18 Jul 2022 | 3 min
Overview
  • From round-ups and no withdrawal fees to conditional interest rates, there are loads of ways to take advantage of different account types.
  • If that all sounds Greek to you, don’t worry - we’ll take you through the basics when it comes to setting up your bank accounts.

If you’ve moved on from stashing away your chore money in a shoebox under the bed, but you’re finding all the jargon about round-ups, conditional interest rates and scheduled transactions just a little much atm, don’t worry - we’re here to help.
Let’s take a look at the two most common types of bank accounts you can open up and how you can use them together to make your money feel more manageable.

Transaction accounts

Transaction accounts are designed to help you manage your everyday spending and saving.
You’ll usually be given a debit card when you open a transaction account, which you can use for your everyday shopping and expenses. Buying groceries, paying bills, the list (unfortunately) goes on. Just remember that unlike a credit card, you can’t spend more money than you have in your account - your card will be declined or you can go into a negative balance, which usually means you’ll cop an extra fee on top.

Your transaction account will usually be the one you’ll get your salary paid into before moving it to a savings account as well, so if you’re trying to do a bit of budgeting it’s worth having a look at some features you can use to help save money.

For instance you could set up a recurring payment to transfer money every week into your savings. If you have a Westpac account you can also enable transaction round-ups, which can be set to put money aside for savings every time you make a transaction.

A couple of things to keep in mind with transaction accounts are account management fees and interest.

If you’re an eligible tertiary student or aged between 14 and 29, you don’t have to pay a monthly fee at all for an everyday bank account with Westpac.

We go into interest in more detail over here, but most transaction accounts will have a low interest rate or no interest rate at all. But don’t worry, because that’s where savings accounts come into play.

Savings Accounts

Compared to transaction accounts which are made for moving money around on a daily basis, savings accounts are at their best when you’re putting in plenty of money and withdrawing money as little as possible.
They usually won’t have a card attached, which means you’ll need to transfer money out of your savings account and into your transaction account in order to spend it.

These accounts have higher interest rates than transaction accounts, which means that your savings will grow over time based on how much money you have in there.

Some savings accounts will have ways that they try to encourage you to deposit money into them and avoid taking money out. For example, if you have a Westpac Choice account (one of their transaction accounts) and a Westpac Life savings account, if you make 5 or more transactions using your debit card and grow your savings account balance every month, you can earn a bonus interest rate!

Now that you’ve got the basics down when it comes to the two most common types of accounts, you can see how each one brings something special to the table, and how you can make them work together to manage your money better than ever before.
If you’re looking to make spending and saving your money easy-as, you can take a look at Westpac’s Spend&Save initiative over here.

The following content has been created by Year 13 and is sponsored by Westpac.