Banking essentials in Australia

There’s a lot of competition out there for your money these days. Most of us tend to stick with the major big four Australia banks. These are NAB, Westpac, ANZ and Commonwealth. A lot of us have an account with the “Big 4” because we grew up with them. Most of my classmates in primary school, including me, were dollarmites. What a great marketing vehicle that was, as it probably got children to become Commonwealth bankers for life. Start ’em young!
We all know money is very important, but most of us don’t like to think about our financial situation. Unfortunately, that means most of us are probably not getting the most out of their banking. This blog introduces to you my recommendations on the banking products to have.

Personally, I think these are the minimum banking products to have.

Transaction Account 1: ING Orange Everyday
Pros: No account keeping fee, 5% cashback for using PayWave, goes down to 2% after 6 months*, free 50c for withdrawing over $200 via EFTPOS, fee-free ATM banking when withdrawing over $200
Cons: No branches, no interest paid, foreign exchange fees
Transaction Account 2: Citibank Plus
Pros: No fees at all on anything, no foreign exchange conversion fee, foreign exchange rates are very close to the spot/market rate, branches all over the world, fee-free ATM banking at all Citibank ATMs worldwide
Cons: Very few branches, terrible online interface, no interest paid, opening account requires an offline component
Why two? The ING account is for everyday use in Australia. The Citibank is for when you go overseas or when you need a bank cheque. Bank cheques are relatively rare these days, but when you need one, you will totally appreciate not handing over $30 to the bank for just a slip of paper really… ING offers free bank cheques too, but you need to wait for the cheque to come in the mail. With citibank, you can go to any branch. The ING OE is a must have. It’s not fully fee-free, but will be fee-free on most occasions. Plus, what other bank gives you money for taking money out or spending it? I have been guilty of hoarding the self-check out at Woolworths and doing 6 lots of $200 withdrawals just to maximise my 50c payments. Both provide Visa Debit cards, but only the ING has PayWave enabled cards at the moment.
*The 2% cashback on PayWave after the 6 months is dependent on depositing $2000 per month across all of your ING accounts. You can deposit the $2000 and then withdraw it out the next day!
Online Savings Account: UBank
Pros: Highest long-term interest rate (4.66% as at blog date), very easy to apply online
Cons: No branches, interest rate is dependent on creating an Automatic Savings Plan (ASP) of $200 every month, not the highest rate on offer at the moment
When UBank started out, they did have the best interest rate. Nowadays, they are only within the top 3 as the other banks are providing slightly higher honeymoon promotional rates that stop after 4 months. However, after the 4 months, most of them drop to much lower than UBank’s. Therefore, UBank is still the best overall though. With the ASP, once again, you can take out the $200 the next day. If you can be bothered shifting you funds for a gain of up to 10 basis points for 4 months at those other banks, then go for it. I used to do this…
Credit Card: 28 Degrees 
Pros: No annual fee, no foreign exchange conversion fees, foreign exchange rates are very close to the spot/market rate, up to 55 day interest-free period, Shoppers Protection Insurance, not using your own money
Cons: No points, high interest if you don’t pay on time
If you have one credit card, this is the card to have. A basic, almost no-frills type of credit card, but with one great benefit – absolutely no foreign exchange fees with the best foreign exchange rate as well. True, you can get the equivalent best foreign exchange rate using your citibank plus account, but who doesn’t like using someone else’s money – even if only temporarily!
If you can “afford” a points-earning card, add it to your wallet. There are very few that have no annual fee and most of those tend to be AMEX cards, which seem to always get slugged with surcharge fees at point of sale. I’m not a huge spender, so I don’t think I would meet the criteria of some cards that waive the annual fee when you spend over a certain (large) amount. To be fair, I’m not very well versed in this area, so I can’t provide a recommendation here. This is where I encourage you to check out the financial products available out there and see whether you could be getting something much better!
Advertisements

8 thoughts on “Banking essentials in Australia

  1. Very good post.
    Both Citibank and ING offer FREE bank cheques with their transaction accounts.

    One comment though:
    The 28 Degrees card does NOT have ‘buyer protection insurance’ as you stipulate. If you are referring to fraud prevention then it is not insurance and is also a pretty standard feature available with practically any credit or debit card.
    http://www.28degreescard.com.au/features.html

    Other than that, good and accurate info.

    1. Thanks ginmi. Maybe I should clarify the free bank cheques to mean that you can get them in person and don’t have to wait for them in the post.

      I will correct the 28 Degrees section. I meant the “Shoppers Protection”, where if you find the same item (must be exactly the same, including model number) advertised somewhere at a lower price, providing you meet the conditions of Shoppers Protection, 28 Degrees will give you back the difference in price.

      1. May I ask where did you see that? I checked the 28 degrees site and found no mention of this ‘shopper protection’ you are describing.

        Thanks.

      2. Oh this thing. I see

        You realise this insurance is NOT free, right? You have to pay for it and the fee is a percentage of the monthly closing balance.

        Wouldn’t waste my time or money on this ‘insurance’ product.

      3. I personally haven’t signed up for it, but if you can manage to have your balance at $0 at a certain time (i.e. pay early), then it is effectively free. Some OzBargainers take up this option.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s