Looking for a bank account with no fees? You wouldn’t be the only one!
Bank accounts are an essential part of our lives, but that doesn’t mean that you should have to pay for the privilege of storing your money at the bank.
Here’s how to find a no-fee bank account.
Why do banks charge fees?
To put it simply, banks charge fees in order to make money. It’s easy to forget this, especially if you have been with your bank for all or most of your life, as many of us have been.
But at the end of the day, banks are businesses, and businesses need to make money in order to sustain themselves and remain profitable. Charging a number of small, seemingly innocuous fees to their customers is one of many ways that the banks achieve this.
What kind of fees should I look out for in my bank account?
There are a number of different fees that banks charge on bank accounts (also known as transaction accounts). To put it simply, if you are looking to do anything with your money, there could be a fee for it. Here are some of the most common bank account fees:
Monthly account-keeping fees are charged, as the name implies, on a monthly basis. This fee is usually a few dollars, and is essentially charged so that you may keep your account for another month. Many banks will waive this fee if you deposit a certain amount each month, or keep your balance over a particular amount. This incentivises customers to put more of their money in their bank account.
ATM fees have been scrapped by the big four banks, but this doesn’t stop smaller banks from charging you to withdraw money from their ATMs, usually at around $2 per transaction. Some bank accounts also have a limit on the number of ATM withdrawals you can make in a month, and will charge you if you exceed this number.
Internet and phone banking can also cost you. Depending on your bank account, you may be charged for withdrawals or deposits made when using these services.
EFTPOS transaction fees could be charged when you use your EFTPOS card to make a purchase.
Branch fees can be charged when you visit your bank’s branch to make a transaction, such as a withdrawal or deposit. Your bank may also charge you a cheque fee if you need to produce a cheque to make a payment.
Overdraft or dishonour fees could be charged if the balance on your bank account drops below zero. For example, if you have a scheduled transaction, but not enough money in your account to cover it, your account balance will be in negative territory, and you will be charged an additional amount by your bank for doing this. You can avoid this by choosing an account that does not charge overdraft fees. This would cause your transactions to decline, rather than put you in overdraft. This may be a little embarrassing, but it’s also a lot less expensive.
So how do I find a no-fee bank account?
While this list of fees may seem long and exhaustive, it’s important to note that although many bank accounts charge many of these fees, most bank accounts will not charge all of these fees. Banks still need to be competitive in order to incentivise new and existing customers to bank with them.
For most of us, a no-fee bank account would be ideal. But does this even exist? The answer is yes, but with caveats.
To avoid bank account fees, choose an account that does not have fees for ATMs, internet and phone banking, EFTPOS transactions, in-branch transactions, cheques or overdraft. These fees are optional add-ons that many banks no longer charge for.
Alternatively, if you find a bank account that ticks all of the other boxes, but still charges for cheques or in-branch withdrawals, weigh up how likely you are to use these services. If your bank charges a few dollars to issue a cheque, but you’ve never written a cheque in your life (and don’t foresee that changing any time soon) then this fee may not even be a problem for you. In other words, you can turn a bank account with fees in to an unofficial no-fee bank account.
When it comes to the monthly account-keeping fee, you have a few different options. You may notice that a bank account you’re considering has a monthly fee, but make sure to read the fine print and any offers available.
Many banks will waive the monthly fee if you deposit a certain amount each month, or keep your account balance at a particular value. So when researching no-fee bank accounts, make sure to know how much you will be depositing and withdrawing each month.
Are there any bank account perks?
When weighing up bank account fees and how to avoid them, you might be wondering if there are any bank account perks to balance out the fees.
Although you won’t find extravagant perks such as concierge services and VIP event seating with most bank accounts, there are certain benefits that banks offer for choosing one of their bank accounts. As mentioned earlier, despite the fees, banks do need to stay competitive.
Some banks offer reward bank accounts. These accounts allow you to accrue reward points on your transactions and account balance. These could be frequent flyer points, or another reward program, depending on the bank and offer.
Cash back rewards are another perk offered on some bank accounts. In most cases, this offer can give you up to two per cent back on eligible purchases made using PayWave or PayPass. Because the offer is contingent on contactless payments, this means that it only applies to transactions under $100. Make sure to check the terms of this offer, as it may only be available for a limited time, such as when you open a new bank account.
Many bank accounts also now offer Apple Pay and Google Pay, which allow you to make transactions using your smartphone, rather than a debit card. Not all banks or bank accounts currently offer this option, so look out for one that does if you are interested in perks.
Cardless cash is another feature that banks are rolling out more and more. This service allows you to use your bank’s mobile app to schedule an ATM withdrawal, even if you don’t have your card on you. You would simply log into the mobile app, select the amount of money to withdraw, and then receive a pin or verification code to use at the ATM.
How do I know which bank account is right for me?
As with all financial products, it’s important to weigh up what you want to get out of them, versus how much you are willing to pay.
For everyday banking, a no-fee bank account would be ideal, but you should also weigh up if there are any rewards or perks that would make any potential fees a little less unappealing.
Once you’ve figured this out, you’re in a good position to choose a bank account, with or without fees.