Welcome to the exciting world of fintech

Welcome to the exciting world of fintech

Most people limit their smartphone use to making and receiving calls, exchanging texts, checking emails and surfing the web.

Other people, though, think of their mobile devices as powerful financial tools that can be used for everything from setting payments and making budgets to trading shares and insuring valuables.

Welcome to the world of fintech, or financial technology, which has grown rapidly in the past five years and which is set to explode in the next five years.

What are the best fintech apps to use? We’ve compiled a mix of trusted favourites and exciting newcomers to help you get the most out of your smartphone.

Banking

Mobile banking apps allow consumers to transfer money, pay bills, check account balances, view transaction histories and access special offers.

ANZ, Commonwealth Bank, NAB, Westpac all have mobile banking apps.

So do all the best-known non-major lenders, such as Bendigo Bank, ING Direct, Macquarie Bank, St George and Suncorp Bank.

Many smaller lenders, like CUA, Heritage Bank and ME Bank, also have mobile banking apps.

Consumers can also use the PayPal app to transfer money to account holders in more than 100 countries, using just their email address or mobile number.

Budgeting

Mint is a money manager that allows you to keep track of your bank accounts, credit cards, bills and investments. “See bills and money in one place. Get alerts and schedule payments on the spot. Say goodbye to late fees.” Mint provides users with custom tips for reducing fees and saving money. Time magazine named it one of its 50 best apps of 2016.

YNAB says it will give you total control of your money. “You’ll stop overdrafting, pay off your credit card debt, your stress levels will plummet and you’ll achieve financial peace.” You can access all your bank accounts from one place and share finances with your partner. The app will also help you set budgeting goals and track your progress.

The Australian Taxation Office app will help you conduct both your tax and super affairs. You can record and manage expenses and trips, relating to your work as an employee, your business as a sole trader or other general expenses. You can also upload your myDeductions records to your tax return at tax time or email a copy to your tax agent.

Currency conversion

Apps like XE Currency, Easy Currency Converter and Currency Converter not only allow you to monitor multiple currencies simultaneously, but also offer real-time updates, historic graphs and offline mode.

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Digital wallets

Google Pay and Apple Pay allow consumers to make credit or debit card payments with their smartphones. You need to register the cards you want to use – but not all Australian lenders participate.

ANZ, Commonwealth Bank, NAB and Westpac also offer mobile payment apps, as does PayPal.

Venmo can also be used to make purchases, but many people use it to reimburse friends in social situations, such as splitting a bill at a restaurant.

Insurance

Trov allows Australian residents to insure individual items from their phone. Insurable items include computers, mobile devices, wearables, gaming devices and household appliances. You can turn protection on and off whenever you like. You can then swipe to claim for damage, loss or theft and use SMS to file claims.

My eVault is a one-stop storage facility for your insurance policies, warranties, receipts, travel documents and important photos. You can set reminders to tell you when your policies and warranties are about to expire. You can also quickly search purchase details, record customer service phone numbers and save instruction manuals.

Investing

ANZ, Commonwealth Bank, NAB and Westpac all offer share trading apps.  

For something different, Acorns will help you save spare change from your everyday purchases and invest it into a diversified portfolio of stocks and bonds.

Peer-to-peer lending

Consumers can use peer-to-peer lending marketplaces to not only borrow money, but also invest money – that is, earn a yield by lending it to others.

Marketplaces include DirectMoney, Marketlend, MoneyPlace, RateSetter, SocietyOne and ThinCats.

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Learn more about savings accounts

Can you set up direct debits from a savings account?

It’s not usually possible to set up a direct debit from your savings account to cover ongoing expenses or bills, as savings accounts are structured around growing your wealth by earning interest on regular deposits, and discouraging withdrawals.

Some transaction accounts allow you to set up direct debits and also earn interest, though you may not enjoy as much flexibility as a dedicated transaction account, or get as high an interest rate as a dedicated savings account.

Can you direct deposit to a savings account?

Yes. You can make one off payments or set up regular direct deposits into a savings account. This can be organised easily through online banking or by making deposits in a branch. Talk to your lender to find out the easiest way for you to set up direct deposits.

How to open a savings account for my child?

Some banks and financial institutions allow parents to open a bank account for their child as soon as it is born, and start depositing funds to go towards the child’s future.

Children’s savings accounts generally don’t have fees, and are structured to help develop positive financial habits by limiting withdrawals, encouraging regular deposits, and earning interest on the savings, similarly to standard savings accounts.

What is a savings account?

A savings account is a type of bank account in which you earn interest on the money you deposit. This makes it one of the easiest and safest investment tools.

Can I overdraft my savings account?

A lot of savings accounts won’t let you overdraw. Some will allow this feature but you’ll need to apply first. It’s best to read the fine print and check with your lender whether this is a feature they offer. It can be a helpful addition, but as your lender can charge you a fee as well as interest for going into negative numbers, it’s best to avoid overdrafting when possible.

Can you have a joint savings account?

Yes. Joint savings accounts can be useful for two or more people wanting to combine their savings to meet shared financial goals, including spouses, flatmates and business partners.

Some joint savings accounts require all parties to sign before they can access the money. While less convenient, this extra security can help encourage all parties to meet their shared financial goals.

Other joint savings accounts allow any of the account holders to access the money. These accounts can be convenient for financially responsible couples that trust one another implicitly. 

How do I open a savings account?

Opening a savings account is a relatively simple process. If you’ve found an account with a suitable interest rate, you’ll just need to get in contact with your chosen lender via a branch, phone call or hop online to begin the process. 

You may be required to provide:

  • Personal details, including identification (driver’s license, passport etc.)
  • Tax file number
  • Employment details

What is a good interest rate for a savings account?

A good rule of thumb to keep in mind with savings accounts is to look for a rate that is higher than the CPI inflation rate. This number is constantly changing, so check the Reserve Bank of Australia’s page. If you aren’t earning interest above this then the value of your money will go backwards over time.

How to make money with a savings account?

Savings accounts make you money by earning interest on your savings. The more money you deposit, the longer you leave it in the account, and the higher the account’s interest rate, the more interest you’ll be paid by the bank or financial institution, and the more your wealth will grow.

To make sure your savings account makes money and doesn’t lose money, it’s important to maintain a large enough minimum balance that the annual interest earned exceeds any annual fees charged on the account.

How much money should I have in my savings account?

A good rule of thumb when working out a minimum balance for your savings account is to make sure that you’ll earn more in annual interest on your savings than what you’ll be charged in annual fees.

If you’re saving with a specific goal in mind, prepare a budget so the interest you earn on your deposits will help you efficiently reach this goal. Online financial calculators may be helpful here.

Can you set up a savings account online?

Yes. Several large and small banks offer online applications for savings accounts, and there are also online-only financial institutions to consider.

Online-only savings accounts are often less expensive than other savings accounts, though they may not offer the same flexibility, features, or face-to-face service as more traditional savings accounts.

Who has the highest interest rates for savings accounts?

As banks frequently change their rates, the most accurate way to know who currently has the highest interest rate is to use a savings account comparison tool.

How does interest work on savings accounts?

The type of interest savings accounts accrues is called compound interest. Compound interest is interest paid on the initial deposit amount, as well as the accumulated interest on money you have. This is different from simple interest where interest is paid at the end of a specified term. Compound interest allows you to earn interest on interest at a higher frequency. 

Example: John deposits $10,000 into a savings account with an interest rate of 5 per cent that he leaves untouched for 10 years. At the end of the first year he will have $10,512 in savings. After ten years, he will have saved $16,470.

What is the interest rate on savings accounts?

As banks frequently change their rates, the most accurate way to look at interest rates on savings accounts is to use a savings accounts comparison tool. When you look at the savings rate check what the maximum and minimum rates are. Often banks will offer you a promotional rate for the first few months which is competitive, but then revert back to a base rate which can sometimes be less than inflation. Ongoing bonus rates are often a safer bet as they will keep rewarding you with the maximum rate, provided you meet their criteria