Get more back from your bank

Banks make billions from us. So why not get a bit back by using their services more effectively? Start by opening sub accounts and earmark them for mortgage/ rent, utilities/fuel, groceries, emergency fund, short term savings, long term savings, and fun. I did hear of someone setting up a sub account for “things that feel like emergencies, but aren’t”. Arrange with your bank to have your pay divvied automatically between those accounts, or switch to a bank that can do it.

Next create automatic payments from relevant accounts to pay your power, phone, mortgage, debt repayment, insurance and so on.

If possible, set these up to go out the day after you’re paid.

If your bank offers budgeting tools, use them. They help you channel your money where you want it to go.

As Westpac once said in its marketing: “We all know how great fries taste at 2am.” But are those fries being paid for out of your holiday kitty?

Generally New Zealand banks’ budgeting apps are poor, although Westpac’s Cashnav is the exception. Once upon a time both Kiwibank and BNZ had great budgeting tools. Kiwibank’s was called Heaps, and BNZ offered Xero Personal. Both were discontinued.

The ASB’s brand new spending tracker looks nice, but is a downgrade on previous budgeting. The old tracker aggregated transactions from all accounts to give an overview of total spend in each category such as groceries or utilities. Now you can only see spend from individual accounts.

Back on the subject of useful tools, some banks offer sweep facilities. They allow you to set up triggers to sweep money into or out of savings when you go over or under certain pre-set limits. The result is increased interest on savings and less cost by avoiding tipping into overdraft accidentally.

Overseas digital banks are champing at the bit to eat our cumbersome big banks’ lunches. There are already ways in New Zealand to “bank” with digital alternatives such as UK-based fintech giant Revolut and local startup Dosh, which offer debit cards and current accounts. These businesses don’t offer lending, and are not regulated as banks. But they do need to belong to Ombudsman services in New Zealand, which means you have an independent organisation that can adjudicate and ensure you’re recompensed if something goes wrong.

Revolut launched quietly in New Zealand last year. It’s similar to the money transfer app Wise, which has been here a few years already. But Revolut offers more features and its accounts could be used for simple banking.

Instead of sub accounts Revolut has pockets that can be set aside for saving or other specific purposes, although they don’t earn interest, Revolut’s head of New Zealand Georgia Grange told me last month when we met up.

Revolut has a basic spending tracker / budgeting tool built into the app. Grange uses it to control her spending in certain categories. “I have a setting in my budgeting so that if I spend over $30 on coffee a week

I get a notification,” she says.

“We were talking about the student banking market and she said they could do that for beer.

“For me it’s huge having budgeting and analytics right next to your payments every day,” she said.

One other feature I liked in Revolut is that it offers single-use virtual cards for secure shopping. That way a retailer [or scammer posing as one] can’t drain more money from the card.

Many overseas banks have tools we don’t and AI and robotics are going to widen the gap rapidly. I’ve seen overseas banks where the home page can show your balances in budget categories, rather than a list of accounts. Another nice tool from one digital bank was a “surprise savings” tool, which uses AI to analyse your spending patterns and advises where savings can be made.

Some overseas banking apps [and both Revolut and Dosh] incorporate split-the-bill technology into the app, which makes divvying up bills between friends easy. It saves using separate apps such as Splid, or pen and paper, to work out who has avoided paying their share.

Common overseas is a feature called round up, where spending is rounded up to the nearest dollar and deposited into savings. ASB’s Save the Change does this.

Better banking isn’t just about digital tools.

If you want your money to go further then you can ask your bank for personalised help.

You’re not going to get this from the digital banks.

If your bank offers budgeting tools, use them. They help you channel your money where you want it to go.