TEST DRIVE

What is it? St George SENSE is a way to budget and save. It's a transactions account and a savings account linked together and is aimed at mostly young adults who want to save and get a better handle on where they are spending. St George is owned by Westpac, one of the big four banks. A St George Visa Debit Card is linked to the transactions account. Each purchase on the card is put into one of 10 spending categories and included on the monthly St George SENSE statement. For example, if the St George Visa Debit Card is used to pay for grocery shopping at Coles or Woolworths or to buy clothes at a retailer, the expenditure is put into the "daily living" category.

A repayment of a car loan or credit card goes into the "loans" category. Some of the other categories into which purchases are reported include: home expenses, transportation and leisure.

The monthly statement includes a pie chart showing the percentage of purchases in each category. Purchases from the transactions account using BPAY, freedomcard or Maestro/Cirrus ATM cards are also put into the monthly spending categories. The aim of this reporting feature is that customers can track their spending and hopefully, armed with this information, better manage their money.

The product has a second feature, which could be described as an electronic equivalent of a jar into which spare change is put. It is where, if a purchase in made on the debit card for, say, $14.20, that purchase is rounded up to $15. And 80 cents is also taken out of the transactions account automatically through a linked debit card and deposited into the savings account. If the purchase is $14.95 cents, for example, then the purchase is rounded up to $15 and the five cents is taken from the debit card and put into the savings account.

The idea is that the purchaser will not miss these small amounts and they will build in the savings account, over time, where the amount earns interest.

This rounding up also applies for purchases with BPAY, freedomcard and Maestro/Cirrus ATM cards.

How it works The money in the savings account is one step removed from the temptation to spend as the money in the savings account must be transferred into the transactions account. The customer can also set a savings target they wish to achieve. A line graph in the monthly statement shows the progress being made towards meeting the savings target. With the rounding function on spending and "top ups" into the saving account from the transactions account, the customer will see the savings grow.

Pros A financial analyst at banking researcher Canstar Cannex, Peter Arnold, says the reporting feature is handy for those who have started work and who need to track their spending to help them identify areas where they can cut spending and save more. He says there are no restrictions on the number of ATM withdrawals or Eftpos, Visa Debit, phone, internet, branch, BPAY or Bank@Post transactions. Of course, ATM withdrawals at non-Westpac or non-St George ATMs will incur a direct charge from the "foreign" ATM operator.

Cons There is a $5-a-month account-keeping fee. Arnold says the fee will probably more than pay for itself as consumers learn better savings habits. A zero interest rate is paid on the transactions account, which Arnold says is typical of transactions accounts. The savings account currently pays an annual interest rate of 2.85 per cent.

Arnold points out that the product is probably not suited to someone who is well-disciplined with their money. They could, for example, have a fee-free transactions account just by keeping a reasonable balance in the account or by depositing their salary into the account.

Arnold says well-disciplined savers could easily link a transactions account with a high-interest online savings account. For example, the St George Direct Saver online account pays a base interest rate of almost 4 per cent and St George's Complete Freedom transactions account is fee-free as long as at least $2000 is deposited in the account each month.

See pages 6 and 13 for comparisons on savings accounts and transaction accounts.

St George SENSE

AN ACCOUNT WITH A BUILT-IN PIGGY BANK AND A CHART THAT SHOWS SPENDING PATTERNS COULD BE A GOOD WAY TO INTRODUCE FINANCIAL DISCIPLINE, WRITES JOHN COLLETT.