It’s easy to accept things as they’ve always been; making peace with routine and the status quo because that’s all we’ve ever known. That sort of Laissez-faire attitude, however, can be detrimental to your finances.
For example, investors have, for years, accepted that high fees are the cost of doing business. Opting to continue embracing pricey funds when more affordable options are now so prevalent may cost investors thousands by the time they’re set to retire and tap into their portfolio.
(This isn’t an indictment or an endorsement of any particular investment plan; of course, certain funds may still be the right choice for many based on their portfolio and risk preferences, but knowing about and understanding your options will ensure you are making the right choice for your future.)
The same can be said about our bank accounts.
Where knowledge of investment options will help make you the most money, knowledge of bank accounts and their various options will help save you the most money.
Let’s see how, using an example.
Fees fees fees
Say you’ve got a typical chequing account with a big bank. It offers unlimited transactions because, let’s face it, it’s 2018 and we rarely carry around much in the way of cash. It costs you $16 per month which isn’t too bad considering the convenience they provide.
But that $16 per month adds up – to $192 per year. But that’s just the cost of doing business, right?
No, it isn’t. Believe it or not, you don’t have to pay any fees for an unlimited chequing account.
One way is to find a no-fee chequing account.
Duca Credit Union offers a no-fee, unlimited chequing account. So too do Tangerine — with its No Fee Daily Chequing Account – and Simplii Financial, with its No Fee Chequing Account.
If you don’t want to switch financial providers, you can maintain a minimum balance in your current account (typically between $2,000 and $5,000) and have your fee waived.
Looking for a chequing account?
Check out our chequing account comparison tool
Again, we’re going to assume some things. Many people have a savings account with a big bank. Those accounts typically vary in the interest they provide between 0% and 0.5%. That’s not even enough to keep up with inflation.
Thankfully, there are options out there that allow your money to work a little harder making you even more money.
Say you have $10,000 sitting in a savings account that earns 0.5%, a typical interest rate offered by the big banks. Your balance will earn a meager $50 in one year.
However, if you were to transfer your balance to a savings account that offers a higher interest rate, you can more than double your yearly interest.
EQ Bank currently offers the highest interest rate in Canada at 2.3%, with its EQ Bank Savings Plus Account. Your $10,000 balance will earn you $230 in the first year.
Looking for a high-interest savings account?
Compare high-interest savings accounts
Dedicated savings accounts
Most of us have a number of different savings goals; all varying in length — from vacation accounts to retirement accounts.
Many make the mistake of using one account for everything – but that makes little sense because each savings goal has a different timeline. A trip should be saved for in an easily accessible liquid account that protects your balance, such as the previously mentioned high-interest savings account. Retirement, meanwhile, can be saved for in an investment account that can stand to deal with the ups and downs of the market.
You can even take it one step further, though.
Why not open separate savings accounts for your various short-term goals? For example: one earmarked for vacation, another for home improvements, and a third for your emergency fund. That system makes it easier to budget each paycheque to meet your savings targets.
Having money separated can also discourage you from dipping into your savings; knowing which savings goal you’re compromising will make it easier to avoid unnecessary spending.