How to Use Internal Bank Transfers to Reduce Fees and Boost Your Money’s Liquidity

When reviewing your bank statement, you often notice small fees added for each withdrawal or transfer outside the bank’s network. If you withdraw from your account to pay bills or move money to another account at a different bank, you may be charged between 5 and 15 riyals per transaction. The gap between what you pay and what you need can be narrowed if you know how to use internal transfers—transfers between your accounts within the same banking institution.

What Are Internal Transfers and Why Do They Cost Less?

An internal transfer is simply moving money from your main account to a sub-account or from a savings account to a current account within the same bank. Since the transaction does not go through an interbank network, clearing systems like SWIFT or ACH are not invoked, which means no associated fees. As a result, most banks process these transfers free of charge or for a nominal fee not exceeding a few pence.

Steps to Set Up an Account Structure Within the Bank

The first step is to divide your money into “pots” or sub-accounts. Many banks offer what are called “sub-accounts” or “sections” within the main account. You can create three basic sections:

• Daily expenses pot—dedicated to small transactions such as groceries and cafés.
• Fixed payments pot—receives your salary or incoming transfers from clients.
• Emergency and savings pot—holds part of your income for unexpected needs or investment goals.

After creating the sections, use your banking app to set a percentage of your salary to be automatically transferred to each pot on the day you receive your salary. Most apps allow you to schedule recurring internal transfers in just a few minutes.

How to Reduce Fees Using Internal Transfers

Let’s imagine a practical scenario: you have a current account at Bank “A” and your salary is paid into it each month. In the same bank, you also have a savings account earning 2.5% interest. If you leave all your salary in the current account, you may face cash withdrawal and account management fees that could amount to around 20 riyals per year. Instead, you can transfer 30% of your salary to the savings account as soon as it arrives. The transfer adds no cost, and you benefit from the accrued interest.

Another important point is using internal transfers to pay bills. Instead of withdrawing money from your current account and sending an external transfer to a bill payment company, you can create a sub-account dedicated to bills and set up an automatic debit from that account. If your bank charges fees for external transfers, you will avoid them entirely.

Using Internal Transfers to Reduce Foreign Exchange Fees

If you travel or deal with foreign currencies, you might assume you need to transfer funds to an international bank before exchanging them. Instead, look for a bank that offers a multi-currency account within the same institution. You can transfer riyals to an account in the required currency within the bank, then withdraw it from a local ATM without incurring transfer fees.

If a multi-currency account is not available, benefit from an internal transfer to the bank’s international foreign exchange account (if it exists). Such transfers are often exempt from foreign exchange fees because they are treated as internal transfers, with only the exchange rate spread applied.

Practical Tips for Using Internal Transfers Wisely

1- Keep the “minimum balance” concept in mind: some banks charge fees if your balance falls below a certain threshold. By splitting your balance into sub-accounts, you can maintain sufficient funds in each account to avoid these fees.

2- Enable transfer notifications: most apps send a notification as soon as a transfer is completed. This helps you track money flow and ensure no unintended withdrawals occur.

3- Review monthly transfer fees: although internal transfers are usually free, some banks may charge fees for recurring transfers above a set limit. Check your account terms to determine the maximum allowed number.

4- Use smart rules in the app: if your bank’s app supports “rules” or “automation”, you can set a rule such as: “Whenever the current account balance reaches 5000 riyals, automatically transfer 2000 riyals to the savings account”. This ensures you never forget to save.

A Real-Life Success Story

Mahmoud, a self-employed software engineer, used to accumulate cash withdrawal fees whenever he needed a small amount to pay his internet bill. After creating two sub-accounts at Bank “B”—one for recurring payments and another for savings—he began transferring 10% of each commission he earned to the savings account and stopped withdrawing cash from ATMs. Over a year, he saved around 150 riyals in withdrawal fees and, at the same time, built a larger balance that earned additional interest.

When Not to Rely on Internal Transfers

If you hold accounts at different banks and need to transfer money regularly between them, internal transfers alone may not be sufficient. In this case, look for solutions such as multi-client accounts within a single platform or using an “e-wallet” service that allows linking different accounts without fees.

In short, internal transfers are a simple yet effective tool to reduce fees and boost your money’s liquidity. By organising your accounts within the bank, setting clear transfer percentages, and enabling smart notifications, you will achieve smoother cash flow and benefit from interest without incurring unnecessary fees.