What’s the difference between a transaction and a savings account?

What is a transaction account?

A transaction account acts as the workhorse of everyday banking. In fact, transaction accounts are often also called everyday accounts.

 

They’re used for routine deposits – usually this is the account you'll get your salary paid into – and other everyday transactions. Your day-to-day purchases or expenses can be paid via a linked debit card, online and mobile banking, as well as automatic debits to pay bills and other expenses. 
 

What features should a good transaction account have?

There are a few things a good transaction account should have. Firstly, you need easy access to your money, so a linked debit card could be handy. You'll be able to use your debit card for withdrawing money at an ATM, or for shopping in-store or online.

 

When you open a Westpac Choice transaction account and a linked debit card (you’ll need to request this if you’re under 14), you’ll also receive a digital version of your debit card if you take advantage of Online Banking in the Westpac App, which you can use while waiting for your physical card to arrive. Link it to Apple Pay™, Google Pay™, Fitbit Pay™, Samsung Pay™ and Garmin Pay™ to make contactless payments with your mobile or wearable device.

 

It’s always helpful to be aware of any ongoing account fees, too. The most popular Westpac bank account is a Choice everyday account. This account waives the monthly account-keeping fee for customers that deposit at least $2,000 each month, customers under the age of 30 or full-time tertiary students, or those new to Australia (having arrived in the last 12 months). Otherwise, a $5 Account-keeping fee applies.

 

Finally, look for any other features or benefits. Another Westpac Choice benefit is the option to earn bonus cashback when you use your linked debit card at ShopBack – an online shopping and rewards platform with over 4,000 brands. 

 

How to open a transaction account

Most Westpac transaction accounts can be opened online, some in as little as three minutes! To open a bank account online, you’ll need to be at least 14 years old with an Australian residential address. You’ll also need: 
 

• Your mobile phone
  
  
• At least one of these forms of identification: 
  
  - Passport
  
  - Medicare card
  
  - Australian driver’s licence
  
  - Australian birth certificate
  
  
• Your tax file number (TFN) is not compulsory but helpful 
   

Providing two forms of ID gives us a better chance to securely verify your ID online, saving you from visiting a branch.
 

What is a savings account?

A savings account is designed for you to, you guessed it, save money. It could help you accumulate money towards your life goals, and earn interest on the money you save, sometimes with bonus interest incentives.
 

What features should a good savings account have?

An important feature to look for in a savings account is the interest rate and how it is paid. Different savings accounts offer different interest rates, bonus rates, and requirements around minimum deposits or limited withdrawals.

 

A high interest rate might be the most alluring factor in your decision but be sure to consider other features or conditions. If that interest rate is short-term, or means you need to take other steps like grow your account or limit access to your account, it might not be your only deciding factor.

 

Another important aspect to watch out for is account fees. If you’re paying more in fees than what you’re saving, you’re going backwards! Check for monthly fees, withdrawal fees, or transaction fees for transfers. 
 

Different types of savings accounts 

There is a range of different savings accounts to choose from, depending on how often and how much you’re saving, and whether you need access to your money.

 

Westpac Life: This account offers bonus interest every month you grow your savings by the last business day each month (even if you withdraw money within that month). You can allocate your savings within the account feature for up to six different goals, all in the one account. And there are no monthly or online transfer fees.

 

Westpac eSaver: If you’re more of a short-term saver, this account offers a bonus introductory rate for the first five months. There’s no minimum deposit or monthly balance required. There are no monthly or online transfer fees with this account. 

 

Bump Savings: This account is designed to help children and teens under 18 get into the habit of saving. There’s a bonus each month you grow your savings, and you can set savings goals. No monthly fees or transaction fees means your money can be working hard earning interest. 

 

Term deposits: If you’d like to lock your money away for a set period of time with a fixed interest rate, consider a term deposit. Choose a term from one month to five years, and you’ll know exactly how much you’re going to earn over that time. When the term expires, you can choose whether to withdraw the funds or reinvest them. 

 

How to open a savings account

Most Westpac savings accounts can be opened online. However, when you open a savings account or term deposit online, you’ll also need to open a linked transaction account to transfer funds in and out of it, if you don’t already have one.

 

If you want a transaction account for your everyday banking, plus a bank account for your savings, you can open both accounts online.

 

So rather than choosing to use either a transaction or a savings account, they can go hand-in-hand to help you manage your money for different purposes.

 

If you’re aged 18-29, you could earn bonus interest when you Spend&Save using the Westpac Choice everyday and Life savings accounts together.

 

If you’re under 14 and opening a Bump Savings account, you’ll need a parent or guardian to open your account with you. If you’re 14-17 you can open your Bump Savings account by yourself, but still have the option of sharing access with your parent or guardian. 
 

Managing your money on your phone 

The Westpac App has recently been named Australia’s overall best mobile banking app and has a range of budget tools that could help you manage your savings and transaction accounts. A simple dashboard gives you good visibility of your ins and outs, helps you track your spending each month, and compares your spending across different categories.

 

Using the Split Group Expenses feature in the Westpac App, you can also split expenses with up to 10 groups, each containing a maximum of 20 people. You can split expenses equally or into different amounts per person.

 

Then of course, you can set up direct payments for regular bills, including the option of transferring money from your transaction account to your savings account.

 

Keeping your money safe 

Whether you’re opening a transaction account, a savings account, or both, it’s crucial that your accounts are secure, and your money stays safe. Some of the security features Westpac offers include 24/7 fraud monitoring and a Fraud Money Back Guarantee.  For peace of mind, we can also send a one-time SMS Code to your mobile to authorise any online transactions.

 

Finally, debit card security features include a dynamic CVC for your digital card. This is a temporary Card Verification Code generated in the Westpac App, which is different from the three-digit CVC printed on the back of your physical card. A dynamic CVC changes every 24 hours for security purposes.

 

Then, if you’ve misplaced your debit card, you can immediately lock it while you look for it, and unlock it when you find it, all by using the Westpac App. 

 

To sum up

While transaction accounts generally offer convenience for day-to-day banking, savings accounts have the ability for your money to grow over time thanks to interest. So, it’s simple to see how transaction and savings accounts can work in tandem to help you manage your money.