A major part of adulting is managing our finances. It’s certainly not sexy and it’s often frustrating but, in my experience at least, getting your financial life together can feel rewarding.
One thing that has helped me make sure I’m saving as much (and spending as little) as I possibly can, is using financial comparison tools for all my accounts. By spending a few minutes researching online, I was able to save myself nearly $700 this year.
And I’m not alone: Over 800,000 Canadians use Ratehub.ca every month to make better financial decisions.
Let’s take a look at how similar research can help save you money.
Depending on your current financial and living situation (whether you own your home or rent, how much you have earmarked for savings, etc.) individual results will obviously vary. However, let’s play around with some assumptions and see what a typical Canadian can save by using online financial comparison tools.
The average home price in Canada was $494,000 in February. Let’s assume you have 20% saved for a down payment ($98,000) and see what your mortgage would cost based on currently available rates.
One of Canada’s largest banks is currently offering a five-year fixed mortgage rate of 3.56% — not bad. If you were to amortize that mortgage over 25 years, it would cost $1,986 per month.
However, a quick search online reveals the best mortgage rate currently offered by a big bank is 3.29%, which would cost $1,930 per month.
That’s still not the best rate available, though. No, the lowest rate currently being offered for a mortgage in Toronto is 2.99% at time of writing, which would result in monthly payments of $1,868.
It took less than five minutes to find these numbers. That five minutes could save you $118 per month.
Total yearly savings: $1,426
Compare today's top mortgage rates
Slick savings accounts
We’re just getting started.
Chances are, you’ve had the same savings account since you were a kid. It did the trick when you were saving up for your first bicycle, but you’re an adult now. You have loftier savings goals and require a savings account that works as hard as you do.
Let’s say you have $10,000 in an account that earns you 0.05% interest (a typical interest rate offered by the big banks). That little nest egg would earn a paltry $5 in interest per year. That’s not even enough to buy a Big Mac meal.
However, if you were to place that money in a high-interest savings account, it would go a lot further. The best high-interest savings account currently offered in Canada is EQ Bank’s Savings Plus Account, which provides an interest rate of 2.3% (which would net $230 in interest on your $10,000 balance).
And that’s enough to take a special someone one for a nice, fancy dinner.
Total yearly savings: 1,656
Looking for a high-interest savings account?
Check this chequing account
It’s 2018 so chances are you operate almost cashless and rely on your debit card for the majority of your purchases. If that’s the case, you likely have an unlimited chequing account with one of the big-five banks. Those accounts can cost as much as $15.95 per month, for a total of $191.40 per year.
There’s no reason for you to be paying that, though. The best chequing accounts in Canada – one of which is the Tangerine No Fee Daily Chequing Account — offer no fees. So, you can keep more of your hard-earned money in your pocket.
Not interested in switching banks? No problem.
Most banks waive fees if you keep a certain balance every month. TD Bank, for example, will waive the fee if you keep a balance of $4,000 in the account. Why not opt to keep that pile of cash in the account as an emergency fund? Doing so will save you nearly $200 per year.
Total yearly savings: $1,847.40
Looking for a chequing account?
There you go. With a few clicks of the mouse you can save yourself nearly $2,000 per year – that’s enough for a yearly trip or a good chunk of change to add to your savings.
Let’s have some more fun with this number, though. Remember the hypothetical mortgage you took out? We amortized that over 25 years. So, let’s see how much you can save in that same timeframe by contributing your yearly savings into the high-interest savings account mentioned above.
Assuming an initial balance of $0, an interest rate of 2.3%, and monthly contributions of $153 (your yearly savings divided by 12), you could save $62,075.99 by the time your mortgage is done being paid off.
Pretty cool, right?
- Hidden Benefits of Your Chequing Account
- How Rising Monthly Fees Kicked My Ass to Finally Switch Bank Accounts
- How a Tangerine Chequing Account Could Make You More Than $900