With everyone trying to tighten their budgets, many are looking for innovative ways to save and stretch their money. It's no wonder then that low-cost banks are drawing an increasing amount of attention. For those who want to make the most of their money, the benefits are obvious. Low-cost accounts offer many of the same features of a regular account but at a fraction of the cost. However, not all low-cost bank accounts are created equal. To ensure that lower banking fees don't come at a cost of reduced functionality, you have to look for certain features.
It must do everything your old account can do
It would be counterproductive to save on banking fees if you then had to pay for services that weren't provided by your low-cost bank account. When looking for a bank account designed to save you money, look for the same features your regular bank account offers:
- Debit orders
- POS swipe
- Online banking
- Mobile app
- Online airtime, data, and electricity purchases.
It must make banking cheaper
The low-cost bank account you choose should save you money on bank fees regardless of how much you spend. Of course, how you use your low-cost account will determine how much you save on bank fees, and it would be wise to look at how low-cost bank accounts make banking cheaper. The largest savings are realised when you choose to withdraw and deposit at the till instead of the ATM or branch, but there are many other ways that low-cost bank accounts help you save money on bank fees.
The best way to establish how much your new account can save you is to compare the costs of a dozen transactions with those made on your old account. Do this by getting an account statement from your bank, highlighting all the banking charges and adding up the total. Then work out how much the same transactions would have been on the low-cost account.
It must include a savings pocket or account
Many people who open a low-cost account have a savings goal in mind. Some have a separate savings account or a savings pocket in their transactional account, but there are shortcomings with both approaches. An external savings account can be self-defeating if it costs you to get money into and out of it. And a savings pocket doesn't give you the high interest rate that you'd enjoy with a dedicated savings account.
The ideal low-cost account is one that grows your money through a linked high interest savings account and allows you to transfer money to and from it easily and without charge. With our Money Account, savings are invested in the Old Mutual Money Market Unit Trust Fund, an investment fund that offers an average rate of return of 7.1% per annum. And, because the investment account is linked to the transactional SWIPE account, transferring money between accounts doesn't cost a thing.
It must be travel ready
Gone are the days of having to carry large amounts of cash with you when you travel. Not only is this unsafe, but it is also unnecessary. The easiest and most efficient way to access your cash when overseas is to open an account that lets you use your bank card internationally.
Usually, this convenience comes at a price, so it's important to compare international banking fees when looking at the various bank accounts on offer. Swiping might only cost a few extra Rands, but international ATM withdrawals can cost as much as R50 with some banks.
It must be secure
Keeping your money safe and secure should be a main priority at all times. Choose an account that offers safe and secure online and mobile banking as well as additional security features like letting you turn your card on and off. This function negates the need to cancel and order a new card while also giving you complete control of the accessibility of your funds.
For more useful money-related tips, sign up for our Money Mailer. In this free monthly newsletter, we serve up articles on topics ranging from saving to borrowing and everything in between. If you've ever wanted to know how to save for university, how to reduce your living expenses, or how to improve your credit score, the insights in these articles can leave you wiser, wealthier, and better equipped to make the most of your money.