Your personal bank account – also known as a transaction account – is your most active bank account.
This is where you make deposits and manage your daily financial needs by withdrawing cash, buying groceries, paying bills and transferring money.
So when you compare bank accounts, it’s important you’re able to identify the right bank account for you. That means being able to understand its features and benefits, as well as any drawbacks.
Securing a bank account with the features for your liking can help save you time and money.
What’s a bank account?
All bank accounts, or transaction accounts, have their own distinctive features, but all provide the same basic service, which is to help you access your money for everyday expenses.
This can be done by issuing bank cheques, debit card purchases and ATM or branch withdrawals.
Bank accounts are a convenient way to to keep your money in a secure place.
The benefits of a bank account
A bank account gives you the means to manage daily monetary transactions and keep tabs on your money.
Some of the benefits of a transaction bank account are:
- It is a secure and safe place to keep your money. This can be useful during volatile economic situations. For the record, the Australian government offers a guarantee of up to $250,000 on deposits at authorised deposit-taking institutions (subject to certain conditions).
- It is a convenient way to organise your hard-earned cash. It is great for paying bills, paying for goods and services, receiving wages or Centrelink benefits and transferring money to someone else.
- It makes it easy to keep a record of all your transactions. This makes it easier to budget, and also comes in handy when you apply for a home or business loan. This gives lenders an insight into your financial habits.
- It is a good place to save money and build your assets. You can link your transaction account to a savings account, which can help your earn higher interest.
- It will often be fee-free, provided you make a certain amount of deposits per month (for example $2,000).
Choosing a bank account
A good bank account will help you manage your money efficiently and help you attain your financial objectives. People have their own goals and preferences, so here are some questions to ask when you compare bank accounts:
What are the main features you want in a bank account? We all have our own preferences when it comes to favourite bank account features. Some prefer convenience and flexibility; others want to earn points on their purchases or have access to Apple Pay. You can always exercise the process of evaluating if your needs are being met by your bank account; if you are not satisfied, you can always shift to another bank. The options are plentiful, so it doesn’t hurt to compare bank accounts and see what alternatives are out there.
Will this bank account meet your ATM needs? Being able to gain access to an ATM might be important, although you might have to pay for the privilege in the form of a fee. That said, many banks will exempt you from fees if you deposit your salary or a minimum amount into your bank account each month.
What sort of account fulfils your needs? Transaction bank accounts are intended for your daily banking needs: it can be an account where your salary goes in and one that you pay the bills and the groceries with. Some banks will charge you if you exceed the number of transactions in a set period, while some will offer unlimited transactions for a monthly fee. However, in this highly competitive market, some banks are offering accounts with unlimited transactions and no monthly fees, which is another reason why it pays to compare bank accounts.
What are your financial goals? Your age and your financial status also plays a part in your choice of bank account. For example, if you are in a wealth-building phase, you might want an account that incentivises you to deposit a certain amount in your account each month. This might also suit young couples who are saving for a deposit for a home loan. These accounts may come with a set number of transactions per month and a fee might apply if you go over the limit.
How many transactions do you want to make per month? Also, do you want extras like a debit card or a cheque book? Do you need access to internet banking?
With a wide variety of bank accounts on the market now, it can be difficult to compare bank accounts and pick the best one for you. Some accounts have no monthly fees. Others give you a fixed number of free transactions every month. The added features can make a difference when it comes to choice…so the choice is yours.