Do you know how banks make the majority of their profits? They used to come from home loans but according to a recent report from UBS Investment, there has been a major shift and now banks make most of their money from everyday transaction accounts. And what’s really shocking is that most of that money comes from low income accounts, so it’s the people who can least afford it that are propping up the banks big profits!
Charges on overdrawing, missing monthly deposit quotas and minimum balance requirements is where the banks’ profits are coming from according to the report. Unfortunately it’s retirees and those already struggling to pay their bills that are paying those fees and charges.
The good news is that its quite simple to avoid unnecessary fees when you’re on a limited income. There are genuine bank accounts out there that will work with your personal situation. Look for an everyday bank account that has features like no monthly deposit requirements, no minimum balance and limited fees on overdraws and no monthly fees.
Here are some bank accounts that fit the bill.
You can also compare all the other 135 bank accounts in the market quickly and easily on Mozo with our handy bank account search tool.
Reverse the roles
If you have some spare savings putting them in a high interest savings account instead of your low interest everyday transaction account, will actually see the bank paying you! You’ll want to look around for a savings account with ongoing high interest, no fees and no restrictions on transactions as well as no deposit requirements. Here’s some of the more popular accounts currently available:
- Don’t leave unused money in your in your everyday bank account where it won’t be earning any interest. Set up a high interest savings account and move cash across to the transaction account when needed. This will see your money earning interest and giving you a little profit of your own to play with. And its easy to do with online and phone banking.
- Spare cash lying around? Compare online savings accounts as well as term deposits before locking your money away. Many savings accounts now offer better interest rates than term deposits and give you greater flexibility.
- Get into the habit of doing an annual review of your bank accounts to make sure that you’re always getting the best deal for your money.
- Set up automatic payments from your bank account to avoid paying late fees.