The best bank accounts and credit cards for managing your everyday finances

Being an investor isn’t just about signing up to InvestNow/Sharesies/etc. and picking the right fund to invest in. We investors need the support of good products and services to help manage our everyday finances. This could include:

  • Transaction accounts to receive money and make payments
  • Savings accounts to keep spare cash and emergency funds
  • Credit cards to pay for our expenses
  • Services to transfer money to/from overseas

In this article, I’ll share my thoughts on what the best bank accounts, credit cards, and services are for managing our everyday finances in New Zealand. As a bonus I’ll also share what I think is the best Children’s bank account in NZ, and the best Australian bank account.

Best Transaction Accounts

Good transaction accounts are critical as they’re used to receive money from your salary/wages, dividends, and more. They’re also used to pay your money out to bills, expenses, and to distribute your money into investment platforms. For me, pretty much all of my money moves through my transaction account at some point.

What I’m looking for in a transaction account:

  • No account fees
  • No transaction fees or limits, so you can move money in and out freely
  • Ability to make direct credit payments to any NZ bank account
  • Ability to link your account to an EFTPOS card so you can spend your money in stores

ANZ, ASB, Kiwibank, and Westpac Transaction accounts

ANZ logo

Chances are the bank you’re already with offers a free transaction account. These are:

You will usually need to pay fees for extras such as having a debit card (although EFTPOS cards are free), paper statements, and manual transactions (those done at a physical branch).

BNZ is the only major bank to not feature here as they charge a $5 monthly fee on their YouMoney account.

Heartland YouChoose

Heartland bank logo

Heartland YouChoose is an interesting product, combining a transaction account, savings account, and overdraft facility all into one. They pay a solid 2% interest rate on positive balances, while giving you the ability to make withdrawals at anytime via EFTPOS or Direct Credit. The YouChoose account gives you huge flexibility without any account or transaction fees, but it could be inconvenient to move all your transactional banking over from your existing bank.

Best Savings Accounts

Money we’re not immediately using or investing (such as emergency funds) should be kept in a savings account. This ensures your money is earning interest for you, rather than remaining idle. The interest from savings accounts won’t make you rich, and may not even beat the rate of inflation, but it’s better than earning nothing, or risking your emergency funds in volatile investments like shares.

What I’m looking for in a savings account:

  • High interest rate compared to similar accounts
  • Money is accessible without any charges or penalties

Just one thing to keep in mind for the below savings accounts is that the rates for them are not fixed, and are likely to fall as wider interest rates drop.

Heartland Direct Call account

Heartland bank logo

The Heartland Direct Call Account allows you to make free and unlimited withdrawals to a nominated transaction account, and doesn’t have any minimum deposit requirements. It currently offers a rate of 1.90%, which is much higher than any other account offering the same level of access to your money.

The main catch is that it takes one business day for you to receive your withdrawn funds (e.g. if you make a withdrawal after 7pm on Friday, you’ll have to wait until Tuesday to receive your funds). In addition, you can only withdraw money out to one account that you’ve linked to it (this can be any account at another NZ bank) – you can’t make withdrawals directly to other accounts.

Kiwibank 90 day Notice Saver

Kiwibank logo

The Kiwibank 90 day Notice Saver offers one of the highest interest rates you’ll find at a major NZ bank, currently at 2.70%. It has a minimum deposit amount of $2,000 and is a PIE fund so tax on any interest earned is capped at 28%. While it is not suitable for holding funds you might need quickly, due to the 90 day notice required to make a withdrawal, a strategy for managing your emergency fund might be to:

  • put 3 months worth of expenses in the Heartland Direct Call account
  • put your remaining emergency funds in the Kiwibank Notice Saver account.
  • If emergency strikes, you can withdraw funds from Heartland immediately, and start the 90 day notice period so you’ll have more funds available to you in 90 days time.

Alternatively Rabobank offers a 60 day Notice Saver at 2.75%, and Westpac offers a 32-day Notice Saver at 2.00% (also a PIE fund). These two accounts have no minimum deposit requirements.

Best Credit Cards

Many would argue against using credit cards because they encourage excessive spending and accrual of debt. My opinion is that credit cards can help us when used in the right way, as their use can come with benefits such as rewards points. Their use does require discipline! – to not overspend, and to pay off the balance in full every month to prevent interest being charged – so may not be suitable for everyone.

What I’m looking for in a credit card:

  • No account fee
  • Benefits for using the card, such as rewards points

American Express Airports Card

American Express logo

The American Express Airports Card has no account fee and awards 1 Airpoints Dollar for every $100 spent – a rewards rate that is incredibly rare for a fee-free card.

The main drawback is that American Express isn’t widely accepted, but you’ll be fine using it with major retailers. Also, almost all EFTPOS terminals (except for at Countdown supermarkets) don’t allow you to use contactless payments (i.e. payWave) with an American Express card, so you must use Chip and PIN.

ASB Visa Light

ASB logo

ASB Visa Light has no account fee, and offers a “Smart Purchase” feature instead of rewards. Currently, the Smart Purchase feature gives you 6 months interest free on purchases over $1,000. The interest free period can be used to your advantage by:

  • Spreading the cost of a large purchase over 6 months
  • Earning 6 months worth of interest on your money, before the card has to be repaid in full
  • Using it to complement the Kiwibank 90 day Notice Saver. For example, if you need to make a large purchase, do so using the Visa Light card, and start the 90 day notice period so that your funds are ready in time for you to repay the card’s balance.

The Smart Purchase feature is really designed by ASB to encourage people to spend more and rack up debt, so do use it with care. Those who don’t have the discipline to do so may best avoid the card, while those that do can benefit from the above advantages.

Best Services

TransferWise

Transferwise logo

Being a diverse nation, many of us in New Zealand have family connections or investments overseas, and need to transfer NZD to/from foreign currencies. I recommend TransferWise as one of the cheapest and fastest money transfer services out there. They also offer a multi-currency Debit Card which is handy for overseas travel.

I did a very quick comparison of four money transfer services to exchange $1,000 NZD into four different currencies, and TransferWise came out on top for all of them. Below are the amounts I’d end up with by using each service (comparison done 26 July 2019):

AUDGBPUSDHKD
TransferWise952.17530.70659.305,157
Western Union951.35530.18644.765,144
ANZ943.10525.30653.205,103
PayPal914.39510.31642.184,992

Special Offer: Sign up to TransferWise using this link and you’ll get a fee-free transfer of up to £500.

Bonus: Best Children’s Bank Account

Co-Operative Bank Youth accounts

Co-opertative bank logo

Children need bank accounts too, particularly if they want to learn about money and good savings habits. Co-Operative Bank’s Youth accounts have no account or transaction fees, and allows parents to gradually add online banking and EFTPOS access to the account, when their child is ready for them. Although, the real outstanding feature of Co-Op Bank’s Youth accounts is the massive 4% interest rate paid to balances under $4,000. For those 18 or over, Co-Op Bank also offers a similar product to tertiary students.

Bonus: Best Australian Bank Account

NAB Classic Banking account

NAB logo

3 out of 4 of Australia’s major banks (ANZ, Commonwealth Bank, Westpac) charge a $5 monthly fee on their accounts, unless you make a deposit of $2,000 or more every month. NAB is the exception to this with their Classic Banking account. This account has no account fees and no deposit requirements, and a debit card is included for free.


Do you have any other favourite bank accounts, credit cards or services? Let me know on Facebook or Twitter!

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Disclaimer

The content of this article is based on my personal opinion and should not be considered financial advice. The information should never be used without first assessing your own personal and financial situation, and conducting your own research. You may wish to consult with a qualified financial advisor before making any investment decisions.