Should I keep all my money in one bank?

Should I keep all my money in one bank?

As Australia faces its first recession since the early ‘90s, you may be wondering if keeping all your money in one bank account is the best option. 

How you decide to divvy up your income, if you do at all, is entirely up to your personal financial situation and budget. But there are benefits to having multiple bank accounts, and some misconceptions around only having one

Let’s take a look at some of the common myths of having one bank account and whether they are true or false, as well as some of the benefits of multiple accounts.

Benefits of keeping money in one account

  • Myth 1 – Simplicity

Having one single bank account your income or Centrelink payments are deposited into can afford greater simplicity for your finances. You only need to remember one set of bank account details, have one debit card and link one account to your bills for direct debit. 

Fact check: False.

While having one bank account may offer some simplicity in your finances, it may end up causing more confusion down the road, prevent you from reaching your savings goals and potentially cost you more. If your bills are coming out of one bank account, which charges a failed payment fee, and your balance goes below $0, you will be stung.

Further, if you’re hoping to save up some money for a financial goal, only having one bank account prevents you from potentially earning interest on your savings through a savings account, and makes you more prone to dipping into your savings, as it can be easily accessed via your debit card.

  • Myth 2 - Multiple accounts may get confusing

Perhaps you’ve tried multiple bank or savings accounts in the past and found it too hard to keep track of. Keeping your money in the one bank can also reduce any amount of confusion for some Australians. 

Fact check: True. 

It can absolutely be difficult for some Australians to keep track of multiple bank or savings accounts. If having one bank account allows you to reduce any potential confusion or difficulty in your finances, then this may be the right option for you.

  • Myth 3 – Loyalty

You’ve been with the same bank account since you were a kid and believe that staying with them for many years will afford you additional benefits and perks than new customers. 

Fact check: False. 

The concept of loyalty to a bank is dead. In fact, banks will typically sting you with a loyalty tax – meaning existing customers tend to pay higher rates and fees than new customers across most financial products.

Bank account providers, home loan lenders, credit card providers and more will offer generous introductory rates, reduced fees, cashback offers and much more just to get new customers on to their books. If you’ve been loyal to one bank your whole life, then you’ve never done your research around what other options may be out there and whether they might offer you greater service, reduced rates or costs.

Benefits of multiple bank or savings accounts

On the flip side, there are a range of potential benefits to having more than one place to store your money, which is why two-thirds of Australians have accounts at more than one bank. 

Here are just a few of some of these benefits:

  • Safety – If your bank details are compromised, you lower your risk of having your entire balance wiped, or having access to no funds, until this is resolved.
  • Savings rates – You may need a linked everyday transaction account to meet a savings account condition and earn bonus interest.
  • Savings goals – You may reach your savings goals faster with one or more savings accounts, than keeping your money in one bank account.
  • Accountability – Multiple accounts also prevents you from dipping into your savings.
  • High balance – Typically, bank or savings accounts will have a balance limit, meaning it may be better to spread your funds across multiple accounts.
  • Linked products – Often times you’ll have a transaction or savings account linked to other financial products, like a home loan or credit card.
  • Rate hopping – With interest rates at record lows, hopping from one savings account to another to ensure you’re getting the highest interest rates on the market.

How do I know which account is best?

Whether you opt for one bank account or multiple, it’s crucial that you regularly compare your options to ensure you’re not missing out on any potential savings.

Bank accounts may come with a raft of fees, including account keeping fees or failed payment fees. A simple bank account comparison using a comparison table can help you to see whether your existing account is the best one for your finances, or if there are more competitive options out there.

Savings accounts have variable interest rates, meaning they are subject to change based on the provider and the Reserve Bank of Australia’s cash rate. This means that it is invaluable that you constantly check to see whether your savings account is still competitive. Is it offering a high interest rate? Is it charging you any fees? What conditions are required to earn a bonus rate? What is the standard variable rate of the account?

Compare savings accounts regularly to ensure you’re getting the best bang for your buck.

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Learn more about bank accounts

Can you open another account at the same bank?

Yes, you can open another account at the same bank if you already have an account there, but some banks place a limit on how many specific accounts you can open.

Generally, though, it is possible to have more than one everyday account, one personal account and one joint account, or have different types of accounts – such as a transaction account and a savings account.

Keep in mind that some bank accounts come with fees, so you could be charged twice for having two types of the same account at the same bank.

Also, if you have more than one high-interest transaction account at the same bank, only one account will be able to earn the highest rate of interest.

How do I close a bank account?

Closing a bank account is one of those tasks that’s easy to put in the too-hard basket. There are quite a few steps involved, some which may require you to hang on the phone for a while.  

Here’s a handy checklist of items to tick off, so the job gets done quicker. If you don’t do your banking online, the following steps can also be done at a branch.   

  • Cancel any scheduled or recurring payments
  • Update your direct debit details (such as loan repayments) with creditors
  • Export your payee address book (to keep a record of saved third-party bank account details)
  • Transfer the balance of your account (to the new bank account)
  • Close your account online, or by calling the bank or visiting a branch

Can you find your bank account number online?

If your bank offers online services, you should be able to find your bank account number online by logging into your account on your bank’s website and checking your details there.

Keep in mind that each type of account you have with a bank comes with a unique account number. This means if you have a bank account as well as a savings account, for example, your bank account number and your savings account number will be different.

If you don’t have access to your bank account online or can’t login, you should be able to find your account number on a mailed bank statement, if you have one.

Alternatively, you can call your bank’s customer service number or visit a branch to retrieve your account number.

Can I close my bank account over the phone?

In most cases, you can close a personal or business bank account over the phone. In fact, this is the best way to ensure you’ve closed an account properly.

By speaking to a banking representative, you can capture and close out any pending transactions, or interest owing/payable on the account being closed.

In the instance where the account is a joint account, or you have multiple bank accounts you want to close, your bank may send you a form that you need to fill out and return.

Either way, you would be advised over the phone of the steps you need to take. Calling your bank ahead of closing an account is often a smart course of action.

Opening a bank account for someone under 18

How do you set up a bank account online?

Once you’ve compared bank accounts and found the right one, the process of opening a bank account online is quite simple and can be done in around 10 minutes.

To set up a bank account online, you’ll need to prove your identity and provide an approved form of ID as well as your tax file number (TFN).

If you’re a new customer of the bank, you’ll need to verify your identity and potentially upload documents before you can complete your online application.

Once your ID has been verified and you’ve set up your bank account online, you should receive your bank cards in the mail along with your PIN and any other account details.

Can foreigners open bank account in Australia?

If you’re migrating, studying or working in Australia, you’ll be pleased to know that you can open an Australian bank account. For the most part, opening a bank account in Australia is a simple process which starts by comparing the types of bank accounts foreigners can open in Australia.

Once you’ve found a bank account that suits your needs, you can start the application process.

When you apply for the account, you’ll need to provide proof of ID which may include your passport, overseas ID or credit card. You may also need to provide a copy of your visa and proof of address in Australia.

Depending on the bank and the type of account you choose, you may be able to apply for the account online or over the phone before you arrive in Australia.

Can I have a PayPal account without a bank account?

You don’t need a bank account to send or receive money through PayPal. However, you do need a bank account if you want to withdraw money from your PayPal account.

How to transfer money to another bank account

Transferring money to another bank is often called a bank transfer, and it can be done a few different ways.

Customers generally need three pieces of information to transfer money to another bank account. Customers need the account name, BSB and account number of the account they wish to transfer money to.

One way of transferring money to another bank account is in a branch with the help of a staff member; they will often give you a receipt as well as confirmation of the transfer.

Transfers can be also made via internet banking and phone banking.

Some banks also allow customers to make transfers via partnered ATMs, especially if the account is with the same bank.

Can you deposit money into somebody else's bank account?

One of the easiest banking tasks in the world is depositing money. You can even deposit money into someone else’s bank account if you wish.

The basic information you need to deposit money into a third-party bank account is:

  • Payee’s name
  • Bank, building society or credit union (though this isn’t necessary)
  • BSB (or bank code, which is the branch identifier)
  • Account number

Including the name of the financial institution isn’t necessary – particularly with online banking – because the BSB will identify this for you.

A handy tip is to record yourself (or add a personal message) in the transaction description or reference. This will show up on the recipients account, letting them know who’s paid them the money.

How do I open a new bank account?

There are a number of ways to open a new bank account – online, over the phone or in the branch. The trick is to decide what type of bank account you want beforehand.

It might sound like a simple enough task, but there are literally hundreds of bank accounts to choose from. And each offer their own banking features and benefits.

A comparison site like RateCity can help you work out what bank account product matches your needs.

Once you’ve made up your mind what you want, it’s advisable to have the following information ready for the application process.

  • A couple of forms of identification (such as driver’s licence, Medicare card, passport)
  • Tax file number
  • Residential address, contact phone number and email (though email is not essential)

Can I open bank accounts for my children?

A common question for new parents is, ‘Can I open a bank account for my child?’

The short answer is yes – as a parent you can open a bank account for your child.

Once you’ve compared your options and found a bank account that suits your needs, the process is relatively simple.

As the bank account is for your child, you’ll need to provide some documentation such as proof of ID, including your tax file number.

You will also need a copy of your child’s birth certificate, and in some cases you may also need to sign a guarantee of indemnity.

Depending on the bank and whether you’re an existing customer, you may be able to open a bank account for your child online. However, you may still need to go into a branch to prove your identity.

Are bank accounts frozen when someone dies?

Yes, Australian bank accounts are frozen when someone dies. If you want to close the account of somebody who has died, you might have to provide proof of death and a copy of the will. You might also have to prove your relationship to the deceased person.

If you have a joint bank account with somebody who has died, you will generally be entitled to all the money in the account. Again, you might have to provide proof of death if you want to change the bank account from a joint account to a one-person account.

How do I open a bank account for a child?

There are few better ways for a child to learn about money management than through savings. And there’s a plethora of bank accounts designed specifically for young people and children.

A bank account for a child can be opened online, over the phone or in a branch in a few easy steps. The minimum age a child can open a bank account for themselves usually ranges between 12 and 14.

If the child is too young to open the account, you can do it for them as their legal parent or guardian. 

To do this, you would need to be over 18, have an Australian residential address and currently reside in Australia (or have proof of residency).

You would also need to provide:

  • Identification for yourself and the child
  • Your tax file number (TFN) or TFN exemption

Depending on the bank account, you might be able to choose what level of access the child has to their bank account (online and via the phone).