A bank account, quite simply, is a transaction account taken out at a bank or other financial institution that houses your funds. It can receive deposits and allow you to withdraw your money whenever you see fit. This will also likely be linked to a debit card, which is commonly provided by banks as part of the account package, while it can also be used for cheques, online usage and digital wallets to be used on your phone.
Bank accounts are utilised across Australia every day by millions of people thanks to their easy accessibility. With digital wallet linkage in particular, making use of your bank account funds has never been easier. Another key positive of bank accounts is their ability to be linked to other accounts such as savings accounts. If you’re low on funds in your bank account, for instance, you can easily receive a transfer from a savings account to top up your balance and continue to spend freely.
How do I compare bank accounts?
Fortunately, bank account owners are provided a wide range of options when it comes to comparison points between different bank accounts. It’s important to bear these factors in mind when the time comes to choose your bank account.
Interest rates
Some bank accounts will come with higher interest rates than others, so it’s often in your best interests to lean towards those which can earn you more money. Alternatively, if you’ve linked a savings account to your bank account with the same financial institution, the interest earned in that account should be prioritised, as it generally has a higher return.
Account fees
With some accounts, you may find that you’ll be charged a monthly fee for keeping it running. Usually this will only be a fee of around $5 or less, but this can amount to $60 per year spent on fees alone. In most cases, this fee can be avoided by depositing a certain amount of money in your account each month as determined by your financial institution, often between $1,000 and $3,000.
However, there are also no-fee bank account options available if you want to reduce this cost to zero. These accounts may not be wholly fee-free, though, as some accounts will charge a small transaction fee for each purchase you make. While this may only amount to a few cents per transaction, this can add up over time.
Deposit requirements
Another factor to consider is how much you’ll have to deposit into your bank account. Many accounts will enforce a minimum deposit limit each month of anywhere between several hundred to several thousand dollars in order to have your fees waived, so if this could be a restriction for you it’d be wise to shop around for an account with lower limits. Without any deposits, you could be charged your monthly fees and then overdrawn fees on top of that, pushing your account into debt.
Ease of access
Accessibility is an important factor for bank accounts. What use are they if it’s difficult to gain access to them? You’ll almost always receive a debit card to make purchases or withdraw funds from your account. Depending on the financial institution it may be harder to come across ATMs or physical bank branches. To combat this, smaller and more regional lenders will arrange with big banks, the Big Four of ANZ, Commonwealth Bank, NAB and Westpac, to allow access to their ATMs without incurring a fee.
How are bank accounts different to savings accounts?
The big one is that while bank accounts provide you with ready-made access to your funds at any time, savings accounts are designed to store your funds away and keep a gap between them and your day-to-day spending. Access is more limited as a result of this, so utilising funds from a savings account is usually made possible by transferring them into a bank account. Monthly restrictions on the number of times you’re able to withdraw or transfer will apply in some cases, however. Debit cards also can’t be linked to savings accounts, so you’ll only be able to use these with your bank account.
The main benefit of a savings account for a user is that it accrues interest on your deposited funds. Savings accounts have a high interest rate compared to bank accounts, which is designed this way to encourage not using your available money compared to bank accounts. You can even find high interest savings accounts for that very purpose. However, your qualification for the best interest rates may be contingent on several conditions. This can include the linking of your savings account to an everyday transaction account with the same institution, the number of purchases you make or minimum deposit limits each month.
Explained: the process behind opening your bank account
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Compare the best options on the market
Before committing to any one financial institution, you should survey the market to find the best account to suit your personal and financial needs. Savvy is a great place to start, as our comparison tools make life easier for you when comparing bank accounts in all the most important areas.
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Gather the required documents
You’ll have to prove who you are before opening up a bank account with various forms of identity documentation. You’ll have to supply at least 100 points’ worth to qualify, with documents such as a birth certificate or passport supplying 70 of those. A drivers’ licence or financial entitlement card will count for 40 points, while a credit card will give you 25. Contact your financial institution if you have any questions regarding these requirements.
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Submit your application
This is probably the simplest step to complete. Each institution will have their own application for you to fill out either online or in person, which the above identity documents will be required for.
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Receive access
Once everything’s been checked off by your financial institution, you’ll be ready to use your account pretty well straight away. Although your debit card might take some time to arrive in some cases, you’ll have access to your bank account to start depositing funds.
Top tips on the best features to look for on your bank account
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Good interest rates
Although they won’t be as high as those of savings accounts, interest on bank accounts can reward your saving with an extra injection of funds.
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Low-fee or fee-free accounts
These will be met with certain conditions, such as only coming with online bank accounts and not allowing for interest to be accrued, but paying little or nothing in fees can make a real difference.
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Online access
These days, most financial institutions will offer apps or online banking features to their customers, but you should always double check to ensure you’re not missing out.
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Branch and/or ATM accessibility
You might want to go for a bank account which not only holds enough physical locations for you to access but also allows you do utilise them freely.
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No international transaction fees
This will come in handy particularly if you’re commonly travelling overseas, as some institutions will charge you exorbitant fees if you’re completing transactions abroad.
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Lower minimum monthly deposit requirements
If you’re not sure about maintaining a monthly deposit flow with your bank account, look for one which has a lower minimum requirement.
