Bank account basics 
 For everyday money matters

Need somewhere to park your regular payments? Need somewhere to secure your savings? These days, managing money is getting more and more complicated, so it’s good to know and understand the basic features available in most bank accounts.  These features allow you to handle your day-to-day cash flow, from depositing regular payments, to paying bills and saving money. This fact sheet highlights and explains some of these features.

When you open a bank account, for the first time or with a new bank, you must provide the bank with some information. Banks don't open bank accounts without certain information which proves you're who you say you are. It’s the bank’s first line of defence against identity theft and money laundering.

To open the account you’ll need to take along some identification (ID), such as a birth certificate, a driver’s licence, and/or a Medicare card (your bank can tell you exactly what you’ll need to take). Once you’ve provided sufficient ID, the bank will be able to open your account.

You will also need to provide your tax file number (TFN) so that you can be identified for tax purposes. While this isn’t essential, if you don’t provide your TFN, any interest your accounts earn will be taxed at the highest rate.

When you open your account, you will also be required to choose the type of account you want.  The most common types of bank accounts are described below.

These accounts are typically designed to cover day-to-day banking needs. They give you a place to deposit regular payments (such as a salary, or JobStart payments), and an account to use when paying bills or doing the shopping. Transaction accounts often come with a cheque book, which you can then use to pay for purchases and bills. These accounts are sometimes called ‘cheque accounts’. Depending on the account you choose, transaction accounts also let you do your banking via the phone and the Internet and may also have services such as debit and credit cards available.

Savings accounts can be a good option if you want to save money, with some accounts providing specific incentives to save. For example, depending on your bank and the account, you may be rewarded with higher interest if you maintain a balance above a certain level for a given period. Others may allow you to opt out of having ATM access to make it a little bit harder to spend your money, and therefore make it more likely that you’ll save instead.

Most savings accounts can also be used for depositing regular payments and for paying bills, although cheque books are generally not offered with savings accounts.

Many banks offer basic bank accounts. These accounts provide fee-free and low-cost for low-income customers such as holders of the Commonwealth Government Health Care Cards, Commonwealth Government Seniors Cards and Commonwealth Government Pensioner Concession Cards.

The Australian Bankers’ Association (ABA) recently revised its Code of Banking Practice which is the banking industry’s customer charter on best practice standards. The Code is helpful to low income earners. The Code states that if you tell the bank that you are a low income earner or a disadvantaged person, the bank will provide you with information on accounts which may be suitable to your needs. This will also occur, if in the course of dealing with you personally, the bank becomes aware that you receive Centrelink or other Government-provided benefits.

See over for a list of basic bank accounts available to those who have concession cards and if you would like more information, please read the fact sheet called Fee-free and low cost banking, available on the ABA’s website: www.bankers.asn.au or freecall: 1800 009 180.

Bank accounts offer lots of options for accessing your money. Some of the most popular options are described below.

ATMs can be used to withdraw cash from an account by using the ATM card which is available with most bank accounts. You can also use ATMs to get an account balance and transfer money into other accounts. Some ATMs also allow you to deposit cash and cheques into your account. Using the ATMs of your bank will generally cost less money than if you use another bank’s ATMs. Fees for using ATMs can vary between banks and between accounts.

You will be given a PIN (Personal Identification Number) which you will enter into the ATM to access your account. It is the key to your account and it is important that you never tell anyone your PIN. A bank or reputable business will never ask you for your PIN. If anyone does, be suspicious, don’t hand it over and report the incident to the bank and the police. Be careful no-one is looking over your shoulder when you enter your PIN.

Short for ‘Electronic Funds Transfer at Point Of Sale’, EFTPOS terminals can be found where goods or services are sold, for example, supermarkets, service stations, restaurants, doctors’ surgeries and gyms. You can pay for goods and make payments through EFTPOS using your ATM card, rather than paying with cash. At some stores, when you use EFTPOS you can also withdraw cash from your account at the same time. You should be aware that there are some retailers who put limits on how much cash can be withdrawn which can be dependant on the amount which is spent in the store.

When paying by EFTPOS, you also use your PIN to access your account. The same rules apply about keeping the PIN confidential and never handing it over to anyone. Be careful no-one is looking over your shoulder when you enter your PIN.

You can use telephone banking to transfer payments to and from accounts, get your account balances, get recent transaction information and pay bills. You will need to register to use telephone banking and will then be given a password or an identification number that allows you to access your accounts over the phone. It’s important never to give your password to anyone else.

Internet banking allows you to view and check your accounts, review recent transactions, apply for loans and credit cards, or transfer money and pay bills – all on-line. Most banks offer Internet banking facilities, but you will need to register with your bank to gain access. You will then be given a password that allows you to use your accounts on-line. Never give this password to anyone else.

There are security issues that need to be considered when using Internet banking. It is recommended that you install and keep up-to-date anti-virus software and a firewall, update security patches and be suspicious of emails requesting you to hand over confidential information such as your Internet banking logon password. Your bank will never ask you for this information, especially in an email. In addition, many banks publish security guides on their websites and this provides important information on precautions that you can take to protect your information on-line.

You can also go into a branch of your bank and, with the assistance of bank staff, conduct transactions including withdrawals, deposits, transfers, and account balance checks. If you do not have a branch close by, you may be able to visit an agency of your branch, such as an Australia Post outlet, to conduct certain transactions. Bear in mind that over-the-counter transactions usually incur higher fees than electronic transactions.

These days, most salaries and most Government allowances are paid directly into bank accounts. To make sure your payments go direct to your account, you will need to provide your employer or Centrelink with basic account details such as your account number, the branch where your account is held, and the name your account is held in. Note that you will never be asked to provide your PIN. If anyone ever asks you to provide your PIN, do not give them the information. A PIN is a number used as an access code for your account when using ATMs or EFTPOS.

Most bank accounts offer lots of easy options for paying bills. Transaction accounts with cheque book facilities allow you to pay bills by cheque, and most transaction accounts and savings accounts allow you to pay bills electronically (e.g., using facilities such as telephone banking, Internet banking) and using direct debits.

A note of caution on direct debits – they are a convenient way to pay everyday bills, but always make sure you’ve got enough money in your account to cover the cost of the debit. If your pay or allowance goes into your account on a certain date, make sure your direct debit payments are scheduled to come out of your account after your pay goes in, or you might end up with an overdrawn account or a dishonoured payment – both can cost you money.

Most banks will provide regular statements for your accounts (just how regular can depend on the type of account). On request, banks will provide statements on a deposit account at more frequent intervals, but this may attract a fee. Bank statements are your record of everything that has happened in your account over a given period – the withdrawals, deposits and transfers that were made, and any bank fees and government taxes you were charged. Telephone and Internet banking can make it easy to check your statements, and some banks even offer ‘mini statements’ through their own ATMs. 

Check your statements regularly to make sure you’ve got enough money in your account to cover your expenses and keep track of your spending, as well as make sure that all transactions made in your account are legitimate. Refer to your statements to see what fees you are paying on your bank accounts and why, and to see whether a few simple changes to your banking habits could help you to reduce the fees you pay (for example, using your own bank’s ATMs instead of other banks’ ATMs).

Bank fees are the price you pay for the products and services that banks offer. Different banks charge different fees for different products and services, and the best way to find out what fees apply is simply to ask your bank. Any fees that apply to your accounts are fully disclosed in information leaflets and terms and conditions that your bank can provide before you open your account. Some banks waive some fees if you are a full-time student.

If you don’t understand any fee which has been charged, contact your bank.

Shop around If you’re looking to open an account, or even if you’ve got an existing account, it’s always a good idea to shop around and make sure you’re getting the best value for your money. So take the time to find out what is on offer, and then compare the results to see which option will be best for your needs.   Read the product information Before you open an account, be sure to read any documentation provided about how the account operates, and what your rights and responsibilities are. It won’t be the most interesting thing you’ve ever read, but it’s often the difference between making the right choice or the wrong choice, and between knowing how to manage and how not to manage your account. If you do read the product information but have a query, don’t hesitate to contact your bank and ask them for assistance. Your bank should provide the information you need.   Tips for keeping your accounts safe We’ve said it before we’ll say it again – never give your PIN to another person (not even to family or friends!). If you do, you can no longer guarantee that you are the only one with access to your accounts, and therefore you can no longer be sure your money will be secure. If you think someone else might know your PIN, notify your bank immediately. To learn more about how to bank safely, refer to the safety checks fact sheet, available on the ABA’s website www.bankers.asn.au or call us on 1800 009 180 for a copy.   To find out more about using your accounts to pay bills If you’d like to find out more about direct debits and other ways to pay bills, refer to the Another day, another bill to pay fact sheet, available on the ABA’s website www.bankers.asn.au, or call us on 1800 009 180 for a copy.   Basic bank accounts Please see next page for examples of basic bank accounts suitable for concession cardholders.

Created August 2004, updated September 2009

Internet: www.bankers.asn.au  Phone: 02 8298 0417 Fax: 02 8298 0402

 

Bank account basics appendix