Understanding banking

The basics of banking

You can choose from a selection of banks in Australia, and each one has a range of bank account options. It’s important to make sure the account you choose matches your needs, and that you’re not paying unnecessary fees and charges. You’ll find that there are generally two types of bank accounts: everyday (or transaction) accounts and savings accounts.

Everyday (or transaction) accounts

Everyday bank accounts are designed to give you easy access to your money. You can usually attach a debit card to the account, making it easy to pay for groceries, online shopping or withdrawing money from an Automated Teller Machine (ATM).

Some everyday accounts let you earn interest, but it will usually be at a lower rate than what you’ll earn if your money is in a savings account.

Savings accounts

These accounts generally let you earn a higher interest rate than everyday accounts. The main difference is that it may not be quite as easy to access your money. There are different kinds of savings accounts, which vary in terms of the access you get to your money, as well as the interest rate. 

Some accounts may not give you ATM access, may not have a debit card attached to the account, or may lock your money away for a certain period. And some others may be online only. In exchange, you’ll usually benefit from a higher interest rate.

Making the most of digital banking

We’re able to do more and more banking with our mobile phones and over the internet. Mobile apps are a convenient way to bank wherever you are. Different banks have different apps, but they’re commonly used to see the balance of your accounts, transfer money between your accounts or make payments.

Online banking platforms usually have all the features of an app, with some more complex options, such as setting up recurring payments or gaining a more comprehensive view of your account history.

Choosing an account

When making changes to how you bank, it helps to be clear about what the purposes of your new accounts will be. You may be saving up for something specific or looking for a more convenient way to manage your money. If you can identify what your banking needs are, you can be more focused in your search.

When comparing accounts, there are some important features to consider:

• interest rates—the interest rate is usually the first number to look for when comparing accounts.
• when interest is paid—monthly interest payments are common, but some savings accounts pay it more infrequently.
• ATM access—how often can you make withdrawals from an ATM? What fees will you pay if you use an ATM outside of your bank’s network?
• digital access—it helps to understand how you can use your account over a mobile app or over the internet.
• fees—are there costs to open the account? Monthly fees? Or even fees for making withdrawals?
• restrictions—savings accounts may not make it easy for you to withdraw your money. For example, you may miss out on interest for the month if you take money out of the account. Understand the features of your savings account to see if it will work with your lifestyle.

It’s common to have multiple accounts to help you build and protect your money. If your accounts are with the same bank, transferring money between accounts is usually quick and can often be done via an app or online.