May 11, 2011
For many students living on a miniscule budget, savings of any size are welcome. Cost-cutting techniques employed by students range from the thrifty (such as home-brewing beer and supermarket shopping during discount periods) to the more extreme (such as "dumpster diving" for food).
That's why it may come as a surprise to discover that students and other young Australians are the most frivolous group when it comes to accruing fees on their transaction accounts, according to Reserve Bank of Australia (RBA) figures.
Young consumers value convenience over cost
In an effort to better understand how consumers, including young Australians, pay for goods and services and to monitor their cash withdrawal behaviour, late last year the RBA commissioned Roy Morgan Research to conduct a survey of payment patterns.
The results revealed that younger consumers (aged 18 to 29), including students, are much more likely to use foreign ATMs despite the associated fees, compared with older consumers.
This is likely to reflect a variety of factors, with convenience often a key driver for many young Australians. This group tended to withdraw money where and when they needed it, even if it meant using another bank's ATM and incurring a fee. The older groups surveyed were more likely to avoid fees by withdrawing cash as part of a regular spending pattern.
The average "foreign" ATM fee is $2 per withdrawal and $2 per balance inquiry. So if students were checking their balance and withdrawing cash once per week from foreign ATMs, then they could potentially rack up more than $200 in fees annually.
However, that figure does not take into account the fees charged by your own bank for using a foreign ATM. So in fact the bill may be significantly higher than you may realise.
Tips to reduce transaction account fees
There are a number of ways to cut your transaction account fees and the most obvious one is to only use your bank's ATMs. Here are a few of our other top tips to help you save money:
- Avoid regular visits to the ATM by withdrawing larger amounts at any one time to cover your weekly or monthly spending.
- Avoid ATMs altogether and instead withdraw cash during point-of-sale transactions, such as when you buy goods at the supermarket (these are usually fee-free transactions).
- But be aware that some institutions also charge EFTPOS and BPay fees.
- Switch to a fee-free transaction account.
- Compare transaction accounts online for one that best suits your situation.
It pays to do your research into the costs to hold a transaction account, because some can be more expensive than others.
Related transaction account links