Transaction Account

A transaction account is an account held with a Bank, Building Society or Credit Union that is designed to help you manage your everyday finances. Most adult Australian hold a transaction account and it is common practice to have your salary deposited directly into this account from where you can pay bills, withdraw cash. Banks often refer to these accounts as savings accounts, though the term transaction probably more clearly describes what they are, as they fare undamentally accounts which facilitate spending or transacting. It's common practice to hold a transaction account and a savings account, wand link these accounts to make cash transfer between the accounts easy. By holding 2 accounts you have access to all the convenient features provided by a transaction account and earn interest on any spare cash in your savings account.

The table below is designed to help you select a transaction account that provides all the features you require at the lowest cost. The costs associated with transaction accounts are generally one of 2 types, those with a fixed monthly account admin fee and those which charge you based on the number and type of transactions you make each month. In conjunction with an assessment of the fees charged your transaction account comparison should consider the importance you place on how you access your account be it by branch, on line, phone, EFTPOS, ATM’s, Bpay, direct debt or debit card.

How to select the best Transaction Account

 

1. Establish how frequently you will be accessing your transaction account

The frequency with which you access your account is a major influencing factor on the type of transaction account which is going to best meet your needs at the most economical cost. Relative to your spending habits you will fit into either the high transactor group or the low transactor group:

High transactor - This type of spender make’s on average, 35 plus transactions per month and tend to use a range of transaction facilities including ATM’s, branch, online, mobile and cheques. Given the high number of transactions per month the most cost effective transactional account for tis group tend to be those offering a fixed monthly account-keeping fee.

Low transactor - This type of spender will make a maximum of around 10 transactions per month and similarly to the high transactors will use a wide range of transaction facilities including branch, ATM, cheque, mobile and online. Due to the low number of transactions made each month the most cost effective solution is likely to be a transaction account with fees that are charged on a per use basis, as opposed to a fixed monthly fee.

 

2. What is the purpose of a Debit Card?

Debit Cards offer instant convenient access to the funds in your transaction account. In a similar vein to credit cards debit cards allow you to tap and go for purchases under $100 and enter a pin for higher amounts.. The key difference with a debit card is that your spending is limited to the amount of money you have in your transaction account, and spending above this will incur hefty fees or result in a rejected transaction. Debit cards also enable cardholders to shop online both in Australia and Overseas.

 

3. The key features to compare

Transaction accounts include a broad range of features that should be appraised to identify those which will be of use to you relative to how you intend using your transaction account. The top features include:

  • EFTPOS - This enables you to use your debit card to pay for transactions using either tap and go (for under $100) and your secure Pin for more expensive transactions
  • ATM’s - Provides the ability to use Automatic Teller Machines (ATM’s) to withdraw cash and check on your account status.
  • Internet Banking - Provides 24/7 access to your account details and enables you to make transactions.
  • Branch Access - Ability to access the branch network of your account provider and process transactions over the counter at a bank branch
  • Cheque Book - Ability to write cheques to pay for transactions.
  • BPAY - BPAY is a facility that allows you to pay bills online using an allocated account and reference number. Funds are withdrawn direct from your transaction account and credited to the company that you paid the bill for. This is a popular way of paying regular bills to utility, phone and Government Departments.

 

4. Transaction Account Fees and Charges

Transaction Account Providers take varying approaches to charging for these types accounts so it is wise to appraise these fees carefully as part of your comparison of the account options. The fees to consider include:

  • Account keeping fee - A monthly fee charged to cover the administration of your account.
  • EFTPOS transaction fee - This is charged every time you use your Debit Card to make an EFPOS transaction and is usually a fixed fee per transaction irrespective of the amount
  • ATM withdrawal fee - This fee is charged every time you make a withdrawal of money from an ATM. Many providers waive this fee if you use an ATM owned by them, but charge the fee if the ATM is not within their network.
  • Branch withdrawal fee - Visiting braches can be an expensive way of accessing your money, as banks tend to charge a fee each time you make either a deposit or withdrawal to your account, particularly if it involves a cheque, as opposed to an EFTPOS transaction

Frequently Asked Questions

What is interest and how can you earn it?

Interest is an amount of money that you earn from your bank by having a positive balance of money deposited into your bank account, earned over time and calculated as a percentage of the balance of your account

What is Bpay?

Bpay is an electronic bill payment system in Australia, where bills are paid through a financial institution’s online or telephone banking facility to registered merchants (‘billers’). Bpya can be a very convenient way of paying bills such as your Electricity, Gas or Telephone Bills, you will find your supplier Bpay details on the bills for these services.

What is a Debit Card?

A Debit Card is linked to a transaction account and allows the cardholder to make payment transactions using tap and go and tp withdraw cah from ATM's. They are also sometimes called bank cards or cheque cards.

What is EFTPOS and how does it work?

EFTPOS is the acronym for Electronic Funds Transfer at Point of Sale which is a payment system where you use your debit card to make payment for goods or services or withdraw cash. It usually refers to the physical machine used to process a payment in-store. These payments are now also referred to as Tap and Go payments, where for transactions of under $100 their is no need to enter a pin number to validate the transaction.

What is a Transaction Account?

Transaction account is a bank account from where your money is available for day-to-day transactions. You can generally access the funds in your transaction account for making payments through EFTPOS machines, online banking, ATMs and branches and by writing a cheque.

What is the Account-keeping or administration fee charged by banks for having a transaction account?

Account-keeping or administration fee is an ongoing fee charged to cover the lender’s administration costs for creating and maintaining the transaction account, it is usually charged monthly.