Have you reviewed your bank account lately?

A recent study by ING Global, says that 89% of respondents from10 different countries want to do a better job managing their money this year.

One of the areas I think we get really complacent about is our bank account.  Far too often I meet people who are dealing with the same bank they have dealt with for the past 20 or 30 years.  Just recently, one of Canada’s young bloggers BlondeonaBudget put up a post asking for help in picking a new bank account.

Banking has changed

Times have changed when it comes to bank accounts.  Gone are the days where you had to deal with one of the 5 major banks.  Today there’s more choice than ever and the choices are well worth considering.  Gone are the days when you went to the bank, stood in line and met with the same teller you were dealing with for 10 years.  Today, you can do almost everything by phone or the internet and the bank is encouraging you to do business that way.  Bank staff is changing all the time and it’s become harder to develop relationships with specific people anymore.

Are you earning interest and paying no fees?

The conventional bank account does the opposite.  You pay a monthly fee for the privilege of getting no interest on your money.  Which is better for you as the consumer?  Getting paid interest on your money with no fees or paying fees for no interest?  This is not a trick question so why are you settling for a bank account that does not work in your favour?

Minimum balances is a form of a fee

Many financial institutions waive the monthly service fees if you maintain a minimum monthly balance in your account.  Is this really a perk? Or is it actually a cost?

If they pay you little to no interest on the money you have at the bank, then consider it a cost.  Why?  Because you could do something else with the money instead of keeping it there for the banks benefit.  For more information read my past article on how much it costs to keep a minimum amount in your bank account.

You don’t have to have everything with the same bank

There was a time it was more convenient to have your mortgage, credit card and bank account all under one roof.  Not as much anymore.  Technology has made it easier than every to deal with multiple institutions so you can shop around for the best products.  Did you know you can have your chequing account at Manulife Bank, your credit card with BMO MasterCard, your line of credit at President’s Choice Financial, your GICs at Canadian Western Bank and a self directed RRSP with RBC Direct?

The bottom line is we need to shop around for our bank accounts just like we shop around for our mortgages, credit cards, investments and GICs.  In fact, we need to do a better job shopping around for our financial products like we do with other commodities like our shoes, groceries, toilet paper and electronics.

High Interest Banking is not just the future; It’s the now!

When ING Direct came to Canada, they changed the future of banking.  You no longer had to deal with one of the big 5 banks and pay fees for no interest.  You no longer had to pay for the privilege of having a bank account.  Today there are lots of choices that give you higher interest with no fees.

I deal with Manulife Bank and have so since 2002.  I do not have a bank account with any other bank and I can do pretty much everything you can do with a conventional bank account.  Other options include President’s Choice Financial, Ally, ICICI Bank, Outlook Financial, People’s Trust and Achieva Financial.  There are more but this covers some of the most common accounts.  There are some great comments from KrystalatWork and FabulouslyBroke on the post “Help! I need a new bank account.”

Even the big banks not have their high interest versions of bank accounts but they still tend to pay lower interest than their competitors above.

Is earning 1% in your bank account really worth it?

If you found $10 your way to work, would it make your day?  What if you found $10 in your bank account every single month for the rest of your life?  Do you think that would add up?  You bank account is something you use every single day and you have to have one.  Why not start profiting from it?  Interest rates on high interest bank account fluctuate with prime but even when rates are low, something is better than nothing.  Don’t discount the power of the compounding effect of 1% on your money.

The message is simple.

If you are paying fees to earn no interest, then it’s time for a change.  You bank account is something you use all the time.  Instead of it being a cost to you every month, why don’t you turn it into a profit center and have it start working for you.

Are you using a high interest bank account?  If so, do you care to share which one you use and your experience with high interest banking?

Written by Jim Yih

Jim Yih is a Fee Only Advisor, Best Selling Author, and Financial Speaker on wealth, retirement and personal finance. Currently, Jim specializes in putting Financial Education programs into the workplace. For more information you can follow him on Twitter @JimYih or visit his other websites Group Benefits Online and Advisor Think Box.

3 Responses to Have you reviewed your bank account lately?

  1. Great advice Jim. It’s easy to get lulled into a routine when it comes to the basics like bank accounts. If there’s a way for me to keep $10 a month rather than handing it over to the bank, I’ll take it!

    • Yahooo! You finally get to leave a comment on my site! Thanks for stopping by.

      You better take the $10! I knew you would. You’re too smart not to. But I am amazed at how many people I meet that do not have high interest bank accounts and think it’s too small of an issue to bother with.
      Thanks for the comment and have a great day!

  2. Hi Jim,
    What is the difference between “High interest rate, calculated daily” and a “compound interest”? For years with TD, I have two checking accounts with fees of $12,00 and no profits. I am starting to consider opening a saving account but, not certain which account would give me some benefits?
    Please advise, and thank you

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