Information on your choices and protections as a consumer.
Banks offer simple transaction accounts as well as a range of products like credit cards and loans. These products usually come with fees and obligations, and may have ‘hidden’ costs in the ‘fine print’.
Banks also offer automated services that make life and saving simpler, but also come with inbuilt risk. Do you need to stress? Keep reading to learn about the importance of informed decision-making and where to go when you need help with your money business.
Transaction and savings accounts
Having a bank account helps to keep your money safe. With Australia’s banks, all customers’ savings up to $250,000 are insured in case things go wrong.
Transaction accounts
Transaction accounts are everyday spending accounts that come with a debit card that you can use to buy things and withdraw cash. They’re also known as ‘bank accounts’.
Savings accounts
Savings accounts are for saving money over longer periods, usually come with better interest rates, and sometimes have withdrawal restrictions or interest rate boosts for adding more money. These types of accounts are usually easy to manage and should allow you to use your money safely without worry.
What about fees?
Transaction and savings accounts typically charge no or low fees. If your account comes with fees, you can check with your bank if there are other options with lower fees or no fees, or you might want to look at offers from other banks.
If your primary income is from Centrelink payments or you have a Low Income Healthcare Card, your bank should be able to give you a no-fee or low-fee account.
📌 See our dealing with Centrelink page.
Term deposit accounts
A term deposit account is a type of saving or investing account that earns interest over a defined period of time (the ‘term’) at a fixed interest rate. Term deposits typically offer a higher interest rate than regular savings accounts, and you can’t access the money until the term is over.
How does it work?
Term deposits are a low-risk way to invest and build your money.
- Terms are usually between one month and five years
- There’s usually a minimum opening balance
- You can access your opening balance early by paying a fee
What happens when the term ends?
Term deposits either roll over automatically at the end, which means the earned interest is added to the principal sum for the next deposit period, at a new interest rate. Or you can withdraw the interest and more from the account.
Are there risks?
While term deposits are a low-risk option, the amount you earn depends on the interest rate. So if your rate is low, your money may not increase very quickly.
Since a term deposit is for a fixed term, you may end up locking your money into a long-term deposit at a low rate of interest, while interest rates elsewhere might increase in the meantime.
The other risk is that if inflation is high and the interest rate on your deposit is low, then the real purchasing power of your money may not actually be increasing, even if your term deposit balance is higher after added interest.
Joint accounts
A joint account is a type of account that more than one person can access. Transaction accounts, savings accounts, or term deposit accounts can all be held jointly.
Benefits of joint accounts
You might take out this sort of account for several reasons. For example, you might:
- have a shared savings goal with a partner
- manage household finances out of one account
- prefer to pay one lot of account fees instead of two for separate accounts.
Is it right for you?
With a joint account, other people can access any funds you put into the account. Be sure to think carefully about who you start a joint account with, and be wary when anyone pressures you to open such an account.
When debt is connected to a joint account, everyone who owns that account is responsible for the debt.
If another person is trying to control your finances, this can be seen as a form of financial abuse, which is also known as economic abuse.
📌 See our financial abuse page.
Credit cards and loans
Credit cards are commonly used in Australia and can be useful when making a big purchase of an essential item or when covering an unexpected cost.
How does it work?
A credit account with your bank allows you to spend money in advance. You’re then expected to pay that money back to the bank with interest. Credit accounts come with a ‘credit’ card, whereas transaction accounts come with a ‘debit’ card.
Good to know
- details – the features and mechanics may differ, like interest rates, interest-free periods and special rewards.
- fees and charges – yearly fees and other payments might be hidden, aside from in the fine print.
- limits – limits on spending, including minimum monthly spend, may apply.
How is credit different to a loan?
A bank loan is similar in that you borrow money in advance and must pay it back to the bank with interest. The difference between a loan and credit is that a credit card can be used at any time for spending on whatever you’d like, while loans are usually taken out for a specific purpose and approved by your bank on a case-by-case basis.
What you can do about risk
The risk with a credit card is that you end up going into more debt than you’re able to pay off. So when choosing a credit account and using credit, think about not only your immediate need but also how you’ll manage the debt without going over your head.
What to look out for
- budget for how much you spend and how much you can pay off each month
- find a card with low-interest rates and low fees
- try to pay your bills on time and try to avoid debt growing through interest
Comparison sites
You might have seen comparison websites for things like loans, credit cards, insurance or superannuation funds. These sites offer explanations of products, reviews and ratings, and price comparisons. They can also help you to decide what’s best for you. Though before you act on any recommendation, it’s important to know how comparison websites work.
- they are there to make a profit – sites often take money from banks and other service providers to advertise their products at the top of lists, so make sure to read about how they’re rating and reviewing products.
- they might not be comprehensive – the sites might not list everything that’s available, so, you might want to look at multiple sources before deciding.
Direct debits and automatic transfers
A direct debit is an automatic transaction where money is withdrawn from your account on a regular basis without any authorisation needed from you after the first transaction.
What it’s for
Direct debits are often used to pay businesses for services like electricity, gas, water, internet and phone bills. Some utility retailers offer a discount on their plans if you pay by direct debit.
You must sign a ‘direct debit authority form’ when setting up a direct debit. This gives the business the authority to access the amount owing on your bill from your bank account. If the bill changes from month to month, the debit also changes.
Is an automatic transfer the same thing?
With an ‘automatic transfer,’ you can tell your bank to send money to a company or person, once or on a regular basis, without the need to sign a form. The difference is that you’re giving permission for a fixed amount to be transferred, not an amount that may change from time to time, like an electricity bill.
📌 For other types of electronic and digital banking information see our ways of paying page.
How it helps and otherwise
Some people use automatic transactions as a budgeting tool – for example, to make sure money goes to where it needs to go as soon as it’s available.
However, you could lose track of any transactions you’ve set up and pay more than you intend if they aren’t budgeted for. You might even overdraw your account and be charged fees for this and/or late payment fees by providers.
Tips for paying safe
- be sure you trust the recipient/payee
- create a system for keeping track of all your automatic payments
- always have enough income to cover automatic payments
- cet up dedications for after pay-day so you have money in the account
Where to find information
Direct debits from savings and cheque accounts
Direct debits from credit cards
Online banking
All banks give you the ability to manage your accounts online, which can be more convenient and faster than waiting on the phone or in line at a bank branch.
You can manage your accounts from anywhere there’s an internet connection. So for people without online access, internet banking is not an option.
Is it safe?
Banks run very secure websites as they are required by law to keep their customers’ money safe. But as with all things on the internet, you should exercise caution and make sure that your account is secure. For example, making use of features like ‘two-factor authentication’ and also setting up a unique password is wise.
Where to find information
Find government short courses on using online banking
📌 See our paying bills and protect yourself online pages.
Banking consumer rights
The law entitles consumers to be treated fairly by the banks. As it relates to your money, your rights include:
| Security and privacy | Have your money kept safe and secure. Conduct your banking in a safe environment. Have your privacy respected and your personal information treated confidentially per any terms you have accepted. |
| Information | Be kept informed about the banking products and services you use, and any changes to the terms and conditions of those products. Be given the information you need to help make an informed decision about whether to use a product or service. |
| Support | Have access to a complaints process. Have access to information about financial hardship arrangements. |
Banks have a track record
Despite being trusted service providers, banks sometimes operate unfairly. The 2019 Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry found that some financial services institutions had been operating either illegally or at least unethically. If you feel you haven’t been given fair treatment according to your consumer rights, you can make a complaint.
Know where you stand
Even operating within these consumer rights, banks are large organisations with lots of resources, and they work to make a profit. This means that as individuals, we are often at a disadvantage when interacting with banks, and they can take advantage of that. So, it’s important to be knowledgeable, and wary, and to know who to turn to for help.
Who can help you with banking?
Find out how to make a complaint and see who can help you if you need to challenge money coming out of your account.
Cancelling a direct debit
You should contact your bank if you want to cancel a direct debit and can’t do so through the business. If you believe there has been an unauthorised transaction, be sure to act quickly.
Pre-form letters to use:
Instruct your bank to cancel a direct debit authority
Instruct a business to cancel their direct debit authority
Hardship departments
Banks and lenders usually run ‘hardship’ departments that are staffed by people whose job it is to help their customers through times when they’re having difficulty paying for fees, debt, and other bills.
Good to know
The law requires banks to give fair treatment to customers, whatever their circumstances. Even if payment comes late, banks would rather they are paid for their product and retain you as a customer than cut you off or chase you for a debt.
What you can do
There are options available to you that could help you reduce, postpone, or spread out bill payments. You can ask your insurer for help with:
- payment extensions
- payment plans
- payment matching
- concession information
- financial counselling service referrals.
Where to find information
Find bank hardship departments – and more at the Australian Banking Association
Negotiating payment terms – pointers from the National Debt Helpline
Template letters – pre-written letters from the Consumer Action Law Centre (and also National Debt Helpline)
When contacting providers, it’s wise to keep a record of when you called, who you spoke with, and what you discussed.
Making a complaint
If you feel you haven’t been treated fairly – especially as it relates to your rights under the law – go direct before approaching an external authority. The course of action recommended by the Australian Financial Complaints Authority (AFCA) is to make a complaint directly with your bank in the first instance.
Contacting the ombudsman
If your complaint hasn’t led to a satisfactory outcome and you feel like you haven’t been treated fairly, you can contact the ombudsman.
Ombudsmen are independent agencies that help to resolve disputes between people and companies or government agencies. It’s a free and independent service, and while the process can be lengthy, your complaint, once submitted, will be resolved.
For financial complaints relating to payment systems disputes, contact the Australian Financial Complaints Authority.
Illegal activity and misconduct
If you believe a bank or other financial institution has engaged in illegal activity or misconduct, contact the Australian Securities and Investments Commission (ASIC) or call them on 1300 300 630.
This information was last updated 5 June 2023.
The links and resources in this article have been compiled and reviewed by the Brotherhood of St. Laurence. We aren’t responsible for what you’ll find at the links, though we do hope you find the information useful. See our disclaimer if you’d like to know more.
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