When the cash rate is lower, fees take a bigger chunk out of your earnings.
What fees will you pay on a deposit account?
The fees savers can expect to pay on a standard at-call savings account versus a transaction account include the following.
|Transaction Fees on Deposit Accounts: Savings vs. Transactions|
|Point of Sale||Branch Withdrawal||ATM Withdrawal own network||ATM Withdrawal other network||Internet Transfer|
|Standard At-Call Savings Accounts||$2.29||$2.56||$2.35||$2.41||$0.29|
|Standard At-Call Savings Accounts||$1.00||$0.00||$1.00||$1.00||$0.00|
|Standard At-Call Savings Accounts||$5.00||$5.00||$5.00||$5.00||$5.00|
As you can see from the table above, transaction accounts charge lower fees for making transactions, while savings accounts will charge exorbitantly high fees to make the same transactions. Savings accounts are more restrictive in nature and often charge high fees as a way of deterring you from withdrawing money. Some savings accounts even specify that you must keep a certain amount of money in the account per month in order to receive the total interest rate – a double-whammy on top of the high fees.
Why you need to choose the right account for your needs
Looking at the numbers, it just makes sense that you would open both a savings account that you put money into and rarely take money out of, and a transaction account for your everyday spending. Why fork out an unnecessary $5 fee just to make an EFTPOS transaction to pay for your groceries with savings, if you can make the same transaction for – at most – a $0.50 fee on your transaction account debit card?
Finding the best account for your situation is a personal decision but doesn’t have to be a difficult task, and CANSTAR is here to make it even easier for you. In 2016, we have researched and rated 54 account products from 11 institutions so you can quickly and easily compare which deposit account will best suit your needs.
How much of your interest earnings will disappear in fees?
What percentage of your interest earnings do those fees represent? It depends on the interest rate.
With a low interest rate of 1.50% earned on a balance of $10,000, making a one-off transaction of the following types could mean that the average fees charged could take a hefty bite out of your interest earnings:
- Point of Sale: 20.73%
- Branch withdrawal: 22.40%
- ATM withdrawal at own network: 18.77%
- ATM withdrawal at other network: 19.27%
- Internet transfer: 16.00%
Meanwhile, with a higher interest rate of 2.49% earned on a balance of $10,000, making a one-off transaction on the following could mean that the average fees charged steal a smaller chunk from your interest earnings:
- Point of Sale: 12.49%
- Branch withdrawal: 13.49%
- ATM withdrawal at own network: 11.31%
- ATM withdrawal at other network: 11.61%
- Internet transfer: 9.64%
This highlights just how important it is to find an account that suits your savings and transaction needs.