WHAT TO LOOK FOR IN A LOW-COST BANK ACCOUNT

Banks are a bit like sheep in that as soon as one starts doing something, the rest soon follow suit. Low-cost bank accounts are a prime example of this phenomenon. Initially, these stripped-down, simple and cost-effective accounts were offered by a few innovative banks, but as demand for these accounts has risen, so has the number of banks offering them. With a plethora of options available, the question now is how do you choose a low-cost bank account? Here, Old Mutual gives you some pointers.

Uncompromised functionality

If you are looking to change accounts to a low-cost bank account, you’re going to want to be able to use the functions you currently use, but at a reduced cost. You don’t want to have to pay for features that were once free, thereby raising the cost of an account that’s supposed to be cheaper. Make a list of all transactions you’re likely to make in a month (a bank statement will be useful), and then make it your mission to find an account that offers these functions, minus the bells-and-whistles that make some accounts more expensive.

Low fees

When you research the various low-cost bank accounts, do a little math. Make sure that the account you choose is actually cheaper at the end of the day. Take a look at your of list necessary functions and transactions and work out how much you’re currently spending on bank fees. Then work out what the difference would be if you went with a specific low-cost account. Determine how the low-cost bank account will help you save – is it by drawing at till points instead of at ATMs? Are the monthly fees lower than you have been paying?

A savings function

For the most part, people look at low-cost bank accounts because they’re trying to save. And so it might be obvious that the ideal low-cost account will have a savings feature or account linked to it. This should offer both a respectable interest rate (6% doesn’t even beat inflation) and transfers between accounts at no additional cost. You also shouldn’t have to pay anything extra for the savings account.

Ready to travel

Many low-cost bank accounts are just as well suited to making international transactions as their more costly counterparts. Just check what the international transaction costs might be when doing your homework. You want to avoid any nasty surprises when you see your statements. Know how much it costs to draw from an international ATM and how much it costs to swipe. Also keep in mind that you’ll probably also have to pay an extra fee to local banks for their services.

Secure

Bank accounts need to be secure, and a cheap bank account is no different. Look for those bank accounts that offer innovative security features, and consider the all points of access to your account: the card, app, and online banking. With one innovative low-cost bank account it’s possible to turn one’s card off and on, meaning that you can deactivate it as soon as it’s stolen.

Learn more

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