best account to get using the Commonwealth Bank system is to open a CommSec Share Trading Account which comes with a freeCommonwealth Direct Investment Account. There are no monthly or application fees at all. There is also no requirement to use the Commsec account. This is their only free transaction account which doesn’t require you to deposit large amounts of money to waive the monthly fee. You have unlimited ATM withdrawals but are limited to two in-branch teller withdrawals per month (which should be plenty for most people)

ING offer the ING Orange Everyday account which is also fee-free and you have access to all the ATMs in Australia. ING will refund the ATM fee to your account as long as you deposit at least $1000 per month. You also get 2% cashback on all payWave® purchases under $100 which means more money for you! The internet and mobile app banking interfaces are also very nice and easy to use. A little known feature with this account is if you cash-out at least $200 from supermarkets or shops then you actually get $0.50 back in your bank account every time. More money!



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