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Reasons to Upgrade Your Chequing Account

Most people don’t love to shop for financial products. And why would you? Switching chequing accounts can seem like a tedious task that’s easier left undone. According to Ratehub.ca’s 2017 Digital Money Trends Report, one-quarter of Canadians aged 35 to 54 have had the same bank account for 20 years or longer. That’s a problem — your personal banking needs change over time, and there’s a good chance your chequing account is no longer the best one for you.

This could be especially true if you’re using a basic chequing account with limited transactions. These kinds of accounts charge monthly fees anywhere from $8 to $15, and have transaction limits ranging from 12 to 30 per month. If you’re using this type of account, here are some reasons you might want to upgrade to a premium account.

You’re paying transaction fees

If you’re constantly going over your monthly transaction limit, you’re constantly wasting money on transaction fees. With most banks charging $1.25 for each transaction over the limit, even just a few extra purchases a month can add up to a big banking bill. And since banks like to charge these fees at the time they’re incurred, it can be easy to underestimate how much you’re spending.

Upgrading to a premium account can help you get better control over your monthly banking expenses. It’s worth spending an extra $10 per month to save yourself $15 in fees, and you might get some useful extra features at the same time.

Take advantage of special offers

Banks know the lifetime value of a new customer is high, because Canadians tend to prefer using one bank for all their financial products — and the chequing account is at the centre of it all. Once you open a chequing account with a bank, you’re much more likely to apply for their other products such credit cards, lines of credit, or a mortgage. Sometimes banks will use your expected lifetime value to make special offers at a loss, and you can use this to your advantage.

Offers come and go all the time, but you’ll frequently see new chequing accounts come with popular electronics like new tablets and TVs. Michael Moore famously picked up a new rifle for opening a bank account in his documentary Bowling for Columbine (thankfully, this offer might be harder to find on our side of the border). The offers change all the time, so you might have to do a bit of research to see what’s available right now.

If you do the math, you might find a special offer like this to be worthwhile. Just be aware that you’ll usually need to switch to a new bank to get them, and you might have to meet certain conditions like having your pay deposited into the new account, and keeping it open for a minimum of two or three years.

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Bundle your banking products

Just like you can get a discount for having your internet and cable TV with the same provider (tip: don’t pay for cable — it’s 2017), you might be able to get a discount on certain products for keeping them all with the same bank. A common example is credit cards. You might be able to have the annual fee on your credit card waived if you use a bank’s top-tier chequing account. If the card’s annual fee is $120 and the monthly cost to upgrade your chequing account is less than $10, that’s a net gain and you should go for it.

Again, you’ll need to make sure this is worthwhile. For example, upgrading from the BMO Air Miles Chequing Account to the Premium Chequing Account can save you the $150 annual fee on the BMO World Elite MasterCard. But it will bump your monthly chequing fee from $14.95 to $30, costing you just over $180 per year more on that side of the equation.

You should also make sure you’re using the best credit card, regardless of which bank issues it. There is no shortage of credit cards in the market, and there are opportunities to earn a great deal of value in travel rewards points. You might find that you’ll come out ahead by getting a new credit card with better rewards, paying its annual fee, and keeping your chequing account as-is.

Also, you should know that upgrading your chequing account will not earn you preferential treatment for products such as mortgages and GICs. Even if a bank offers you some kind of loyalty rate, it’s likely just a sales tactic. The fact is products like mortgages, loans and GICs are highly competitive and you are almost guaranteed to find better rates outside of your primary financial institution — especially if you bank with one of the Big Five. Entertain a sales pitch from your bank, but you should also compare rates elsewhere to get the best deal. In the case of mortgages, a mortgage broker can help uncover the best mortgage rate for your situation.

Get rewarded

Some premium chequing accounts offer travel and cash back rewards, so you may be tempted to upgrade to a premium account in the hopes that you’ll make your investment back in free Hawaiian vacations. If that’s your plan, do your math carefully. In my recent review of the Scotiabank One Chequing Account, I revealed that you would need to spend nearly $7,000 per month on debit purchases to earn enough points to equal the value of your monthly fee.

Go no-fee

It might not necessarily be an upgrade, but you can potentially save a lot of money and get better features by switching to a no-fee chequing account, such as the Tangerine Chequing Account and Simplii Financial (formerly President’s Choice) No Fee Chequing Account. These kinds of accounts offer unlimited transactions, free cheques, and don’t impose any monthly fee.

If you don’t need the features that come with a premium chequing account like free Interac e-Transfers, or the option to do your banking in person, a no-fee chequing might be the way to go. And if you’re paying a monthly fee or incurring transaction fees, it might be more cost effective to pay à la carte for e-transfers and skip the monthly charge.

Conclusion

If you’re using a chequing account with limited monthly transactions, and you’re comfortable within the limits of your account, chances are you won’t benefit much from upgrading to a premium account.

But that doesn’t mean you shouldn’t compare chequing accounts to see if you can get a better deal. Banks change their offers over time, and you change your spending habits as well. If you’ve had your current chequing account for more than a few years, you might find that another account is offering the features you need at a lower total monthly cost.

But if you are using your bank account to its fullest, upgrading to a premium account could be rewarding. It can help you save on transaction fees, save money on bundled products like credit cards, earn rewards, and possibly get a new gadget at the same time.

The most important thing is to evaluate how you’re using your chequing account and select the one that meets your needs at the lowest cost. If a premium account meets your criteria, make your upgrade and enjoy the additional features and cost savings.

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