Transaction Accounts Guide

A transaction account is an everyday account that allows you to manage your finances easier. Most people will have one of these accounts, where their salaries are deposited and money for bills and expenses are withdrawn from as required. These types of accounts often earn very little or no interest, so many people consider linking a savings account with a higher rate of interest to them.

Things to consider when choosing a transaction account

1. Work out your spending habits

Your spending habits will influence what type of transaction account and features you should consider. There are two types of spending profiles, high transactor and low transactor.

• High transactor: This type of spender will make on average 35 or more transactions in one month and prefer a wide range of transaction methods such as ATM, cheque, branch, phone and internet. These types of spenders typically suit transaction accounts that charge more in monthly account keeping fees, however look for ones that have low or no fees to save yourself more.

• Low transactor: On average this type of spender will do a maximum of about 10 transactions per month and will use a wide range of transaction types such as branch, ATM, cheque, phone and internet. Because this type of spender doesn’t use their transaction account as often, look for an account with low or no monthly account keeping fees.

2. What is a Debit Card - do you need one?

A debit card with a Visa or MasterCard attached is similar to a credit card as it allows you to purchase items by selecting credit and either signing a receipt or entering a PIN number. The difference however is that you are using your own money first and only the banks if you spend more than what’s in your account, as long as you have set up a credit limit. The major benefit of a debit card is that you have the full access that credit cards give you so you can make purchases over the internet, phone and overseas.

MasterCard or Visa? Unlike credit cards that have three main issuers, MasterCard, Visa and American Express, debit cards currently have two – MasterCard and Visa. Choosing between the two will depend on the financial institution your transaction account is with and the benefits attached. They are both available through a wide range of financial institutions and can be used around the world. MasterCard offer their customers access to exclusive competitions and offers while Visa offers their customers access to pre-purchase tickets to concerts and gigs before they go on sale to the public as well as other exclusive deals.

3. What features are available for Transaction Accounts?

Most transaction accounts come with a range of features depending on your needs. When choosing a transaction account, look for one that has all the features you require so you can get the most out of your account. Some common features to choose from include:

• EFTPOS Facility: Whether you can perform transactions via EFTPOS
• ATM Access: If transactions via ATMs are allowed
• Internet Banking: If you can access your account details online and make transactions
• Branch Access: If you can process transactions in a bank branch
• Cheque Book: If a cheque book is attached to this account
• BPAY: BPAY is a facility that allows you to pay bills online using an allocated account and reference number. Funds are withdrawn direct from your transaction account and credited to the company that you paid the bill for.

4. Star Ratings

To help you better compare transaction accounts, CANSTAR CANNEX has allocated star ratings to most transaction accounts listed on RateCity. These star ratings are a benchmark rated on your spending habits, accessibility, fees and features in comparison to other transaction accounts. The ratings are from one to five with five being outstanding value.

When comparing transaction accounts, you can use these star ratings to help you find a product that best suits you.

5. Which fees you need to be aware of....

When it comes to fees on transaction accounts each account may vary. This will depend on your account balance, the amount of withdrawals and other transactions made and whether there is a limit or not. Typically some fees that you may come across include:

• Account keeping fee: This is typically a monthly fee that your financial institution charges you to manage your account.
• EFTPOS transaction fee: These fees can be charged for making a transaction via EFTPOS
• ATM withdrawal fee: If you withdraw money via an ATM. Some charge for withdrawing money from their own institution as well as other ATM networks. Be sure to check what your financial institution charges.
• Branch withdrawal fee: Fees for withdrawing money when visiting a branch.
• Cheque withdrawal and/or deposit fee: Fees charged for withdrawing money using a cheque or when depositing a cheque into your account.

When comparing fees for transaction accounts on RateCity you can sort your results by:

• Account Fees: The results will show all monthly account keeping fees in order from lowest to highest.
• Average Fees: The results will show all transaction account fees averaged out in accordance to the star ratings and whether you are a high or low transactor. That way you can see how much you will likely be charged in fees depending on your spending habits.

6. Other benefits

Finding an account that offers free transactions or a rebate is another handy way to reduce the amount you pay in fees.

a) Free Transactions: If you are a high transactor and make plenty of transactions each month, look for a transaction account with a low or no account keeping fee and a high number of free transactions. Most transaction accounts that offer free transactions are setup to encourage you to do your banking online, via phone banking and through EFTPOS and ATMs and reduce the amount of time spent in the branch.

b)Base rebate: Some financial institutions may offer transaction accounts with a rebate to cover you for the costs charged for any transaction fees charged by other institutions. Typically if you have more than one account with the one institution such as a home loan, credit card and a transaction account, you can be rewarded for doing more business with them by offering rebates of standard fees. The way it usually works is that you are charged for your fees at the end or beginning of each month but then any rebates you’re entitled to are deducted and the net amount is debited from your account.

7. Tips to consider

When you find the right transaction account that suits you the good news is that you can control the amount you pay in fees by following the tips below:

• Some transaction accounts offer a minimum amount of free transactions before you are charged. If this is the case with your account, make sure you monitor the number and type of transactions you make so that you don’t exceed the limit and pay more than you have to.
• Withdraw money more efficiently by taking out larger sums, that way you can limit the number of transactions you make overall.
• If you have a credit-debit card on your account, selecting “credit” when withdrawing cash or making purchases can avoid transaction fees.
• When making purchases using EFTPOS ask for “cash out” so you don’t have to withdraw money from an ATM later.
• Some financial institutions will waive the account keeping fees if you deposit a certain amount each month. Check with your institution if they offer any special conditions like this.

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