Modern man is hard to imagine life without a bank account. It helps to pay for goods and services, whether it is a payment of utility bills, education for a child or a loan payment for a car or a mortgage; and also to save up money for a particular goal and to receive certain benefits, for example, a pension. There are a lot of kinds of personal bank accounts in Australia, like high-interest saving accounts, individual retirement account, kids/children and joint bank accounts, for students and others. These products are offered by both large (ANZ, NAB, Commonwealth, Westpac, ING Bank, St. George, Citibank) and small (Bankwest, AMP, ME Bank, Bendigo and others) Australian banks and financial organizations. How to compare banking accounts wisely and to choose the one, which will suit you best? Bankchart.com.au assists you in taking the needed actions.
Step 1. What is a banking account? What are the types of accounts?
A personal bank account is a financial account at a bank, opened for a client for making transactions, withdrawals and sometimes for savings purposes. Now, most bank accounts can be managed online, as well as using a bank card that is tied to an account.
There are such kinds of a bank account according to its goal:
- current – is an everyday transaction account for making payments with a card or a check and withdrawals (at ATMs, the branches or post offices )
- savings – is a higher interest account, opening to save up money for a particular goal, like wedding, travel, car purchasing, renovation and others
Depending on a client’s status personal accounts can be:
- general - is a standard account for Australian citizens - adults
- individual retirement/social account - is designed to receive social payments like a pension or to save up money for an old age
- for students – is a cheap bank account, developed for students life
- for youth savers – is savings account for teenagers, or for parents to save money for their children, for example, for education, and also to increase the level of the financial grammar of the kids
- for immigrants - for foreigners who travel in Australia or move to there for a permanent place of residence
- joint bank account – fits you best if you are going to share expenditures or to save up for a particular purpose with your married couple, parent or friend. There are such types of a joint account: both to sign and either to sign
Personal accounts can be opened in a national (AUD) or foreign currency, like USD or EUR.
Step 2. How to compare personal bank accounts?
You should carefully check all account commissions, proposed by a bank, in order not to overpay in the future and to choose a personal account that suits you the best, like:
Monthly servicing fee – usually is zero but sometimes can rich 4-5 AUD or even 35 AUD. It can be waived if you regularly deposit, for example, 1 500 – 2 000 AUD per month
Withdrawal commission – depends on the way (with a check or a card) and the place (bank branches, post offices, native or alien ATMs) of the money withdrawal. By our investigation, the fee level varies from 0 to 3%. The lowest tariff is for withdrawals at the bank’s ATMs and the highest other banks’ ones
Online and phone transaction fees – usually are not high and don’t exceed 0.5-1% of the operation sum
Foreign transaction tariff – as a rule, equals 3% and is important for people dealing with a foreign currency, for example for travellers
Overdrawn commission - usually equals 35 AUD and can be charged if your bank account is overdrawn. For example, a monthly servicing fee is to be paid, but your balance is insufficient for such an operation.
To reduce your account expenditures, you can:
- Research the market and choose the offer, which fits your goals and volumes of operations
- Use operations which have lower commissions. For example, if you need cash, do not be lazy to walk a couple of blocks to withdraw money without a fee at the bank’s ATM, than to pay 3% when withdrawing at a nearby ATM
- Decrease the number of ATMs using by withdrawing larger sums or paying by EFTPOS
- Always keep some balance on your account to no be overdrawn
Also, you should pay attention to such non-price parameters:
Level of interest rate – is the price for deposited money, paid by a bank to you. As a rule, according to our research, it ranges from 0.5-1.5% annually and is more significant for savings and retirement accounts. But some banks don’t charge any rate, on the other hand, some provide a higher percentage in the amount 2.5-2.5% per annum. A bonus to a standard rate can be offered by a bank, for example, for new clients for the first three months since opening the account
Minimum balance – is an important parameter because the rate usually depends on its level. A higher interest rate often requires larger balance, like 50 000 AUD or even higher
Free transactions – banks can offer a certain number per month of zero-fee operations
Requirements to a client – banks can establish requirements for a client’s age, level of income, residence, social status, etc.
In addition to the account conditions, it is essential to choose the bank that suits you best, for this you should ask yourself such questions:
1) How many offices and ATMs does the financial organization possess? Are any near your place of living or working?
2) Does the bank have both savings and current accounts?
3) Does the bank provide additional useful services and products, like credit cards, insurance, online banking, and others?
Step 3. How to open a bank account?
Before applying for a bank account, you must make sure that you meet the following criteria that banks can set:
- have eighteen years or be older
- be a resident Of Australia
- have a required annual income
These are standard account requirements, but they may differ for special bank accounts (student, retirement, for youth savers, for foreigners), for example, Australian citizenship is not required to open an account for non-residents.
In most banks, you can apply for a personal account online. To do this, you will need to fill out an online application and attach scans of your identification papers. Except for online application, you can make an application by phone or at a branch, but such ways are less convenient.
Australian banks usually offer to submit several documents to the choice of the client. Each of the papers has a certain number of points from the bank for identification. To apply for a bank account, the provided documents must have at least 100 points.
Such documents are:
- Passport, birth or citizenship certificate – 70 points
- Public service employee ID card, drivers’ or shooters’ license – 40 points
- Any document with your name and address: car registration, rental receipts, utility bill, bank statement – 25 points
- Any card with your name: credit, Medicare, store, union or library card – 25 points
For example, you can present your passport and the public service employee ID card or your birth certificate plus the car registration and the Medicare card.
After online application, Australian banks can ask you to visit the nearest branch to complete the identification process in person. For this, take with you the passport, your driver’s license or the Medicare card.
Before opening for some accounts (savings, retirement) the bank can require to deposit some money to the account, especially if you are opening a higher interest rate account.
Step 4. Features of opening some types of banking accounts
If you are a foreigner, student, pensioner or want to open a youth savers account - some peculiarities in the accounts conditions and client's requirements can appear.
For example, if you are a non-resident, you can open a bank account with a travellers firm or directly in a bank after arriving in Australia. The first way is the most convenient variant because a travellers company will help you to deal with a bank. Also, such organizations can provide you with other useful services, like:
- Tax File Number
- Employment support (short-term)
- Visa aid
- Placement (short-term)
- SIM card
Such servicing usually will cost you 79-900 AUD depending on the quantity of the provided services and its period of granting.
Or you can do this by yourself providing to a bank your passport and sometimes additional documents (a driver's license, student ID, credit card or birth certificate). Also, the bank can question you the address of living and the place of working. Most large banks in Australia, like Commonwealth Bank, NAB, Westpac, ANZ, HSBC and Citibank, have personnel who can speak a variety of languages.
When choosing a bank, in addition to the standard tariffs of running a current account, it is useful to clarify the currency conversion fee. After the account is opened, you can transfer to it money through a bank, PayPal or a transfer company.
Many Australian banks offer special current accounts for students. They are characterized by the absence of a service charge, but the interest rate on balance is usually also not charged. To a student account, a bank can add additional financial services (credit card, mobile banking application, savings account, etc.) and benefits (discounts on goods and services of partners). The client must be studying half-day or full-day at a tertiary institution, a college or undertaking discipleship in Australia.
If you are over 55 years old or retired, you can apply for an individual bank retirement account. Such accounts are also usually free, but they have an increased interest rate on balance which varies from 0% 2,6% yearly. Its size, as a rule, depends on the balance size, for example, the highest rate is for the amounts of 250 000 AUD and above.
Youthsaver accounts are developed for teenagers or for adults to save up money for their children, for example, for paying their education. The accounts often have zero servicing commission and higher percentage rates. But to receive the increased rate, the client mustn’t withdraw money. This account is available for people younger than 18 years and if he is under 13 years old, it is opened by a parent or legal guardian. Such accounts usually have educational software to help your kids to learn the foundations of finances.
Before opening a joint account, you should ask yourself the following question:
- Do you entrust the other person, even if things go wrong?
- Do you have similar spending habits?
- What is the purpose of opening the joint account? Сan you do without it?
You must keep in mind that closing a joint account is more difficult than to open it. In particular, this will require the consent of both owners; you should block the direct debits and inform counterparties of the new account details, call your bank and negotiate a meeting with your partner to close the account, zero the balance and to share it with a partner, take away a final statement.
Selecting the bank for opening a personal current account it is useful to get know how many offices and ATMs the financial organization possesses, whether the necessary type of account is available, whether the bank provides additional useful services. To choose the best current account also you should check accurately all banks tariffs to not to overpay, like: monthly servicing fee, withdrawal commission, online and phone transaction fees, foreign transaction and overdrawn commission; and also non-price parameters, like: the interest rate, minimum balance, the quantity of free transactions and requirements to a client and others. To decrease your account expenses, you can: research the market, use operations which have lower commissions, always keep some balance on your account, etc.