Try getting by without your transaction account. It’s the account your pay goes into and your bills come out of. It’s the card you take out of your wallet most when shopping and at ATMs – every day.
The trouble with many transaction accounts is that you pay monthly account-keeping fees, transaction fees and exception fees that can add up to a couple of hundred dollars each year. But these transaction accounts are now dinosaurs: if you’ve had the same day-to-day account forever, your switch to fee-free banking is overdue.
Thanks to greater competition among the banks, fee-free accounts are becoming easier to find. In 2009, NAB was the first to make the big move and eliminate monthly account fees on their transaction accounts. ING Direct, Bank of Queensland and Bankwest are some of the other financial institutions that have followed suit.
|Company||Account||Interest calculated||Interest rate||Min opening deposit||Cheque dishonour fee||Dishonoured outward payment (direct debit)||Overdrawn account fees|
|AMP Banking||eASYTransact||N/A||N/A||No min||$45||$40||Debit interest accrues (depending on current interest rate)|
|BankWest||Hero Transaction Account||daily||4.5%||$1||$15||$15||If account is overdrawn by more than $100, debit interests accrues at 18.56%pa|
|BankWest||Zero Transaction Account||N/A||N/A||$1||$15||$15||If account is overdrawn by more than $100, debit interests accrues at 18.56%pa|
|Bank of Queensland||Day2Day Plus Account||daily||0.01%||$1||$15||$15||Debit interest accrues (depending on current interest rate)|
|Citibank||Plus Transaction Account||N/A||N/A||No min||$0||$0||Debit interest accrues (depending on current interest rate)|
|Coastline Credit Union||Visa Debit Account S4||monthly||0.05%||$1,000||$10||$15||$10|
|HSBC||Day to Day Account||daily||0% - 2.75%||No min||$40||$35||$9|
|Hume Building Society||Passbook Savings Account||monthly||0.25%||$1||$20||$15||$0|
|ING Direct||Orange Everyday||N/A||N/A||No min||$10||$10||Debit of 10%pa|
|NAB||Classic Banking||daily||0.01%||No min||$0||$0||$0|
|NSW Teachers Credit Union||Bill Paying Account S2||daily||0.01% - 0.1%||No min||$10||$15||$10|
|People's Choice Credit Union||Expenses Account||daily||0.1%||No min||$15||$15||$25 for a Second Letter Fee; $25 if account is overdrawn for over 20 days|
|QT Mutual Bank||My Account||N/A||N/A||No min||$15||$15||$20|
|Suncorp||Everyday Basics Account||N/A||N/A||No min||$10||$10||$40|
Source: Canstar & Ratecity 16/1/2012
Any one of these ‘fee-free’ accounts are great if you make plenty of transactions but still keep adequate funds in your account to cover direct debits and so avoid getting hit with hidden penalty fees.
If you don’t make in-branch transactions, many accounts have zero transaction fees. If you want to make a transaction over the counter, you will pay for the pleasure.
The accounts listed in this table don’t charge you for withdrawing cash at the ATM, paying with EFTPOS, or making online transfers or direct debits. With the exception of Coastline Credit Union, these accounts don’t require you to have a minimum ongoing balance. Some will still charge you for things like not having enough money in your account to cover a direct debit.
Some examples of the nasty exception penalties still charged by these accounts include:
• People’s Choice Credit Union: $15 charge for an outward or inward dishonoured direct debit
• AMP eASYtransact account: $45 for a bounced cheque
[TIP] Many overdrawn transaction accounts attract debit interest at a high “credit card” rate of around 16%, so it’s always worth keeping your account balance above zero.
Other great transaction accounts
Although the above accounts do not charge any transaction fees, base your choice of everyday account on your patterns of usage. Do you keep a high balance in your account all the time or are you a low-balance customer? How many transactions do you make each month and what sort of transactions are they (online, Bpay, over-the-counter, etc)?
YMM developed a scenario to determine the best accounts for bankers with a low balance and high balance, where each month a customer will make:
• five direct debits
• 10 EFTPOS transactions
• 20 Internet/BPAY transactions
If you make plenty of transactions and your account tends to have a low balance, the NAB Classic Banking account is ideal. Unlike other products, it doesn’t charge for overdrawing, dishonoured direct debits or writing a bounced cheque.
The Citibank Plus Transaction account is also good value for low-balance users. Apart from charging debit interest for overdrawing, the account has no other transaction or penalty fees.
You can even make international transfers for free – a stand-out feature.
What about if you tend to keep a higher balance on your transaction account? If so, the Bankwest Hero Transaction Account is a great option. Not only does it have the highest interest rate in the market – a straight 4.5% calculated daily – it also has no EFTPOS, ATM, Internet banking or direct debit fees. However, the account stops earning interest once the balance exceeds $5,000; in that case, your funds should be shifted to an online savings account.
A special mention also goes to ME Bank’s Interest Savings account, for its daily interest of 0.25% to 3.5%. Under the scenario given above, this account didn’t attract any transaction fees, although you can be charged for more frequent transactions.
-- By Stephanie Hanna