There are three compelling reasons to consider changing your everyday transaction account.
- Australian households pay billions of dollars in bank fees annually.
- Most everyday transaction accounts pay little or no interest.
- Customers are often dissatisfied with the service they receive.
Step 1: Find a better account
This is not easy, with hundreds of options on the market. However, past CHOICE studies found the difference between the best and worst accounts for representative case study scenarios was hundreds of dollars each year. Worth a look, below, has some ideas.
Step 2: Open the new account
You’ll need to provide 100 points of identification, such as your passport, driver’s licence, council rates notice, and so on.
Step 3: Redirect automatic payments
This can include your salary and direct debits. You still need to reestablish direct debits yourself – a pretty archaic system which is being updated soon. You should also write to the merchant.
Step 4: Close the old account
Watch out for penalty fees. Up to $50 may be charged if payments from your old account are dishonoured because it has insufficient funds. Make sure you’ve enough money in the old account until all payments are redirected.
Worth a look
There are a number of other account types that are worth considering.
No-fee interest-paying transaction accounts
BankWest's Hero account pays 5% pa on balances up to $5000 (but no interest on balances above that – the idea is you’d divert them to a high-interest savings account). There’s no ongoing minimum balance or limit on deposits or withdrawals and similar to other banks, you’re charged $1.95 to use other banks’ ATMs (except BankWest affiliated banks). However, there are a few catches with this account. You must deposit at least $2000 each month, and while all financial institutions charge penalty fees, BankWest’s are among the highest. Its dishonour fee ($50) is higher than most banks, and BankWest charges $45 each time you overdraw your account, up to a maximum of $135 per day.
HSBC’s Online Savings account pays 5.35% on balances over $5000 (but just 0.5% on the first $4999). There’s no account fee. A $2 fee is charged if you use a non-HSBC ATM more than five times a month.
Members Equity's InterestME is a combined transaction and savings account. There’s no account fee and most transactions are free. ATM withdrawals cost $1. Interest at 6.75% is paid on balances above $3000, with 0.25% paid for smaller amounts.
Many financial institutions offer accounts with unlimited transactions, excluding withdrawals from other institutions' ATMs, for a monthly fee of around $5.
Past CHOICE surveys found higher satisfaction levels among credit union customers, compared with banks. And more recently, in July 2007, Roy Morgan Research found:
- 73.0% of banks’ customers are satisfied (an average figure for all banks).
- The lowest satisfaction was with Commonwealth Bank (68.2%).
- The highest: Bendigo Bank (90.5%).
- The banking sector lagged well behind building societies and credit unions for customer satisfaction (both scored 87.9%).
Smarter use of your existing account
Cut your fees by avoiding withdrawals from others banks’ ATMs and sticking to the free transactions allowed each month.