Using Bank Accounts Wisely

How Families Can Make the Most of Their Accounts

Jul 21, 2009 Wei Yin Wong

Households can use bank accounts wisely by being aware of fees and charges, asking about fee-free accounts and consolidating their accounts.

With so many bank products available these days, it’s little wonder that many families find it a challenge to use their bank accounts wisely. While it’s very easy to be lured by bank products that offer high interest rates, don’t forget that these often come with terms and conditions that are often easily overlooked, resulting in higher fees being charged.

Here are some tips for families to make the most of their accounts.

Beware of Account Fees and Charges

According to figures released from the Australian Bank Fee Survey 2009, Australian households pay an average of 22% more on bank fees than British households and 11% more than Americans. This translates to about paying $200 AUD more each year than they should. It is largely due to a broader range of fees charged by Australian banks, approximately 300 different fees compared to about 200 in Britain.

That means it’s important to be aware of the range of account fees that banks charge their customers. Some useful fee-saving tips are:

• Ask about fees and charges. Do this before signing up for any bank account. Take time to read the fine prints.
• Know the minimum balance. Keep a cash minimum in transaction accounts as most everyday accounts pay virtually no interest. It’s better to park surplus cash in high interest accounts such as online savings accounts or fixed term deposits.
• Avoid over-the-counter transactions. Use other cheaper options such as ATMs, Internet banking, phone banking and electronic fund transfer at point-of-sale (EFTPOS).
• Avoid using foreign ATMs. Withdrawal fees are much higher from ATMs of other banks and not considered as free transactions.

Ask About Fee-free Accounts

Those who access their cash frequently, say more than 10 times a month, can opt for a flat fee for unlimited transactions. However, households that withdraw money less regularly can choose a fee-free account with limited monthly transactions.

Many banks also offer fee-free accounts to children, students and pensioners. So families should take advantage of these. However, do read the terms and conditions carefully and be very familiar with any fee-free limits that apply. The limit is usually different for ATMs, over-the-counter transactions and checks.

Consolidate Bank Accounts

The more accounts a family has, the more fees it has to pay. So why not consolidate all bank accounts into one? This way, there is only one set of fees to pay. Many banks also reward loyal customers by waiving regular account fees to customers who take out a mortgage, car loan or personal loan and other bank products and services. Look into this to save more on bank fees and charges.

Families who use their bank accounts wisely and carefully can save hundreds of dollars each year. Make the most of these accounts by knowing exactly what fees are charged learn how to save on these fees. Using fee-free accounts and consolidating bank accounts will help as well.

Found this article useful? Read also Choosing the Right Bank, Banking Options for Families and High Interest Bank Accounts for Families.

Reference:

Field, Nicola. “An Account that Fits” in Money Magazine. Australia: ACP Magazines, August 2007.

The copyright of the article Using Bank Accounts Wisely in Family Finances is owned by Wei Yin Wong. Permission to republish Using Bank Accounts Wisely in print or online must be granted by the author in writing.

Avoid Using Foreign ATMs

Use Bank Accounts Wisely to Avoid High Fees