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Learn more about bank accounts

Most people don’t put a lot of thought into their everyday bank account. That is a shame, because comparing the cheapest bank accounts can be a handy way to find a bank account which minimises unnecessary fees and charges, while qualifying for a range of perks and extras.

We’re going to look at the different types of everyday transaction accounts available, what distinguishes these bank accounts from other options and the sort of things you should be looking for when comparing bank accounts.

What type of bank accounts are available?

  • Transaction accounts – These bank accounts are designed to make meeting day-to-day expenses easy. Transaction accounts are set up to make it easy for people to receive their pay, take out cash and pay any bills that have arrived. While these bank accounts are highly accessible, they generally don’t offer a great interest rate return and sometimes have numerous bank account fees and charges that the account holder should be wary of.
  • Savings accounts – On the other end of the spectrum you’ve got savings accounts, which are designed to give people a place where they can put their money and make it grow faster. Savings accounts typically offer a superior interest rate to regular transaction accounts, and some have measures in place that make it harder to access your money, theoretically making it easier to set your funds aside and save.
  • Joint bank accounts – This is a bank account that has two names on it, and is an account that is generally opened by people in a relationship. There are advantages to opening joint bank accounts, like lowering account fees, but there are also inherent risks involved.

What are the advantages of a transaction account?

When you’re testing the market, and comparing the cheapest bank accounts to find the best option, it’s useful to be aware of the advantages an everyday transaction account offers for users.

  • Easy-to-use and accessible – Perhaps the chief advantage of an everyday transaction account is the fact that it’s easy to use, and highly accessible. If you’ve got a bill to pay or need a place where you can receive your wages, a regular transaction account generally gets the job done, making it easy to manage your money and meet day-to-day expenses.
  • They’re often free to open – Rules change from provider to provider, but most everyday bank accounts are free to open. This allows you to get started with your new bank account, without having to worry about being slugged with fees straight off the bat.
  • No lock-in period – Most people don’t shop around for the cheapest bank account, but it’s easier than you might think. Many institutions offer bank accounts with no lock-in periods, which can be useful for people looking to shop around for a better deal.
  • Your money is safe – A bank account is one of the safest places to keep your money. Should the unthinkable happen and the financial institution you’re banking with somehow goes bust, the Australian government will guarantee your savings account balance up to the value of $250,000, which can provide some peace of mind in times of volatility.

What are the disadvantages of a transaction account?

When you’re comparing the cheapest bank accounts and looking to find the right one for your situation, it’s equally as important to be aware of the disadvantages of a transaction account.

  • Interest rates are variable – While they take some guidance from the Reserve Bank of Australia (RBA), banks and financial institutions are free to change their interest rates whenever they like. This could cause problems for people who want a bank account that can give them the potential to grow their money, while managing their day-to-day expenses.
  • Interest rates are lower than savings accounts – What’s also true is that interest rates offered by traditional transaction accounts are generally lower than those offered by savings accounts. So even if you have found the cheapest bank account available, that doesn’t necessarily mean you’re in a good position to grow and expand your wealth.
  • Paying multiple fees – Another one of the main sticking points that comes with people opening transaction bank accounts is the fees payable. While the nature and amount of these fees vary from provider to provider, bank account holders can often lose a significant portion of their savings paying fees that in some cases they’re not even aware of.
  • Temptation to spend – Having money that’s easily accessible is convenient, but it can also be very tempting. The ease with which transaction bank account holders can access their funds can sometimes result in people making unnecessary discretionary purchases, which over the course of time can make it more difficult for savers to meet their long-term financial goals.

What sort of fees will I have to pay with a transaction account?

If you’re comparing the market, and looking to find the cheapest banking account in Australia, it’s important to be wary of the sort of fees these bank accounts commonly put upon customers:

  • Monthly account-keeping fees – These are fees charged by your bank or financial institution that are designed to cover the day-to-day administration and upkeep of your account.
  • Phone banking fees – If you’re someone who likes to bank over the phone, your use of this banking feature might incur an additional level of fee from your provider.
  • Internet banking fees – By the same token, if you’re undertaking internet banking, you may be incurring additional charges from your bank or financial institute.
  • Overdraft charges – Some banks and financial institutions will penalise account holders for overdrawing on their bank account balance. It’s always important to be aware of your bank’s policy on overdrafts, and whether they impose additional charges when this occurs.
  • Transaction fees – Depending on your provider and the nature of the transaction you wish to undertake, you may also incur separate transaction fees you have to pay. Again, it’s important to be aware of your bank’s policy when comparing bank accounts.

What should I look for when choosing a transaction account?

When you’re comparing cheapest bank accounts in Australia and looking for the right one that fits your situation, it’s important to consider the following aspects and traits.

  • Are the fees low? Bank accounts with low fees generally ensure that the bank account holder has more money at the end of the day. Make sure you compare bank accounts by fees, to make sure you’re not needlessly digging into the money you’ve saved to cover unnecessary charges.
  • Does your bank have minimum and maximum account balances? Be wary if your bank imposes charges for going under or over any minimum or maximum balances.
  • What sort of access does it offer? When comparing transaction accounts, it’s important to be aware of the different levels of access offered, to make sure you’ve got the right bank account to meet your day-to-day expenses, while keeping your funds safe.

Frequently asked questions

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.

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.

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

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.

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 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 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 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 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.

How do you open a bank account in Australia?

Opening a bank account in Australia is usually a straightforward process. Some banks give you the option of opening an account online, while others require you to visit a branch.

Different bank accounts offer different features, so it’s best to compare your options to find one that suits you.

All banks require you to pass an identity check to open a bank account. Australia uses the 100-point identification system, which means you’ll need to show a number of forms of ID that, together, add up to 100 points.

Common ID types include a driver’s licence, passport, Australian visa in a foreign passport, and Australian Medicare card. You’ll find out what types of ID are accepted when you go through the sign-up process online or at a branch.

Once your account is open, you’ll be given or sent a debit card that you can use to make purchases and withdraw money from your account.

Can I link a bank account to Paypal?

Paypal is a safe and convenient way to pay online without the need to share your financial details. You can send and receive money or accept credit and debit cards as a seller using Paypal.

It’s easy to link your bank account to a Paypal account and start making transactions within minutes.

To start, you first need a Paypal account (it’s free to join). When setting up your Paypal account, you will be prompted to link a credit card or bank account (or both if you wish).

PayPal works without a balance; you can use Paypal to shop or send money when your balance is zero.

When your Paypal balance is zero, Paypal will ask you to choose your preferred payment method at the checkout.

This could be either your linked bank account or credit card. Your bank details can be updated if you change banks or credit cards.

Can debt collectors take money out of your bank account?

Many people find themselves struggling to cope with debt at one time or another. In these cases, a debt collector could contact you to demand payment for a debt, to explain the consequences of you failing to pay a debt, or to organise alternative payment arrangements.

If you’re contacted by a debt collector, you may be wondering what their rights are and whether they can take money out of your bank account.

Creditors cannot access money in your bank account unless a court order (also known as a ‘garnishee order’) is made to allow creditors to recover debt by taking money from your bank account or salary.

If this happens, the creditor can take money out of your bank account unless you pay the debt in full or make an alternative payment arrangement such as paying in instalments through the court.

Can I close a bank account with pending transactions?

You can close a bank account with pending transactions. But after the account is closed, any incoming transactions will be declined by your (old) bank.

The best way to ensure this doesn’t occur is to either wait to close your account until all pending transactions are complete, or contact the creditor and supply them with alternate bank details.

If you’re unsure whether you have any scheduled transactions, you can speak to a banking representative over the phone or via online support.

In most cases, your bank withholds the amount owing for pending transactions (such as online purchases).

Because the pending amount is deducted from your bank balance, you can close your bank account and the purchase will be honoured.

Do you need a bank account to sell on eBay?

You don’t need a bank account to sell on eBay. But if you don’t have a bank account, you must provide either a credit card or debit card.

How long does it take to open a bank account?

The length of time it takes to open a bank account varies, depending on whether you want to open it online or in person.

Online

Most banks and credit unions have simple online applications that usually take no more than 10 minutes to fill out. It can be especially fast if you have your identification documents like your driver’s licence and passport handy. Sometimes you will instantly be approved and the bank account opened. However, depending on the financial institution, it may take a day or so to be processed and your account number issued. Your account information and ATM or debit card will then be mailed to you, which usually takes between five to 10 days.

In person

If you decide to go into a branch or office to open a bank account, it may take about half an hour. Make sure you bring your identification documents with you. Also book an appointment if you can, otherwise you might be forced to wait in line. Sometimes your ATM or debit card will be issued on the spot, otherwise you’ll need to wait for one to arrive by mail, which usually takes between five to 10 days.

How do I open a bank account for a baby?

If you’ve just welcome a new baby into the world, congratulations. Opening a bank account for your child can be a wonderful first gift.

Before you can open your child an account, you’ll need to have a birth certificate or passport for your baby.

As the parent or guardian, you’ll also be listed as a joint holder on the account. This means you’ll need to have proof of your identification and address (a driver’s licence, passport, birth certificate or Medicare Card).

Many banks and credit unions offer baby banks accounts. Usually, you can apply online; otherwise you can head into a local branch or office with your documents.

How can I find bank accounts in my name?

To find ‘live’ bank accounts in your name, you’ll have to ask individual lenders, which involves contacting them one by one and proving your identity each time. To find ‘unclaimed’ bank accounts (those that have been inactive for at least seven years), you can use this website.

How do you find a bank account number by name?

For privacy reasons, Australian banks won’t hand out account numbers or other details about their customers. However, if you provide a bank with a BSB and account number, they should be able to confirm if those numbers belong to one of their customers.

What do you need to open bank accounts?

Opening a bank account is one of the simplest online tasks you could perform. The hard part is deciding which type of bank account you want to open.

All banking institutions have a website where you hit ‘apply’ on the account of your choice and step through an application in less than 10 minutes.

Here’s a list of information that is generally required for applications.

  • Identification (driver’s licence, passport, proof of age card, proof of citizenship and/or birth certificate)
  • Tax file number (so you don’t get charged the highest tax rate)
  • Address, contact email and phone number

If you decide to open a new account at the branch, make sure you ask beforehand what information you need to take with you, or take all of the above to be safe.

Do you need a bank account to get a credit card?

To get a credit card, you need to show proof of income, which will almost certainly require you to have a bank account.