Slice 1: The Margarita

Sometimes the best pizza is the simplest, and there’s no simpler pizza than an old fashioned margarita. In banking terms, this is the standard transaction account which gives you full access via EFTPOS, debit card and branch but no interest paid on the account. Not all margarita pizzas are created equal mind you and my slice of choice is NAB’s Classic banking account. It’s got no monthly fee, unlimited withdrawals from NAB and rediATMs as well as unlimited free access to your money via EFTPOS, internet banking, phone banking, branch and cheque book. There are similar accounts such as the Suncorp Everyday Basics account and the Citibank Plus Transaction account, but NAB has the widest distribution of ATMs and branches.

Slice 2: The Supreme

If you’re the type who wants it all, from pineapple to parmesan, nothing beats a Supreme pizza. In banking terms, you’ll be looking for a bank account that not only acts as a transaction account, but also pays high interest. My choice of supreme is the AMP eASYSaver (you’ll have to forgive their appalling capitalisation policy in naming the thing though!). You get 5.15% interest on every dollar, unlimited free access through internet, NAB and rediATMs, EFTPOS and an optional free chequebook.

There are other high-interest transaction accounts such as the BankWest Hero account, but AMP has the highest rate as well as no conditions with regards to balances or deposits. One thing to note however, is that this account has a $5 monthly fee, so you’ll need to hold a balance of at least $1,200 at all times to make the interest cover the fee.

Slice 3: The Gourmet

If you see yourself as a bit of a gourmand, there are niche accounts providing extra ATM benefits on top of being great everyday accounts as well.

The Moroccan Lamb and Tandoori Chicken banking equivalents come hot from the ovens of ING Direct and BankWest. ING DIRECT’s offering is the Orange Everyday account. There’s no monthly fee and unlimited free ATM withdrawals at any Australian ATM if you withdraw more than $200. On top of that there’s unlimited free EFTPOS transactions and ING Direct even pays you $0.50 if you withdraw more than $200 through EFTPOS. A few of those and you’ve got yourself some free garlic bread!

The second slice of choice is the BankWest Zero Transaction Account. Again, there’s no monthly fee, unlimited free ATM withdrawals at any ANZ, Commonwealth, NAB, Westpac or BankWest ATM as well as unlimited free EFTPOS transactions. The only catch is that you need to deposit $2000 a month into the account to maintain it, otherwise you’ll be switched over to another BankWest account.

The Crust: Final Thoughts

So next time you’re siting idly at home waiting for the delivery boy to arrive, instead of wallowing in your own hunger, use the time to see if there’s a bank account that’s more suited to your taste. It’s a slice of advice that could make things a lot easier for you.

Still hungry for information on bank accounts? Finish off that pizza and head over to Mozo Answers!

Bank Accounts

Students are a frugal bunch at the best of times, and if you’re looking to save enough change for some $7 Pad Thai for lunch, the humble bank account is one place where you can save a few pennies by avoiding unnecessary charges on everyday transactions.

First of all, you want a student bank account with as few fees as possible. That means no monthly service fee, no own-bank ATM fees, and no eftpos fees. You also want to make sure that there aren’t any minimum requirements or conditions for the account fees to be waived, as chances are you won’t be able to meet them with just a casual wage and centrelink. The other key component is the availability of a debit card so you can shop online using your own money. All of the Big 4 (ANZ, Commbank, NAB and Westpac) have accounts that match this criteria, and seeing as they have the largest ATM networks you’re best off sticking with them as it’ll mean you’ll pay less foreign ATM fees.

Credit Cards

Some of the big banks offer specific student credit cards, whilst there are other ‘normal’ credit cards that are an ideal fit for students. What is an ideal fit? By and large students are looking for a no frills, low cost solution that can act as a type of overdraft. So the things to look out for are interest free days, annual fee and interest rate. My recommendation? Take a look at the self-titled ‘HSBC credit card’ or BankWest’s Zero Mastercard. Both have low fees, 55 days interest free days, a reasonable purchase rate and relatively low income thresholds for applications.

As far as income goes, the combination of youth allowance and some part-time work will get you over the line for most no-frills cards. When you apply, make sure you take documentation for all your income in the form of payslips and centrelink documents if need be.

Personal Loans

For those looking to avoid the potential pitfalls of credit card ownership, some banks offer specific student loans to help cover the costs of textbooks, living costs, fees etc. These loans tend to feature reduced fees and/or interest for students and some even allow you to defer interest payments till after you’ve completed your studies! Victoria Teachers Credit Union’s Student Loan currently leads the market, offering an unsecured loan with no monthly fee, a low application fee of $20 and an extremely low variable rate of 11.55%.

Still hungry for information on student accounts? Stop playing ultimate frisbee and head over to Mozo Answers or check out the Mozo Student Room!

For example, both BankWest and ING Direct offer transaction accounts that reimburse ATM fees. A more innovative product is Suncorp Bank’s everyday options account, which is an everyday account that can link to multiple savings accounts as well as lock away part of your funds to a term deposit “flexiRate”.

St. George’s latest offering, St George SENSE Savings, is similar in many ways to Suncorp’s with a few different bells and whistles. The ‘SENSE’ account is effectively an amalgam of St. George’s leading savings and transactions accounts with a few clever gimmicks to help things along.

The first innovative add on is that you receive a combined statement for both accounts. SENSE also comes with a range of pretty snazzy and informative graphs that help you track your spending. One of them is a pie chart that breaks down your everyday spending by categories, such as leisure, home expenses, and transport. There’s also a bar graph version that shows these amounts month to month. Plus you get a graph outlining your savings progress in relation to your set target.

There’s also the Sense Rounding Contribution graph -and this is what really sets this product apart. What exactly is a rounding contribution? Well, every time you make a purchase on your debit card, the SENSE account automatically rounds up the transaction to the nearest dollar and takes that balance from your everyday account and puts it into your savings bucket. For example, say I bought a coffee and a croissant on my way in to work that costs me $5.30. If I pay using my SENSE account, $6 gets taken out of my account. $5.30 goes to the barista and the remaining $0.70 goes into my SENSE savings account. The same process also applies to all BPay transactions too. It’s a really nifty way to start saving without putting any effort in.

All the standard perks come too – if you deposit over $2000 a month into the account you don’t pay an annual fee, there’s no minimum balance required, a VISA debit card, and all the convenience of having linked accounts, such as ease of transfers and regular payments. The savings account comes with a reasonable 4.85% rate as well.

So hats off to St. George. They’ve managed to craft a simple, yet intuitive and innovative product that redefines the relationship between the transaction and the savings account. For all those that struggle with saving, or simply having to manage two accounts, this is one option that could make a lot of SENSE.

Find the best savings account rates at mozo.com.au.

Exception fees are fees charged by banks for ‘exceptional’ circumstances. These circumstances include late payment fees on both credit cards and loans, over-limit fees on credit cards, honour fees when overdrawing a bank account, and dishonour fees charged for cheques that bounce. Reserve Bank data shows that banks charged consumers $961 million in exception fees in 2008.

The impact of these fees on your credit card cost can be significant. Say you’re on a ‘low rate’ credit card with an interest rate of 11.99% and running a $3000 balance. A $30 charge for being a couple of days late on a payment effectively makes your interest rate 12.99% in terms of your cost. If you’re late or overdraw a few more times over the course of the year, the additional costs effectively transforms your low rate card into a middle of the range card without any of the perks.

The principal legal argument for the class action is that when a customer breaks a contract with a bank (by making a late payment for example), the bank may only be able to recover a reasonable estimate of the cost. IMF Australia’s contention is that the banks charge fees much higher than what can be termed a ‘reasonable estimation’, given that it actually costs banks “only a few dollars at most” when you make a late payment or overdraw on your account.

There is a foreign precedent, with close to a million Britons unsuccessfully seeking compensation for overdraft charges in 2009, though a new case set to be heard in Glasgow in June could lead to more litigation. The issue also reared its head in America, with the US Federal Reserve recently ruling that creditors must obtain a consumer’s consent before charging fees for transactions that exceed the credit limit.

Here in Australia, the worst offenders for credit card over limit and late payment fees are Citibank and Suncorp, both charging a whopping $40 for each occurrence. Even NAB, who made a great deal of noise when slashing bank account fees this year, still charge $25 for going over your card limit and $30 for a late payment. Westpac and St. George lead the way, charging only $9. However, the case goes back six years, which could still spell trouble for those who have only recently cut fees.

Even though there will most likely not be a resolution for years, if ever, it will be intriguing to see how the banks behave in the light of all this publicity, particularly in a time of record profits. Even if this case is successful, it almost goes without saying that the banks will find other means to maintain their margins, whether through higher regular account fees or interest rates. As a consumer, the best way to deal with this is to shop around. Only when customers start voting with their feet (and their wallets) will banks really address these issues.

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This is a big win for the banking industry. The measure only applies to income earned on bank accounts, savings accounts, term deposits, bonds and annuities. It will have the effect of pulling money into the banks from other investment vehicles — and from out of cookie jars and under mattresses. And it is Mr Swan’s hope – and mine, and I’m sure yours – that this extra leg up for banks will help them gather sufficient deposits to reduce the overall cost of funding their home loan products. Wouldn’t that be nice: better savings returns and cheaper home financing. Only time will tell.

But what’s it mean for you exactly? Well, at an interest rate of 5.85% (the best standard at-call interest rate in the market right now, at UBank), you’ll be able to save up to $17,000 and receive the full rate reduction. If your taxable income is between $35,000 and $80,000 then you’ll only pay an effective tax rate of 15% on interest: that means a saving of up to $150 a year. And of course the savings are even higher if you’re on a higher rate of tax.

But here’s a savings measure you can access right now. If you already have money that’s not getting the best rate in the market, you can make $150 or more by moving it. If your 17 grand is only earning 4.50%, say in an old BankWest TeleNet Saver account, then moving it to a rate of 5.85% makes you $150 — even after paying current tax rates. And you can do better yet with a Term Deposit, where plenty of providers offer well over 6% on your money for terms as short as 6 months.

If you’re not making the most of your savings, don’t wait for 2011. Mozo’s Rate Chasers have been out in the field chasing down the best rates – compare savings account and term deposit rates now.

Take for instance the ING Direct Orange Everyday account: it costs nothing to get it and you can and will earn $60 for free by simply depositing money into the account, making a purchase with your Visa Debit card, and debiting money from your account ($20 each). On top of this, every time you withdraw $200 or more from an ATM, ING Direct will pay you $0.50.

Perhaps you’re the kind of person that likes credit cards rather than debit cards? Not a problem! Sign up for the HSBC Credit Card and you’ll be credited with $50 when you make your first purchase. Or the Woolworths Everyday Money Card, which gives you a $50 shopping card after you make 3 purchases. If you’re smart about these types of deals then you could be making yourself a tidy little sum for about half an hour’s work of filling in application forms. The banks are obviously hoping you will stay with them, but if you wanted you could simply then pocket the money, pay off the purchases and then cancel the card. However be careful doing this, because if you make lots of applications for credit this will show up on your credit history – and that may make it harder to get credit in the future!

Perhaps a better way of getting something for nothing from a credit card is via rewards points on a card that has no annual fee. If you always pay off your card in full, of course! There’s not many cards out there like this, but they include the American Express Gold Ascent Rewards Card, American Express Blue Sky Credit Card, the Bank of Queensland Blue Visa and the Coles Group Source Mastercard. There are also a few rewards cards that waive the annual fee if you spend more than a certain amount each year, including the Amex cards offered by AMP, HSBC and Suncorp.

If you’re the kind of person that can walk past a $50 note lying in the street then this blog isn’t for you. If not then enjoy your free lunch. I know I did.

(Note: the offers mentioned in the article were valid at the time of writing, but they may not be by the time you read it. And of course, there may be terms and conditions on each offer that we’ve not reproduced here.)

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The bank was pressured both by ongoing complaints and the Reserve Bank’s disclosure that the industry raised almost $1 billion in dishonour and exception fees. While the cause was taken up in defence of underprivileged account holders, small business will also enjoy the fruits of fee free accounts, which come into place this week.

At this stage, none of the other big banks have followed NAB’s move, but it’ll be interesting to see whether more consumer agitation drives changes that also benefit small business. We’ll keep you posted.

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