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Everyday Transaction Accounts - July 11th
When you use your credit card to pay for your movie ticket, or withdraw money for splitting the bill for a dinner out with friends, you probably don’t give the payment method too much thought, right?…
– Read moreA transaction account is a bank account used to manage your everyday finances. You can deposit your income, and withdraw money to spend it on the things you need in a variety of ways: debit card EFTPOS, ATMs, direct debit, Bpay, branch access, and cheques.
Transaction accounts are useful for just about everyone. Individuals can compare transaction accounts on our website. Businesses also need a good transaction account, and you can also compare business bank accounts on our website.
The country recently new, brightly-coloured banknotes introduced in 2015, but the Reserve Bank says this redesign may be the last as we move towards a cashless society. According to Statistics New Zealand, Kiwis used electronic debit and credit cards for 6.5 billion transactions in July 2016 alone.
You may not even need your debit card soon, as many banking apps and digital wallets now allow you to make contactless payment with your mobile phone. Contactless mobile phone apps available so far in New Zealand include Google Wallet and Samsung Pay, encrypted with fraud detection and payment protection used on debit and credit cards. We are just a few steps behind Sweden, which is already 95% cashless, and Denmark, where 90% of the smartphone-owning population uses MobilePay and the government plans to make its “no cash” policy official by 2030.
ABS Bank have even designed a new makeover for Kashin, the elephant-shaped moneybox first released in 1964, to make sure that in this digital age, everyone still learns the value of saving money. ‘Clever Kash’ now has Bluetooth that connects it to a child’s bank account app, and displays their bank account balance on the screen on its stomach.
When we know what to look for when choosing a transaction account, and stick to a realistic budget, we can do quite well for ourselves. You can make a plan today to meet your weekly and monthly needs, using the Sorted.org.nz Money Planner budgeting tool.
If you need more help in learning how to budget, head on over to our Budgeting & Saving section. You’ll find all our best hints and tips to help you survive and thrive financially.
There are a few basic things to look for in a transaction account, depending on your financial needs:
Being able to use your money in many transactions involves paying fees. Some of the more common fees and the average costs you can expect (from our 2016 data) include:
Surcharges are another matter entirely. Surcharges are fees charged by the business you are purchasing the good or service from to cover the extra cost involved in processing a transaction by debit card rather than by cash.
If you use a contactless debit card, you might not be aware that there is a surcharge as you are quickly swiping your card and leaving the store. ‘Tap and go’ card methods including MasterCard PayPass (a.k.a. MasterPass), Visa payWave, or ASB PayTag are faster, easier ways to make purchases under $100 – but keep an eye out for avoidable surcharges.
You might not know that you can save money while you’re spending it, with a transaction account that has an interest rate attached. Such accounts should provide a good interest rate and standard, fee-free transaction features such as EFTPOS and ATM access, direct debit, internet banking, and branch access.
Average interest rates for transaction accounts have stayed fairly low since the RBA cash rate cuts brought our cash rate to 2.00% in 2016, so you’ll have to shop around to find a good interest rate.
Written by: TJ Ryan
When it comes to our Savings and Transaction Account star ratings and the Everyday Banking Award, CANSTAR assesses the transaction account offerings for the main transactor profiles outlined here.
Someone who is a fan of online shopping and pays all their bills online via online payments, direct debit, or BPAY may be an Electronic Transactor. They are likely to make an average of 40 transactions per month.
There are electronic transaction accounts that are specifically designed for customers whose main channel to transact is online or via debit card. For CANSTAR’s star ratings, an electronic transaction account must offer full access to the account via a debit card enabled for ATM, EFTPOS, point of sale, and BPAY.
Someone who still visits a branch occasionally to deposit a cheque or make a currency exchange before a big trip, or phones up every now and then to pay their bills, may be a Full Service Transactor. They are likely to make an average of 25 transactions per month.
There are transaction accounts designed for customers who occasionally make transactions at a branch or over the phone, as well as some electronic transactions. This is definitely a good solution for those who are elderly or unaccustomed to online banking. CANSTAR requires that for our star ratings, a full service transaction account must offer full access to the account via methods including ATM, branch, EFTPOS, point of sale, and BPAY.
We also assess what’s on offer for Junior Transactors under 12 and Youth Transactors under 18 – look at our Youth Banking page.
Please note that these are a general explanation of the meaning of terms used in relation to transaction accounts. Your bank or financial institution may use different terms, and you should read your product disclosure statement (PDS) carefully to understand everything that may apply to your account. You cannot rely on these terms in relation to any transaction account you may open.
Account-keeping or administration fee: An ongoing fee charged to cover the lender’s administration costs for creating and maintaining the account. Usually charged monthly on transaction accounts.
Annual equivalent rate (AER): A rate that can be compared between lenders. Any advertisement for a savings product that quotes an interest rate must also quote the AER so that you can compare the return you might expect over time with other products.
ATM (Automatic Teller Machine): A machine found in public places, which allows you to withdraw funds from your account, usually 24/7.
Balance: The amount of money available in your transaction account.
Banking Ombudsman: If you have a dispute with your bank and haven’t been able to resolve it through the bank’s internal complaints resolution process, you can contact the Banking Ombudsman of New Zealand. It is a free and independent service that helps people resolve disputes with their financial institution.
Basis points: A unit of measurement used to describe the percentage change in interest rates or the value of a financial product. One basis point is 0.01%.
Branch: The physical building where your bank or financial institution exists. Branches are usually only open during normal working hours.
Cash: Money in the physical form of notes and coins.
Cheque account or checking account: A transaction account that allows you to make payments with your own money by writing cheques. If you do not have enough money in your account when the recipient cashes your cheque into their own account, the cheque will “bounce”, meaning it is not be paid and you may be charged penalty fees.
Consumer: Someone who buys and uses products or services.
Credit card: A card that gives the account holder access to a line of credit. You can spend up to a specified credit limit, but the money must be repaid, otherwise you start paying interest on the balance of the card (whatever you have spent).
Debit: Withdrawal transaction.
Debit card: A card that is linked to a transaction account and allows the cardholder to make payment transactions and ATM withdrawals. Also known as a bank card or cheque card.
Deposit: Money that you put into an account with a financial institution. (A “deposit” can also refer to a down-payment on an item you are purchasing. It is paid as a promise to purchase, with the balance of the purchase price remaining to be paid.)
Direct debit: When a transaction is automatically removed from an account and received into a different person’s account. For example, your salary or wages are automatically removed from your employer’s bank and deposited into your bank account.
EFTPOS (Electronic Funds Transfer at Point of Sale): A payment system where you use your debit card to make payment for goods or services or withdraw cash. An EFTPOS machine is used to process debit and credit payments in-store.
Electronic banking: A broad term used to refer to the banking system where you use online banking, telephone banking, ATMs, or EFTPOS to access your account. You can use electronic banking to make withdrawals or other payments, deposits, or transfers.
GST (Goods and Services Tax): The New Zealand tax levy on payments for goods and services.
Income: Money you earn, including wages, salary, interest, government benefits, and rental income.
Inflation: The percentage by which the price of goods and services rises each year.
Interest: An amount of extra money that you earn from the bank by having a positive balance of money deposited into your bank account. Interest is earned over time by calculating a percentage of the balance of your account.
Internet banking: Online banking. This can be done in an internet browser on any computer, smartphone, or tablet device that has internet access. It can also be done using an app on a smartphone or tablet.
Introductory rate: A promotional, introductory bonus offer where a set interest rate applies to the account for a set time period. At the end of the bonus period, rates revert to the base rates.
Junior transaction account: Transaction accounts for children and youth. A parent or guardian operates the account in the child’s name until they reach legal age, but the child also has access to their account.
On-call: “On-call” or “at call” transaction or savings accounts allow you to immediately withdraw your money from the account whenever you like.
Pay Anyone: A payment system where you can transfer money to any individual or organisation using online or phone banking, as long as you have their account name and number.
Reserve Bank of New Zealand (RBNZ): The Reserve Bank is the central bank of New Zealand, and they are responsible for setting the official cash rate. They manage monetary policies such as the official cash rate to stabilise inflation and the economy; maintain a sound and efficient financial system; and supply our national banknotes and coins.
Savings account: Bank accounts that pay significant interest back to the account holder and cannot be used to make transactions. Savings accounts typically have higher interest rates than transaction accounts. They can be linked to transaction accounts to make savings available as funds for transactions as needed.
Transaction: The movement of money in or out, including deposits, withdrawals, and transfers between bank accounts.
Transaction account: A deposit account where your money is available for day-to-day transactions. Provides frequent access to funds in your account for making payments through EFTPOS machines, online, ATMs and branches, and also for the use of cheques.
Transfer: When you give the bank instructions to move money from one account to another account, e.g. moving money from your savings account to your transaction account. This is different to a payment where you send money from your account to somebody else’s bank account.
Withdrawal: When instructions are carried out to pay money out of your account and it is paid, e.g. when you get cash out from an ATM.
Our Ratings & Guides
Compare Transaction Account for Full Service Transactors (high use)
Compare Transaction Account for Electronic Only Transactors (lower use)
Savings and Everyday Transaction Accounts Star Ratings Report
Checklists
Spending personality: What type of transactor are you?
Personal finance management tools
Should you change your bank account?
Articles and Guides
Choosing a transaction account:
Savings and transaction account fees: What to expect
Spending habits:
5 ways your spending habits can change the world
Who offers transaction accounts in New Zealand?
To see which products received five-star outstanding value ratings for different customer profiles, compare transaction accounts on our website or read our latest star ratings report or Everyday Banking Award report. See how your current institution stacks up with what is available on the market, and switch if you’re not satisfied.
The below list is current to 2016. For more information on how CANSTAR rates transaction accounts, read the Methodology in our latest star ratings report.
