It’s been a year since my first post on Banking Essentials in Australia. Since then, Australian banks have released highly competitive offers to grow their customer base. This calls for an update!
This is going to be another long post, but it’s definitely worth reading if you are seeking some Australian banking product advice. If you already read the first post, it’s still worth reading this one, as some previously recommended products have changed features and there are now some new chart toppers!
Note in my analysis of credit cards, I disregard interest rates as credit cards are only worth having if you pay your total statement balance every time on time.
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 if you deposit $1,000 a month in any ING account
Cons: No branches, no interest on balances, foreign exchange fees applies
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 and partner ATMs worldwide, Citibank Dining Program
Cons: Very few branches, no interest on balances, opening account requires offline ID verification
I still recommend having two; ING for everyday use in Australia and Citibank for when you go overseas. The ING not fully fee-free, but it is on most occasions. What bank gives pays you when both 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. Also, if you pay for your meal with your Citibank card at participating restaurants as part of Citibank Dining Program, you get a free bottle of wine. This provides no benefit for me, as I don’t drink, but most people do.
*The 2% cashback on PayWave after the 6 months is dependent on depositing $1000 per month across all of your ING accounts. You can deposit the $1000 and then withdraw it out the next day!
Transaction Account Runner’s Up: Bankwest Qantas Transaction Account
Pros: Pays 0.01%pa interest (better than nothing), provides free overseas ATM access, Bankwest ATMs are at every 7-Eleven
Cons: Must deposit $2000/mth to keep account fee-free, foreign exchange fee applies
I make a special mention for this account, as there is no other Australian transaction account that offers a reward program. It’s a partly fee-free account, but not as fee-less as Citibank. I don’t actually have this account, but some of you may consider this higher value than the Citibank, since overseas ATM withdraws are free with this account too. If you wanted to simplify your banking providers, you could combine this the Bankwest Platinum Zero Mastercard for fee-free purchases in foreign currencies. More on this card below…
Online Savings Accounts
Online Savings Account: UBank USaver with USaver Ultra
Pros: Highest short-term and long-term interest rate (4.17% as at blog date), very easy to apply online
Cons: No branches, higher interest rate requires having another UBank transaction account: USaver Ultra
UBank has reigned back on top with the highest rate in Australian online savings accounts. However, to get the current highest rate, you need to have two UBank products, the USaver online savings account and and USaver Ultra transaction account. My tip, keep your USaver Ultra at a zero balance (there’s a trick to do this) and keep all your funds in the actual USaver. The USaver Ultra is handy to pay bills via BPay due to its “sweep” functionality; I’d recommend that you read more about that one on the UBank site.
Non-Rewards Credit Card: Bankwest Platinum Zero Mastercard
Pros: No annual fee, no foreign exchange conversion fees, international travel insurance, purchase security cover, purchase extended warranty, concierge, up to 55 day interest-free period, not using your own money
Cons: Income must meet Platinum requirements (usually income >$50k) to receive waiver of foreign exchange fees, steep dishonour and late payment fees
Shock! My top credit card pick has been bumped! I have been championing the 28 Degrees for many years, but having a read through the Bankwest Zero Mastercard fees and features, I have to say the 28 Degrees has finally been trumped! This has all the same features as the 28 Degrees and more! Complimentary travel insurance is always handy and with many travel sites charging in non AUD currencies, it’s handy to know you can pay for your holiday in the local foreign currency without surcharge and get complimentary travel insurance. Researching to update this blog post has made me really consider whether I should jump ship!
Non-Rewards Credit Card Runner’s Up: 28 Degrees
Pros: No annual fee, no foreign exchange conversion fees, foreign exchange rates very close to the spot/market rate, up to 55 day interest-free period, complimentary concierge, not using your own money
Cons: High interest if you don’t pay on time, the only credit card featured on this list with no complimentary travel insurance
This is still a great card, if for some reason you can’t get the Bankwest Platinum Zero Mastercard. It just isn’t as good compared to the Bankwest product. As 28 Degrees has recently turned into a Platinum card, some people may find it harder to be approved for this product than previously.
Rewards Credit Card: Citibank Signature Visa Friends and Family Offer ending 31 October 2014
Pros: Current no annual fee for life offer, fee-free rewards program, complimentary international travel insurance, often offers 0% fee-free balance transfer offers, two Priority Pass lounge passes a year, complimentary purchase cover insurance, complimentary extended warranty insurance, Citibank Dining Program, up to 55 day interest-free period
Cons: Must meet Signature income requirements to be approved (usually income >$75k), potentially slow credit approval process, high interest, foreign exchange fees apply, minimum $15k credit limit, which could hamper future borrowing capacity for some, e.g. home loan
When I wrote this blog last year, no annual fee reward cards were scant and of those available, they tended to be AMEX, which always seem to get slugged with surcharge fees at point of sale. Thanks to Citibank’s Friends and Family Offer, which has been extendedly running for almost a year now, you can now finally get a true no annual fee rewards card. On top of the rewards program, there is the host of complimentary insurances. Citibank also offer 0% fee-free balance transfers on up to 80% of your limit allowing a cheque-to-self option. If you play this carefully, you have an almost free lump of cash to do some smart arbitraging, e.g. home loan, shares, etc. However, be punctual in paying back the full balance transfer on time or incur some nasty interest rates!
Initially, Citibank were also offering no fee for life on their Platinum product as well, which has a lower income threshold, but almost similar benefits, including rewards. Unfortunately, this offer concluded 31 July 2014.
The no annual fee is a temporary offer only. You have to take utmost care to ensure you cancel this within one year of opening, so you are not charged the annual fee. If you can spend $1,500 within the first three months of opening, the 50,000 qantas points are a great bonus. You also get two free passes to Qantas Lounges and like other Signature/Black cards, you get all the great complimentary insurance benefits. This product also gives you two cards, Visa and AMEX, linked to the one account, allowing for higher potential point-earning power at surcharge-free AMEX merchants. Being part of the AMEX family also opens you up to frequent cashback reward schemes, like Shop Small.
I’m still fairly new to rewards cards, so you may actually know of better products – leave a comment and I’ll look into it. My base criteria is no annual fee and no fees or minimum spend to enrol in to the rewards program. I’m a pretty low spender, so if a card has an annual fee of $xyz, but I would need to spend a fair sum to get cashbacks to be ahead, the product is not worth it to me. It could be for you.
It is also worth checking with your bank, as you can get access to usually expensive premium rewards cards free if you have a package, like a home loan package. I have excluded these from my analysis, but I encourage you to do your own research and see if your bank can offer you a better deal!