Personal Finance » Banking

Every penny counts in banking

In the health and fitness industry, there are numerous success stories where you can see the before and after pictures. I want to make my attempt to show you some before and after pictures of real people who made the switch from mainstream conventional bank accounts to high-interest bank accounts.

Everyday banking Annie

Let’s start with Annie. She is what I would call an average Canadian. She makes $50,000 per year. Her employer deposits her income to her bank account automatically every 2 weeks.

Annie banked with one of the major banks in Canada. She had an everyday bank account that charged $5.00 per month in basic monthly fees. If she exceeded a certain number of transactions, she was charged an additional $1.00 per transaction. When we went through her bank statements for a 12-month period, here’s what we discovered.

  • 12 months of fees = $60.00
  • Interact fees= $40.75
  • 12 months of interest = $0.85
  • Average monthly balance= $1,675

We then compared these fees to what happened once she made the switch to President’s Choice Financial. Remember that we are talking about everyday banking. At President’s Choice, Annie is on track to earn almost $50 in interest and $0 in service fees. Annie went from a net cost of $99.90 to a net gain of $50.00. That is a net charge of $149.90 over a one-year period.

Minimum balance Margaret

Margaret also had an account at one of the major banks. Margaret had an account that if she kept a monthly minimum balance of $1,000, she would avoid any service fees. We went through her statements and the good news was that she did not have any service fees charged. However, when we looked at the interest earned, there was zero interest earned in the same account.

For Margaret, she was very proud that she did not pay any fees in her everyday bank account. In her mind, she did not think that anyone earned interest in a bank account.

Would it surprise you to hear that if Margaret had her accounts in a high-interest bank account, her monthly average balance would have generated about $120 in interest in a year? Margaret has made the switch and she is on her way to making interest and still pays no fees.

Corporate account Clyde

Clyde owns a small business. He made the switch to the Manulife Advantage Bank Account. His initial concern in making the switch was whether Manulife could provide everything that he needed in a corporate bank account. Clyde was very open after using the Manulife account that he was happier than ever and he would never go back to his previous bank. Once you take a look at the numbers, you will see why.

In the last twelve-month period in the Manulife Advantage account, Clyde made over $200 in interest and paid a total of $3.50 in fees. That is not monthly but over the entire 12-month period. At one of the major banks, Clyde’s company had a corporate account that made $4.34 in a 12-month period. In that same 12-month period, Clyde paid $162.00 in banking fees.

Clyde was amazed at the difference. He has an extra $354.16 in his pocket as a result of making the change.

High-interest bank accounts make a difference

In all three examples, there was a significant difference in the before and after. While changing bank accounts can be inconvenient, I think it also can make a significant financial difference. In my eyes, every penny does count and these three people represent the need for everyone to take a look at the benefits of high-interest bank accounts.

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