Why Your Chequing Account is Holding You Back

Dear Readers,

If the banking industry has something going for itself today its their attractive chequing accounts. Chequing accounts are central components of our daily lives today. Nowadays, we depend so much on our debit cards, recurring bill payments and money transfers and they have formed the foundation to our financial lives. However, the problems associated with these accounts are too large and I personally find some of the drawbacks to outweigh the convenience. Now I’m not downgrading them entirely – a chequing account is essential and the flexibility associated with these accounts is unparalleled.

In today’s article – I will be looking at a few ways to maximize money currently held in your chequing account and look at attractive chequing accounts in the market today.

Method 1: These types of accounts pay no interest – so move the money!

Yup, you heard that right, chequing accounts normally pay 0 to near-zero rates on your money. While the bank benefits from you depositing money in their institution and investing it elsewhere – you are essentially left holding the bag. Imagine over a lifetime keeping large sums of money in your chequing account and earning no interest.

It is better to move the majority of your money into a savings account or another investment vehicle of your choice and keep a small amount of money in your chequing account to cover basic expenses and daily debit transactions and transfer in money from time-time if the balance dips.

Imagine if you had 2500$ in your chequing account from year to year (on average) and your bank paid 1.5% interest (in a savings account) — you would be missing out on 375$  over a 10yr period.

Method 2: The majority of chequing accounts have fees

Many of the chequing accounts nowadays have egregious fees that can really cut into your pockets. Unless you have a discount of some sort (like a student discount or keep a minimum balance) you are probably getting hit pretty hard on fees. Finding ways to lower fees and maximize your interest income can be a great way in getting you some extra pocket money. For example, with an average monthly fee of 9.95-24.95$ a month! that’s 120$ – 300$ a year on banking fees.

If the benefits offset the fees, then its alright but even then finding ways to cut your fees can be extremely advantageous.

Recommendation 1: Tangerine Chequing Account – this is one of the premiers accounts with no fees still offered on the marketplace. They offer many free services like other banks such as free debit transactions and recurring bill payments. They even pay interest on the account.

Recommendation 2: Big 5 – The big 5 banks are not a bad option for chequing accounts. As a student it can be great because you get a student discount. However, when that expires you will need a minimum limit to use the account or get stuck paying fees. Many of times that limit can be a couple thousand. That’s money that can be put to good use elsewhere such as investments, mortgages, rent and much more.

In summary getting additional income from shifting money over to a savings account can be extremely advantageous and trimming your fees is an extra bonus. Do not leave large sums of money in your account you do not require – its better to transfer that money into higher interest accounts to get a better bang for your buck.

Disclaimer: I wrote this article myself and the above information is my own personal opinion.I have no business relationship with any of the companies listed above.  Please verify with your bank or financial institutions for various fees and interest charges associated with savings, chequing and other accounts.

 

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