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How to save on fees and charges Financial institutions (includes banks, building societies and credit unions) and institutions from the financial services sector (includes finance companies, investing companies and loan companies) make their money by moving your money around and charging you for the service. To find ways to reduce or eliminate how much you and your family pay in fees and charges, you should understand your banking and financial needs, examine your spending and payment habits and then shop around for accounts/cards to suit to your needs. Regardless of the type of accounts you have, know their features. Shop around and compare what other institutions have on offer. Fees and charges Fees and charges may be for administration, for transactions or for interest on borrowed money. They may be charged across your savings accounts, cheque accounts, combination savings/cheque accounts, credit cards, debit cards, overdraft facilities, home loan accounts, personal loans and combination packages. Consequently, you need to calculate the actual impact of your spending patterns on your monthly fees and charges. Savings and cheque accounts Financial institutions usually have a choice of accounts for different levels of use. Choose carefully to suit your spending and transaction needs. • Frequent ATM users are better off paying a monthly account keeping fee as it is likely to be cheaper than paying (excess) transaction fees. • Fee-free accounts—these concessional accounts have no monthly fees and offer a number of free transactions each month. • In some cases, accounts with the lowest fees pay lower interest—remember to check. Paying the lowest possible fees may mean you get lower interest. • Some accounts offer fee waiver or reduction if you maintain a specified minimum monthly balance. • Combining more than one account may allow you to avoid paying service fees that are charged on small account balances. This can also help when it comes to deeming accounts and maximising interest— particularly for couples. • Conversely, having more than one no fee account— each with a small number of free transactions may eliminate your current monthly fees. • Accounts that offer cheque facilities may charge ‘Debits Tax’ on all withdrawals while others charge the tax only when a cheque is debited to the account. Select accounts that have the features you need and use. • Reduce the number of transactions you make—this may help you reduce your fees. Plan ahead so you can make fewer withdrawals. • Consider using EFTPOS (Electronic Funds Transfer at Point Of Sale) to obtain cash. By using a debit card linked to your transaction account to pay for your purchases, you can ask for cash at the same time and this will count as only one transaction. • If you are comfortable with using ATMs (Automatic Teller Machines), EFTPOS, telephone banking or the internet, use them wherever possible. The fees charged for these transactions are generally lower than those charged for transacting face-to-face with staff. In some cases, these services are free. FIS028.0809 (page 1 of 3) www.centrelink.gov.au • If you need extra cash, take it out when using EFTPOS when you pay for groceries or petrol as the two transactions only attract one fee. • Use your own financial institution’s ATMs. While most ATMs allow you to obtain cash using cards from competitor institutions, the charge is usually more for this service. • Some financial institutions offer their shareholders fee-free accounts and other benefits. • Negotiate—customers doing a lot of business with a single financial institution should ask to be exempted from transaction fees. Debit cards • Similar to credit cards, but the whole balance is payable at the end of each month. • Be aware that non-payment of whole or part of the balance can incur a hefty ‘late payment’ or ‘delinquent’ charge. • Debit cards also can have varying interest free days for your purchases. • Some debit cards also allow for minimal cash advance access. A cash advance on your credit card should be a last resort as interest is charged immediately as well as a transaction fee. • Rewards do not necessarily come at nil cost. Often rewards programs can only be accessed by paying an annual reward charge. • Pay the whole balance in one instalment as a number of payments over a month may incur multiple transaction fees. • Reviewing what is being offered by your debit card is always wise, as the fees and conditions can change at any time. Credit cards • If it suits your spending patterns, and you are comfortable with using credit cards, you can benefit from using a credit card with varying interest free days for your purchases. • You can use one transaction from your savings account each month to pay off the credit card account balance. If you pay the full balance that is outstanding on your account on time, you can avoid interest charges altogether and gain more interest on your savings. • An annual charge usually applies to a credit card that offers an interest free period. • A higher interest rate is usually charged for cash advances and amounts outstanding after the interest free period than is charged on credit cards without an interest free period. The interest is often charged from the date of the transaction. • A cash advance on your credit card should be a last resort as interest is charged immediately as well as a transaction fee. • Interest rates vary—consider one of the many low interest credit cards. Some have low or no fees, and can also include interest free periods vary. • Rewards programs do not necessarily come at nil cost—often they can only be accessed by paying an annual reward charge. If you don’t spend large amounts and won’t use the rewards, don’t join. • Reviewing the fees and conditions of your credit card is always wise, as these can change at any time. Home loan accounts • Those with home loans should negotiate with their institution to waive the fees. • Refinancing your home loan may also save you money in the long run. As always though, you should look at the up front and continuing costs or fees of all options before making your final decision. Combinations • Consolidating all of your banking business with one institution may save on fees. Most financial institutions offer fee waiver or reduction when you package several products such as loans, transaction accounts, credit cards and insurance. • Many mortgages offer an offset facility which will reduce your interest charges. To find out more contact direct your account provider or your card provider. FIS028.0809 (page 2 of 3) How to save on fees and charges How to find out more Financial Information Service Planning for or needing help in retirement Financial Information Service seminar bookings Looking for work Parent or guardian To speak to Centrelink in languages other than English 13 2300 Disclaimer The information contained in this publication is intended only as a guide to payments and services. It is your responsibility to decide if you wish to apply for a payment and to make an application, with regard to your particular circumstances. This information is accurate as at September 2008. If you use this publication after that date, please check with us that the details are current. 13 6357 13 2850 13 6150 13 1202 TTY* enquiries Freecall™ 1800 810 586 *TTY is only for people who are deaf or have a hearing or speech impairment. A TTY phone is required to use this service. Go to our website at www.centrelink.gov.au Check the “we speak your language” link on Centrelink’s website for information in languages other than English. Note: calls from your home phone to Centrelink “13” numbers from anywhere in Australia are charged at a fixed rate. That rate may vary from the price of a local call and may also vary between telephone service providers. Calls to “1800” numbers from your home phone are free. Calls from public and mobile phones may be timed and charged at a higher rate. FIS028.0809 (page 3 of 3)