Planning on opening a bank account, but don’t know which type to get, or which bank to go to? With so many options these days, it can be overwhelming. To help you figure out which bank account type is perfect for your needs, here are the things you need to consider first.
Bank account type
There are different account types available, and some of these can be tied to each other for more flexibility. Here are the most common ones:
- Savings account - If you want an account that lets you save and earn interest, go for a savings account. The interest rate depends on the bank and usually on the balance of the account. Keep in mind though that you might need to maintain a minimum balance in order for the account to earn interest. You can also use this account for deposits and withdrawals. Some banks may be willing to pay higher interests if you haven’t made any withdrawals from your account within a time period.
- Transaction account - This type of account is what you need if you’re looking for a hassle-free way of handling bills and other everyday transactions. Also known as a cheque account, you can use this to pay for utility bills and shopping. This account usually doesn’t earn interest so it won’t help you save money in the long run. A transaction account usually has a monthly fee, and you can get a cheque book with it.
- Term deposit account - If your main reason for opening an account is to save money or invest, a term deposit is what you need. This account earns higher interest compared to a savings type, but you’ll need to maintain a higher minimum balance. You’re also required to leave the money for a longer time period or term. Once the term ends, the interest is paid out. The interest rate depends on the bank, but it’s usually a fixed amount.
Flexible banking options
To make your life easier, choose an account that includes flexible banking options. Electronic and online banking allows you to withdraw, deposit, make payments, or transfer funds via an ATM or Internet. This is very handy if you frequently do most of your transactions through the ATM or online to avoid the long queue at the bank. Flexible options also means you can easily access your money even if you’re abroad or travelling.
Depending on the type of services an account includes, you might have to pay for additional fees such as overdraft, fund transfer, and ATM charges. If the account you’ve chosen has a monthly fee, ask your bank if you can waive it. Some of these charges can actually be avoided. One good example is the ATM charges, which you can avoid by withdrawing or depositing money only through your bank’s ATMs.
For your convenience, choose an account that’s issued by a bank with plenty of branches nationwide. This makes it easier for you to find an ATM or a bank to process transactions. An international bank with branches in other countries is an ideal choice if you frequently travel or do business abroad. Choose a bank that has a branch near your office so you can conveniently pay bills and handle other transactions during your break or right after work.
When applying for a bank account, make sure you’ve prepared all the necessary requirements. Proofs of identity that are accepted for bank applications include your birth certificate, utility bills, Medicare card, driver’s license, and other government-issued IDs. Once you’ve submitted the requirements and application form, it’ll usually take five to ten days to process your documents. For other personal finance tips, check out the Alpha Finance Blog.