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Accounts

How to open a bank account in Australia

The most common account for day-to-day money management is a current or cheque account (commonly called a transaction account in Australia), which provides ATM access, a cheque book, an EFTPOS card, the facility to pay your regular bills by direct debit, telephone banking and possibly other services, such as an overdraft facility.

Many people have at least two accounts: a current account for their out-of-pocket expenses and regular transactions, and a savings account for long-term savings. Before opening an account, compare banks’ charges and fees, interest rates (e.g. on credit cards and deposits) and the services offered by a particular financial institution or account.

If you’re planning to work in Australia and are paid fortnightly or monthly, one of your first acts should be to open an account with a bank, building society or credit union. Your salary is usually paid directly into your account by your employer, and your salary statement is either sent to your home address or given to you at work. Employees who are paid weekly or fortnightly are often paid in cash, in which case it’s up to you whether you open an account (although it’s difficult to manage without one). New arrivals can open an account during their first six weeks in Australia with just a passport.

When opening an account by post, attach a certified photocopy of the pages of your passport showing its number and expiry date, and your signature, photograph and visa (if available). You may also need a copy of your driving licence. If a copy of your passport is sent by post, it must be certified by a professional person (such as a doctor, lawyer or teacher) or a person of similar standing with a public position, such as a civil servant, councillor, member of parliament or police officer.

Banks and other financial institutions are required by law (under the Financial Transaction Report Act, 1988) to verify the identity of each signatory to an account. To meet this requirement, you must provide either a reference from a reputable person or specific identification documents.

Most people pay their bills from their current accounts, either by standing order or by cheque. Bills can also usually be paid by telephone by simply quoting your account details. Bank statements are usually issued monthly (optionally quarterly), and interest is normally calculated daily and paid quarterly.

Transaction accounts pay very little interest on account balances, e.g. from 0.1 to 0.5 per cent. If you regularly have $1,000 or more on deposit, you should consider keeping it an account that pays a ‘reasonable’ interest rate. The minimum opening balance may be as low as $1, although you should bear in mind that you usually need to maintain a much higher balance in order to avoid bank fees and charges.

Savings Accounts

All banks, building societies and credit unions provide a range of savings accounts, usually referred to as deposit or investment accounts in Australia, many of which are intended for short or medium-term savings, rather than long-term growth. Other types of savings account include cash management trusts, deeming accounts, mortgage offset accounts and savings investment bonus accounts. Retirement Savings Accounts (RSA) are a kind of superannuation fund.

Most banks and building societies have two basic types of savings account: instant access and term deposit accounts. Instant access accounts, as the name says, allow you instant access to your money. There’s usually a minimum balance, which may be as low as $50 or as high as $5,000. With some high-balance accounts, all deposits and withdrawals must be over $1,000. Interest rates usually depend on the account balance, e.g. $500, $1,000, $5,000 or $10,000.

Non-residents are subject to a withholding tax of 10 per cent on the income earned on bank deposits in Australia; this is deducted at source when interest is paid.