With so many banks operating in Australia, choosing where to keep your money isn’t always straightforward. From interest rates and account fees to accessibility and security, here’s what to consider before opening an account.
For many Australians, opening a bank account is something they do once and rarely think about again. Maybe you’ve been with the same bank since your parents opened your first savings account, or perhaps you chose your current provider because it was the most convenient option at the time.
But just because a bank worked for you five or ten years ago doesn’t necessarily mean it’s still the best fit today.
Australia has a competitive banking market, with major banks, smaller banks, credit unions and digital-first providers offering different products and features. And while the big four banks are often the most recognisable names, they’re far from your only options.
Whether you’re looking for an everyday transaction account, somewhere to grow your savings or a place to keep money for a fixed period, here are some important factors to consider.
Consider What You Actually Need from a Bank
Before comparing providers, think about how you intend to use your account.
Are you looking for somewhere to receive your salary, pay bills and make everyday purchases? Or are you more interested in earning interest on money you’re putting aside for the future?
Different accounts serve different purposes, and not every bank offers the same range of products.
For example:
- Transaction accounts are designed for everyday banking, including receiving income, making purchases and paying bills.
- Savings accounts allow you to put money aside while potentially earning interest on your balance.
- Term deposits generally offer a fixed interest rate when you deposit money for an agreed period.
- Offset accounts are linked to eligible home loans and can help reduce the interest charged on a mortgage.
You also don’t necessarily need to hold all your accounts with the same institution. Some Australians choose to keep their everyday banking with one provider while using another for their savings.
Understanding what you want your money to do is the first step towards finding a suitable account.
Compare Interest Rates, Not Just the Advertised Rate
If you’re opening a savings account, the interest rate is likely to be one of your biggest considerations.
However, the highest advertised rate doesn’t always mean you’ll earn the most interest.
Some banks offer introductory rates that only apply for a limited period, while others provide bonus interest when certain conditions are met.
These requirements might include depositing a minimum amount each month, growing your account balance or limiting withdrawals.
It’s also worth checking whether the advertised rate applies to your entire balance. Some accounts offer different interest rates depending on how much money you have deposited.
Before opening an account, consider:
- Is the interest rate ongoing or introductory?
- Are there conditions you need to meet to earn bonus interest?
- Does the rate change depending on your account balance?
- How often is interest calculated and paid?
- Is the rate variable, meaning it can change over time?
Taking the time to understand these details can help you compare accounts more accurately.
Don’t Automatically Overlook Smaller Banks
Australia’s big four banks – Commonwealth Bank, Westpac, NAB and ANZ – are familiar to most consumers. However, smaller and specialist banks can also be worth considering.
Some focus on particular financial products rather than offering every type of banking service.
For example, Australian specialist banks such as Judo Bank offer personal savings accounts and term deposits, providing an alternative for savers who want to compare options beyond the major banks.
A smaller bank isn’t automatically better or worse than a larger institution. The important thing is to compare the products, interest rates, fees, account conditions and services that matter to you.
You should also check whether the provider offers the features you need, particularly if you’re looking for a full-service everyday banking relationship.
Check Account Fees and Charges
Interest rates tend to attract the most attention, but fees can also affect the overall value of a bank account.
Depending on the provider and account, you may encounter monthly account fees, international transaction charges, ATM withdrawal fees or other service costs.
Some accounts have no monthly fees but may still charge for certain transactions or services.
If you regularly travel overseas, for example, foreign currency conversion fees and international ATM charges could be particularly relevant.
For savings accounts, it’s worth checking whether any fees could reduce the interest you earn.
Always review the account’s terms and conditions and fee schedule before applying.
Think About How Easily You Can Access Your Money
Accessibility is another important consideration, particularly if you’re putting money aside for emergencies or short-term financial goals.
Transaction accounts generally provide convenient access through debit cards, electronic transfers and payment services.
Savings accounts may work differently. Some allow withdrawals directly to other accounts, while others require you to transfer money through a nominated linked account.
Term deposits are different again. Because your money is invested for a fixed period, early withdrawals may require advance notice and could result in reduced interest earnings.
Consider how quickly you might need your money and whether the account’s withdrawal arrangements suit your circumstances.
For an emergency fund, easy access may be particularly important. For money you don’t expect to need for several months or years, you might be more comfortable with restrictions on withdrawals.
Understand How Your Deposits Are Protected
When choosing a bank, it’s important to understand how your money is protected.
In Australia, the Financial Claims Scheme (FCS) provides protection for eligible deposits held with Australian authorised deposit-taking institutions (ADIs).
Under the scheme, eligible deposits are protected up to $250,000 per account holder, per ADI, subject to the scheme’s rules.
This means the limit generally applies to the combined eligible deposits you hold with the same ADI, rather than separately to each account.
The scheme is designed to protect eligible depositors if an Australian ADI fails and the Australian Government activates the FCS.
Before opening an account, you can check whether the institution is an authorised deposit-taking institution through the Australian Prudential Regulation Authority (APRA).
It’s also worth understanding that deposit protection is different from investment protection. Products such as shares and managed funds are not covered simply because they’re accessed through a banking provider.
Look at Digital Banking and Customer Support
With more Australians managing their money online, the quality of a bank’s digital services can make a difference to the everyday banking experience.
Depending on your needs, you might want to consider whether a bank offers:
- Online account opening and management
- A mobile banking app
- Easy electronic transfers
- Clear transaction histories and account statements
- Convenient customer support channels
- Security features such as multi-factor authentication
If you prefer speaking with someone in person, branch availability may also be important.
However, if you’re comfortable managing your finances digitally, a bank without an extensive branch network may still suit your needs.
Consider how you prefer to bank and whether the provider’s services align with those preferences.
Consider Whether You Need More Than One Bank
There’s no requirement to keep all your money with a single bank.
In fact, depending on your financial goals, using different providers for different purposes may be worth considering.
You might prefer the convenience of a transaction account with your existing bank while choosing a separate savings provider based on its interest rates and account conditions.
Similarly, someone with money they won’t need for a fixed period might compare term deposits from several institutions rather than automatically choosing their everyday bank.
Of course, managing multiple accounts can mean keeping track of different logins, conditions and transfer arrangements.
The right approach will depend on whether the potential benefits outweigh the additional administration involved.
Review Your Banking Arrangements Regularly
Choosing a bank doesn’t have to be a permanent decision.
Interest rates change, account features evolve and your financial priorities may look very different in a few years.
An account that suited you when you were studying might not be the right fit when you’re saving for a house deposit, managing a mortgage or preparing for retirement.
Reviewing your banking arrangements periodically can help you identify whether your current accounts still meet your needs.
For savings accounts in particular, it’s worth checking whether you’re continuing to earn the rate you expected and whether you’re meeting any bonus interest conditions.
Finding the Right Bank for Your Financial Goals
There’s no single bank that’s going to be the best choice for every Australian.
The right provider depends on what you’re looking for, whether that’s convenient everyday banking, competitive savings rates, access to your money or particular account features.
Rather than choosing a bank based on familiarity alone, take the time to compare your options, understand the conditions and consider how each account fits into your broader financial plans.
And remember, you don’t necessarily have to choose just one. Sometimes the most practical banking arrangement is a combination of accounts from different providers, each serving a different purpose.