How to perform a financial health check for the new financial year

How to perform a financial health check for the new financial year

The new financial year is almost upon us and it’s the perfect time to take stock of your personal finances and perform a financial health check. After all, even the smallest of changes made through a financial health check may help you to achieve your goals.

If you’ve never performed a financial health check, it’s all about looking at your current providers, the rates you’re being charged as well as any fees, comparing options across the market and ensuring you’re still getting the best value for your financial needs and goals.

In fact, your bank may offer a free health check, with Commonwealth Bank providing financial guidance for its customers online or in-branch. Otherwise, it’s a relatively simple process that may help you to save hundreds, if not thousands of dollars, by the next financial year

Using RateCity comparison tools, such as tables and calculators, let’s look at how you may perform a financial health check.

RATECITY FINANCIAL HEALTH CHECKLIST: Different financial products and what to compare

Products What to compare
Bank accounts Fees, including overdraft fees and foreign transaction fees
Savings accounts Interest rates

Fees

Features, including savings tools

How frequently your provider cuts rates

Credit cards Interest rates, including purchase rates, cash advance rates and balance transfer rates

Interest-free periods

Rewards programs and perks

Fees and charges, including annual fees, foreign transaction fees and cash advance fees

Card type; Visa, Mastercard or AMEX

Car loans and personal loans Interest rates

Fees, including application fees and account-keeping fees

Features, including a redraw facility and making extra repayments

Loan term

Loan type (secured or unsecured)

Home Loans Interest rates, including comparison rates

Fees, including annual fees

Features, including offset accounts and a redraw facility

Loan type (fixed rate, variable rate or split rate)

Superannuation Fees

Investment options

Investment performance

Insurance options

Customer service

Banking products

Starting simple, make a list of all the basic everyday banking products you use, meaning your bank accounts, savings accounts and buy now, pay later apps. Then, check what fees (if any) your provider is charging, what the interest rate is if it’s a savings product, and what features it offers.

  1. Bank accounts – Most bank accounts do not charge account-keeping fees, so if your provider does, it may be worth comparing other options. You may want to also consider switching if your provider does not offer fintech you’re interested in, such as Apple Pay.
  2. Savings accounts – While interest rates are at record lows, there are still rates above 1 per cent if you’re willing to shop around. In the meantime, you may want to keep fees low to save as much of your nest egg as you can. Also consider if your provider offers helpful savings features like round-up tools.
  3. Buy now, pay later – Are you constantly being stung with fees from your buy now, pay later app? Or are you interested in access to a higher purchase limit? Consider comparing other options today.

Credit products (excl. home loans)

Next, look at any credit products you have, including credit cards, personal loans, and car loans. Check what fees (if any) your provider is charging, what the interest rates being charged are, and what features they offer.

  1. Credit cards – It may be worth looking at your Spending Profile to ensure you’re using the right card for your needs and goals. Think about how you use your credit card and make sure it lines up with how you use it. Then, perform a comparison of the market and see if your card(s) are still the most competitive in terms of rates and fees.
  2. Personal loans & car loans – Paying off your debt is arguably the most important thing you can do for your financial health if you have a personal loan or a car loan. But did you know that you can refinance these loans if you’re unhappy with your provider or rate? Keep in mind that refinancing and extending your loan term may increase the amount of interest you pay overall.

Home loan

Arguably the biggest debt you’ll ever pay off, getting your mortgage into a better position can mean the difference in tens of thousands of dollars over the life of the loan. Therefore, we’re going to give it special focus when performing your financial health check.

Firstly, you’ll want to find your current interest rate. Then hop online and research your provider’s rates for new customers, as well as other lower rates on the market. If your home loan provider is offering a lower rate for new customers you may want to consider picking up the phone and requesting they reduce yours. If they refuse, mention you’ve seen lower rates offered by said lenders you’ve already researched and threaten to refinance. The provider should hopefully be encouraged to keep you as a customer and reduce your interest rate.

If not, then it’s worth considering if refinancing your mortgage could be beneficial this new financial year – especially if you’re in mortgage stress. Refinancing can be helpful for several reasons, including reducing your repayments, paying off your loan faster, adding features to the mortgage, accessing equity and more.

There are a few steps involved in refinancing and the process can take a few days, if not weeks. There may also be switching costs associated, such as application fees, so it’s not without its risks. But if you switch to a lower-rate lower-fee lender, for example, you may save hundreds a year, or thousands over the life of a loan, in interest charges and fees. Discover how much you may save by switching home loan providers through a Mortgage Calculator.

Superannuation

While not something most younger Australians think about, it’s one of the most important financial products you’ll want to get right as early as possible. Saving for retirement is a fundamental part of healthy personal finances as your nest egg will hopefully fund decades of your retired years.

Look at your current superannuation fund, including your balance, how much you’re contributing and its fees. Many super funds will project how your current input and balance will grow over however many years until the current preservation age.

If that amount won’t allow you to live comfortably, consider the following:

  1. Salary sacrificing - If your budget allows for it, making more than the standard 9.5 per cent pre-tax deposit into your super fund may help boost your balance thanks to compound interest.
  2. Switch up your investment options – there are different levels of investment options based on risk across all super funds that may be worth exploring.
  3. Compare other superannuation funds – if you feel your super fund is not performing how you want, if the fees are too high, if you’re unhappy with your insurance options or customer service, consider comparing your superannuation fund options and switching. The best super fund for your financial health is a personal choice, and it’s worth keeping in mind that past performance is not indicative of future results.

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Fact Checked -

This article was reviewed by Personal Finance Editor Georgia Brown before it was published as part of RateCity's Fact Check process.

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Learn more about bank accounts

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 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.

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.

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.

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.

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 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 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.

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.

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.

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.

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.

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.