How transaction fees work

By Jackie Pearson

The right transaction account for you will depend on how you do your banking, whether you have multiple accounts and loans with the one provider and how many transactions you make per month.

REBATES FOR LOYALTY

Let’s say you have your transaction account, mortgage, a term deposit and a credit card all with the same bank. It may be worth your while to be with an institution that uses rebates.

Some accounts are structured to reward customers who do more business with that institution by offering rebates of standard fees charged. Bendigo and Adelaide Bank, for example, gives customers a monthly fee allowance (a rebate) that they use to reduce the eligible monthly transaction fees they incur on their account.

Bendigo and Adelaide Bank’s chief executive of retail banking, Mike Hirst says, “We also reward customers who have more than one account with us by offering additional transaction account rebates for these other accounts.

“If they have a term deposit investment common fund, debenture, personal loan or credit card with us, they will be entitled to increase their rebates on an eligible account each month,” says Hirst.

If you’re with a bank that offers fee rebates for customer loyalty, you will still accumulate transaction fees on your every day account each month and those fees will be charged to your account at the end or beginning of each month. You will see them listed on your statement. Any rebates you’re entitled to are then subtracted from the fees and the net amount is debited from your account.

LIMITED TRANSACTIONS OR FLAT MONTHLY FEE

St George Bank is one of a growing number of brands that now offers different types of transaction accounts for different users: either with a set number of free transactions per month or unlimited transactions for a flat monthly fee.

“For example, for a flat $7 per month fee our Complete Freedom Account provides you with the convenience and flexibility to undertake unlimited electronic transactions … St George branch transactions and personal cheques,” a spokesperson for St George explains.

NAB has a similar system for enabling people to avoid monthly account service fees – arrange to have your salary or any regular deposit paid into your NAB smart everyday bank account. The amount you will need to deposit each month depends on which account you hold – $2500 for NAB eBanking, at least $5000 a month for NAB Gold Banking.

If you maintain a high balance and make very few transactions, a fee with a limited number of transactions combined with a way to avoid the maintenance fee is your best option. If you make a high number of transactions you are probably better off with the “unlimited transactions for a flat fee” model.

ALWAYS USE OWN-BRAND ATMS

One of the easiest ways to incur fees is to use ATMs that don’t belong to your bank’s network. Each time you do you will incur a “foreign ATM” fee (usually $2). Withdraw money from five foreign ATMs a month and you will incur $10 in unnecessary fees. Non-brand ATM fees can’t usually be reduced by fee rebates.

TIPS FOR BEATING FEES

• Monitor your banking habits and keep a record of the number and type of transactions you make.
• Make larger withdrawals less frequently to limit the number of withdrawals you make
• Use your debit card and select “credit” when withdrawing cash or making purchases to avoid transaction fees.
• Ask for “cash out” when using EFTPOS to make two transactions for the price of one.

Related Links

• Find the cheapest transaction account
• Search transaction accounts by institution
• Search for savings accounts

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