The strategy: To switch bank accounts.
Oh god, that is such a hassle. Do I really want to do that? There's no doubt banks have benefited from customers' reluctance to jump through all the hoops required when switching bank accounts. But from July 1, new reforms have made the process (a bit) easier.
Instead of having to chase around and work out who you've given your account details to for direct debits and credits, and then notifying each one individually of the change, you can now get your new bank to do the legwork.
How does that work? If you ask your new bank for help, it will contact your old bank to get a 13-month list of your direct debits (things like regular bill payments) and direct credits (like your salary). You can then authorise your new bank to give all these people your new account details, or go through the list and select which of them you'd like to move across to your new account.
According to the government's financial information service, MoneySmart, you can also ask for the list from your old bank yourself and take it to your new bank. But hey, why not get your new bank to do the work?
MoneySmart says it is important to remember the 13-month list won't include ''pay-anyone'' payments you have set up through internet banking, such as your fortnightly babysitter or cleaner's payments. It also won't include BPAY payments and recurring payments where you have supplied your debit-card number. You'll still need to sort these out yourself but your new bank can show you how.
A good starting point is to get a printout of your pay-anyone and BPAY lists from your current online account.
It also suggests leaving some money in the old account for a while to cover any payments you might have forgotten. If you miss a payment, you could be charged penalty fees. But you don't want to leave the old account running indefinitely, as this is also likely to incur unnecessary fees.
Is it worth switching? Aren't all banks as bad as one another? While the average transaction account is certainly not the place to leave your savings, there are still big differences between accounts. Some charge account-keeping fees, some charge account-keeping fees if your balance falls below a certain level during the month and others don't charge them at all. It may be worth paying this fee if the account has other benefits but you certainly don't want to have to keep $5000 in the account at zero or close-to-zero interest just to avoid them.
Then there's the interest on your money. In its most recent report on deposit accounts, ratings company Canstar found most transactions paid either no interest or a token interest rate such as 0.1 per cent or 0.25 per cent. The report was released in March but this hasn't changed.
However, there is the odd account offering a reasonable interest rate - though generally with extra terms and conditions. Bankwest's Hero transaction account, for example, is now paying 4 per cent interest on balances up to $5000 (there's no interest on amounts above this) with unlimited free electronic transactions and no account-keeping fees if you deposit $2000 or more a month, while NAB's Cash Manager account is paying 3 per cent and no account-keeping or transaction fees - though you'll need an opening account balance of at least $5000. Both accounts were rated five stars in the Canstar report.
Transaction fees vary widely, so it's worth looking back over your recent statements and working out your usage levels. Some accounts have a fixed number of free transactions each month and charge only if you exceed this limit and it's generally cheaper if you use electronic transactions. The Canstar report (canstar.com.au) lists the best accounts for different levels of transactions. You can also search for the best account for your transaction type at ratecity.com.au.
Is it still worth switching if I have my mortgage with the same financial institution? MoneySmart says you should check whether you're getting a special package rate. If you are, switching could cost more than it's worth, as you could lose the package benefits. Having your transaction account with a different institution may also be less convenient, so ask your lender about other transaction deals it can offer first.