Things to consider when choosing a transaction account

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 Most people will have one of these accounts, where their salaries are deposited and money for bills and expenses are withdrawn from as required.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.

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.

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:

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:

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

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:

Start comparing transaction accounts now

This is an information service. By browsing on the website and/or using our search tools, you are asking RateCity to provide you with information about products from multiple financial institutions. We will try to show you a range of products in response to your request for information. The search results do not include all providers and may not compare all features relevant to you, for further details refer to our FSCG. The rating shown is only one factor to take into account when considering these products. We are not a credit provider, and in giving you product information we are not making any suggestion or recommendation to you about a particular credit product. If you decide to apply for a product, you will deal directly with a financial institution, and not with RateCity. Rates and product information should be confirmed with the relevant financial institution, and you should review the PDS before you decide to purchase. See our terms of use for further details. This advice is general and has not taken into account your objectives, financial situation or needs. Consider whether this advice is right for you.