Saving by paying less bank fees

Ideas to help you save by reducing your banking costs.

Understanding bank fees and how to avoid paying them unnecessarily can help to free up extra money for your savings.

Combine and reduce

If you’re not using an account, close it and move the money to one of your other accounts. If you have a number of smaller debts – such as personal loans, hire purchase, credit cards and store cards – it can be a good idea to combine them into one loan at the lowest possible interest rate. Or ask your bank if you can combine other debt with your home loan, which is usually at a lower interest rate. It’ll be easier to manage, you’ll pay less interest and you could save on fees.

Pick the right sort of account

Think about how you’ll use your bank account and choose one that charges little or no fees for those services. There are three main types of accounts: current accounts for everyday banking, online accounts and savings accounts.

  • Current accounts, also known as transaction accounts, usually have lower fees but pay little or no interest
  • Online accounts tend to have the lowest fees of all, provided you do all your banking online
  • Savings accounts pay you more interest, but charge a fee when you do things like take money out of the account or get a statement printout from a bank teller

Think about how you pay for things

If you pay fees each time you buy something with EFTPOS, they can add up to large sums of money over the year. You can save by getting enough cash from an ATM to cover several purchases at a time. Another way to save money, if you just want a small amount of cash, is to ask a retailer if you can get cash out when you’re paying for something by EFTPOS. It’s up to them, but it can save you paying another withdrawal or ATM fee.

Avoid the cost of spending more than you have in your account

If you pay for something by cheque, direct debit or automatic payment and there isn’t enough money in your account, some banks will charge you a fee, such as an honour or dishonour fee for sorting it out. BNZ doesn’t charge these fees. To help avoid fees being charged you could set up text alerts to let you know when your money is getting low, or consider getting an overdraft facility. An overdraft lets you overdraw your account (borrow) up to a certain amount to cover spending blowouts. An overdraft comes with costs – interest charges, ongoing maintenance and set up fees. But these could add up to less than paying honour or dishonour fees. An overdraft facility is a form of lending, so the bank will use normal credit/lending criteria to assess your credit-worthiness.

Tip

Remember, it’s always better to keep your spending within the limits of your income. Don’t borrow unless you really have to.