Smarter Banking - Make the most of your money

Important Notice

This booklet gives information of a general nature and is not intended to be relied on by readers as advice in any particular matter.

You should consider consulting a financial adviser regarding how this information may apply to your own circumstances.

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HOW CAN I MINIMISE THE COST OF BANKING?

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Banks charge fees for the services they provide. The main principle behind fees, and the way they are structured, is the user pays principle. In other words, the customer should pay a reasonable fee for the services they use.

Fees are disclosed in the terms and conditions of the documents you sign when you open an account with your bank. You can also check the fees that apply to the type of account you have by going to your bank’s website, or by calling your bank.

CHECK YOUR ACCOUNT STATEMENT

Any fees charged to your account are clearly listed on your account statements, including what the fee was for, how much it was, and when it was charged.

Be sure to check every account statement you receive. Statements help you to:

Make sure you’ve got enough money in your account to cover your expenses and payments,
Keep track of your spending,
Know what fees you’re paying and why, and
Understand your banking habits and whether a few simple changes might help you reduce the fees you pay.

If you ever see a fee on your account statement that you don’t understand, or don’t think you should have been charged, contact your bank.

IS YOUR ACCOUNT RIGHT FOR YOU?

Fees are usually the first thing people think about when they’re looking for a bank account. But fees are not the only important thing – making sure you’ve got a bank account that matches the way you want to bank will help you keep the costs of banking to a minimum.

Two ways you can keep your bank fees as low as possible:

Choose a type of account that suits your banking habits, and
Use your account in a way that minimises the fees you’re charged.

CHOOSING THE RIGHT TYPE OF ACCOUNT

How many transactions do I make each month?

If you make very few transactions, say 4-8 transactions each month, you may be better off with an account that charges you for each transaction. But if you make a lot of transactions, say more than 8 transactions each month, it might be cheaper to pay a single monthly account service fee, rather than a fee for every transaction you make. (For more information about comparing bank accounts, see click here)

How many accounts do I have?

If you’ve got more than one account, you may be paying more than one set of fees. Some banks offer linked accounts, such as a transaction account and a savings account, so you can maximise the interest you earn on your money and minimise the amount you pay in fees.

Exceptions to the rule

Not all accounts have fees. For example, some banks offer savings accounts with no service or transaction fees, as long as your account balance remains above a
certain minimum at all times (for example, $1,000).

If you’ve got a loan, such as a home loan with a bank, the bank may waive fees on your transaction account. Packaging your loans and your everyday bank accounts with the one bank can result in fee savings.

If you’re eligible for a basic bank account, you can significantly reduce your fees – possibly to zero. (For more information about basic bank accounts, click here)

Did you know?

As well as the regular fees your bank may charge, such as an account service fee or transaction fees, the terms and conditions of your bank account may allow for ‘exception fees’.

Exception fees may be charged when there are insufficient funds available to cover a transaction such as a direct debit (or in certain circumstances with credit cards). Exception fees being charged on your bank account are avoidable. There are different options available to you depending on your bank and the type of account you hold.

Check your account balance before you make a payment (via ATM, Internet or telephone banking), and be sure to have enough in your account to cover any direct debits. Monitor your spending to make sure you don’t exceed your account balance.

Some banks have facilities available to assist you avoid exception fees, such as SMS alerts for both successful and missed transactions or a ‘sweeps’ facility to automatically transfer funds from another account when a direct debit is presented which may overdraw an account. You should contact your bank to see if these services are available for your account.

The banking industry has taken a number of significant steps on exception fees by abolishing and reducing some of these fees. Some banks now offer accounts with no exception fees and provide discounted exception fees to eligible low-income earners and pensioners.

Fact sheets on exception fees can be found at the ABA website www.bankers.asn.au.

The fact sheets provide:

Information including comparative tables on exception fees for regular transaction accounts and transaction accounts for eligible low-income earners and pensioners.
Updates reflecting ongoing industry responses.
Tips on how to avoid exception fees.

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Avoid exception fees

Here’s some tips on how to avoid exception fees:

Choose the right account that suits your banking needs.
Have sufficient funds in your account to cover your direct debits and payments. If you’re not sure the account balance before making a transaction, check via an ATM, telephone or Internet banking.
Consolidate your accounts to help you keep track of your funds more easily.
Have your salary deposited into the same account as your direct debits.
Create a budget and plan your spending so that your financial commitments match your incoming funds.
Choose an account which doesn’t allow exception fees to be charged. Remember– this account will not extend a line of credit, so if you try to make a payment and there aren’t enough funds in your account, the transaction will not proceed.

USING YOUR ACCOUNT WISELY

Are your banking habits costing you money? How many transactions do you make on your transaction or savings account each month…5… 10…20…more? The way you do your banking affects the fees you may be charged.

Take this quick quiz to check how efficiently you bank.

QUICK QUIZ: YOUR BANKING HABITS	YES	NO
Do you ever get charged a fee, but don’t know what it is or why it’s been charged?
Do you receive bank statements in the mail and file them away without reading them?
Could you reduce the number of withdrawals you make each month…even if it’s by just a few?
Do you ever go into the bank to make a deposit or withdrawal when you could use an ATM instead?
Do you use whatever ATM is closest at the time, regardless of whether it belongs to your own bank or a different bank or operator?
Do you live off your debit card rather than carrying around cash?
Does your account come with a cheque book that you’ve never used?
Do you have more than one account?

If you answered ‘yes’ to any of the questions below, chances are you’re paying more in bank fees than you need to! Maybe it’s time to think about the way you bank and how to minimise your fees.

It’s important to understand what fees are payable and when. The actual amount of each fee will vary from bank to bank. When you’re shopping around for your account, ask each bank about its fees.

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Avoid ATM direct charges

Here’s some tips on how to avoid or minimise fees under the new ATM direct charging rules:

Use your own banks’ ATMs or a fee-free networked ATM.
Where possible, make your payments or check your account balance using telephone or Internet banking to help limit your cash withdrawals and transactions.
Ensure you don’t authorise a transaction that is too costly. Remember – in a foreign ATM transaction, the screen will disclose the ATM operator fee, and it is your choice whether or not to pay it.
Consider using EFTPOS and getting cash out with a purchase, such as from a supermarket while you’re purchasing groceries.
Contact your bank to discuss your options.

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Use your own bank’s ATMs

Where possible, use ATMs provided by your own bank or that are in a networked arrangement because you can save on ATM direct charges. Most banks have information on their websites on the location of their ATMs, or you can ask your bank for details. Using an ATM which is operated by another bank, financial institution or a ‘third party ATM deployer’ can cost you more in fees.

UNDERSTAND THE DIFFERENT FEES

Be sure you understand the different fees. Fees can include:

Account service fee – usually charged at regular intervals (for example, monthly) on some transaction accounts.
Transaction fee – might apply when you make a withdrawal or a deposit, or if you request a statement or an account balance. Most banks charge more for a transaction that’s made at the branch or an agency, than for one that’s done electronically, such as via ATM, EFTPOS, telephone or Internet banking. You could also be charged a fee for any direct debit set up from your account as these are withdrawals. There are accounts that offer a number of free transactions before fees apply.
Other (Australian) ATM transactions – you could pay higher fees to use an ATM that does not belong to your bank – often called a ‘foreign’ ATM transaction.
Overseas ATM or EFTPOS transactions – you may pay higher fees at an overseas ATM or EFTPOS terminal than you would on similar transactions in Australia.
Early withdrawal fee – this fee may apply to a term deposit if you withdraw your money before the end of the specified term.
Dishonour fee – when a cheque or direct debit is returned (dishonoured) by the bank because there isn’t enough money in your account to cover the amount.
Overdrawn account fee – a fee may apply if you overdraw your account, meaning you’ve withdrawn more money than you have available as cleared funds. This can happen with direct debits if you’re not careful. This may be a one-off fee, or it may be charged for each day your account remains overdrawn.

For more information about choosing the best type of bank account for you, click here.

ARE YOU ELIGIBLE FOR A FEE EXEMPTION?

Some banks will waive the account service fee. Fee exemptions are usually available for:

Pensioners where your age pension is paid into your bank account.
Recipients of certain government allowances
Australian War Veterans
Customers with a relationship with the bank (such as a term deposit or home loan over a specific amount)
Customers who are reliant on over the counter services (such as people with a disability that prevents them using electronic banking facilities)
Customers aged under 18.

MONITOR YOUR ACCOUNTS

Monitoring your accounts helps you to keep track of your transactions, make sure you’ve got enough funds in your account to cover your spending and payments, and make sure you don’t pay fees unnecessarily.

Be sure to bank in an efficient way. Managing your accounts is part of adopting good banking behaviours.

Banks have a number of services to assist you to keep track of your banking needs and activities. Services can include:

Register for telephone or Internet banking – manage your banking more easily and perform transactions online that would otherwise cost you in additional fees. For example, instead of going into a bank branch and making a withdrawal, transfer funds via Internet banking.
Set-up advance payments – keep on top of your bills and payments.
Set-up alerts – receive updates on your accounts. For example, some banks have SMS or email alerts which can automatically send you information about your account, including daily balance, withdrawal, deposit, high balance, low balance alerts. Remember – SMS alerts may incur a fee or a charge.

Did you know?

In March 2009, ATM reforms required by the Reserve Bank of Australia resulted in owners of ATMs being able to directly charge the customers a fee for the use of their machine. That means, if you use an ATM that is not operated by your own bank or is not in a networked arrangement, you will have a direct charge to the ATM operator to conduct the transaction.

When you go to conduct a transaction, the fee that the ATM operator charges will be displayed on the screen. You can then choose whether to use the ATM and pay the fee shown, or cancel the transaction at no cost and access cash another way – from another ATM or via an EFTPOS terminal. For example, rather than go to an ATM to withdraw cash, you can get cash out when you make an EFTPOS transaction (for example, at the supermarket or petrol station). This counts as only one transaction of your monthly fee-free allowance, and helps keep your fees lower.

A fact sheet on the ATM reforms and ways to minimise fees can be found at the ABA website www.bankers.asn.au.

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Check your statements regularly

Review every account statement you receive and keep an eye on the fees you are paying. Be aware of how much your bank account costs you, and think about how you might minimise those costs. For example, if you’ve got access to Internet banking, regularly checking your transactions online can help you to keep within your account’s fee-free transaction limits.

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FEES CHECKLIST: WAYS TO KEEP YOUR FEES LOW

If you think you may be paying more than you need to, consider the following ways to reduce your fees:

Keep your transactions to a minimum.
Use ATMs, EFTPOS, telephone or the Internet banking, where possible, to conduct your banking transactions.
Use your own bank’s ATMs.
Use EFTPOS, where possible, to withdraw cash while you are making a purchase. Remember – staff-assisted transactions in a bank branch usually incurs additional fees.
Make sure you always have enough money in your account to cover withdrawals and direct debits and avoid overdrawing your account.
Use automated telephone banking, simply follow the prompts.
Use BPAY to pay bills, where possible, rather than writing cheques.
Use Internet banking. Most banks offer fee-free access for transactions conducted online, such as viewing and printing account statements. Remember – staff-assisted transactions using telephone banking usually incurs additional fees.
Combine your accounts into one bank account, or link your accounts.
Monitor your accounts using SMS and email alerts, where possible, rather than using ATMs (for example, to check your account balances).
Take cash out fee-free when overseas by using your bank’s partner ATMs in the foreign country.
Schedule your payments in advance to help you keep on top of your bills. Some banks let you set up an email alert to let you know when your transaction has been processed. You can set these up using Internet banking, simply follow the prompts.
Check if you’re eligible for a fee exemption.
Check if your bank has a ‘fee rebate system’ for personal transaction and savings accounts that rewards people who bank electronically.
Understand your regular account fees, and when they’re charged.
Make sure you’re using the right account for your banking needs.

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