Australian Banking System

Our guide on opening an Australian bank account.

Australia has an excellent banking system and probably owes its avoidance of the global recession in part to its banking system. The Global Competitiveness Report of 2008-09 ranked Australia’s banking sector as 4^th in the world for its soundness and Standard & Poor rated the banking system as the most stable in the Asia-Pacific.

Banking is Australia is very similar to banking in the UK. There are four major Aussie banks; National Australia Bank; Commonwealth Bank of Australia; Australia and New Zealand Banking and Westpac Banking Corporation as well as many smaller and regional banks. There are also a variety of building societies, credit unions and finance companies.

Most of the banks offer a variety of services including current and savings accounts, internet banking, credit cards and telephone banking. You can also access your cash at one of the many ATM machines around Australia, usually for free. You can also withdraw cash from most major retailers.

There may be a monthly fee incurred if you go over your agreed number of transactions, but many banks will waive the fee if you keep your balance to an agreed minimum or limit your transactions.

Current Account/Transaction Account

The most common type of bank account and one that most Australians use to pay in their wages and pay out their bills, mortgage payment and so on. With this account you’ll get an EFTPOS card that allows you to draw money out of the ATM machines and to pay for most transactions.

Once you arrive in Australia you should make opening a bank account one of the first things you do as many employers will want to pay your wages straight into your account. You can open an account during your first six weeks in the country by simply using your passport as your ID. If however you want to open an account by post, perhaps before you arrive in the country, then you’ll need to send in a photocopy of your passport, your signature, a copy of your visa and possibly also your driving licence. To authenticate these copies you’ll need to get a professional to sign it testifying that these pieces of ID are genuine and belong to you. A professional could be your doctor, MP, local councillor or even teacher.

Once you open an account by post you will be obliged to visit the bank when you arrive in Australia to confirm your identity in person.

Typically banks pay the minimum amount of interest on current accounts so if you think you’ll regularly have more than $1000 in your account you may want to consider a savings account.

Bank charges

Australian banks levy a larger number of fees than the British banks so be warned! Some of the things you might be charged for are; balance enquiries, money transfers, monthly account charges and overdraft fees – although the latter may be on the way out after the National Australia Bank decided to scrap their penalty fees last October closely followed by Central Banking Australia and Westpac.

If you decide to get a credit card in Australia you may also be stung with an annual fee – just for having the card!

Savings Account

One of the best things about saving in Australia is that your money is protected by the Federal Government, so should the banks suffer a crisis like those in the US or the UK, your money is guaranteed.

There are a myriad of savings accounts to choose from either on the High Street or the internet. If you want access to your money then many banks and building societies offer accounts that do not require a minimum balance and offer unlimited withdrawals, nor will you be penalised by taxation as deposits and withdrawals on saving accounts are not taxed.

Interest rates on savings accounts are attractive in Australia, ranging from around 3.5% to 6%. In fact some banks are offering a fixed term rate for one year of up to 6.45% with no minimum amount required. But if you do decide on a higher rate of interest there will be restrictions on withdrawals or contributions with fees payable if you break the terms, so do make sure you know what you are getting into. However if you have a little bit you can set aside, many of the fixed-term accounts offer great deals!

If you want instant access to your account you can still get a good interest deal with unlimited withdrawals. It’s best to compare a few savings accounts to find the one that’s right for you.