Money/Savings

3 Banking Habits You Should Eliminate Now

3 banking habits you should eliminate now

The banking habits of Canadians have evolved significantly in recent years. Now, rather than going to the bank and waiting in line for the next available teller, we’re using ATMs. Online and mobile transactions are becoming more and more popular. However, too many of us are still paying unnecessary chequing account charges.

Before trusting a financial institution with your money, it’s important therefore to get the facts on day-to-day transaction charges and, at the same time, the interest rates on savings accounts.

And don’t stay with a bank just because you’re afraid it will be too complicated to transfer your money to another institution. Think instead of how much you’ll save in the long term and what you have to gain!

Here are some day-to-day banking habits you should eliminate to hold on to more of your money and grow your savings.

1. Paying too much in bank charges

Start by adding up all your current bank charges. Then, compare them to those of other financial institutions. These charges may consist of monthly account fees, minimum balance fees, withdrawal fees, transaction fees, ATM fees, etc. All these charges can add up to hundreds of dollars by the end of the year. For that reason, it’s a good idea to shop around to find a bank that has a no-fee chequing account.

Here are a few tips on how to save, even if you do decide to stay with your current financial institution:

  • Choose a transaction package that suits your banking habits.
  • Stay within the number of transactions allowed by your package.
  • Keep a minimum monthly balance at all times, if your service package waives your monthly fees when you do so.
  • Make your transactions online or use a self-service kiosk. It’s generally more cost effective than teller transactions.
  • Use the ATMs of your own bank or credit union to avoid paying a fee for withdrawals made at another financial institution’s ATM.
  • Keep enough money in your account to cover bill payments and cheques written on your account, because this will help avoid charges for NSF cheques or overdraft protection.

2. Making a withdrawal every time you need money

It certainly can be worthwhile to plan your cash withdrawals! By knowing how much you’re going to need for the coming week when you go to withdraw cash, you can reduce the number of monthly ATM transactions. You could also ask for cash back when making a debit card purchase in stores, to save yourself a transaction.

Don’t hesitate to switch service packages if the one you have doesn’t meet your needs or is no longer appropriate for your situation.

3. Keeping all your money in a chequing account

If you keep all your money in a chequing account, you’ll probably earn nothing in interest. To make your money work for you, open a high-interest savings account. It’s a practical solution, because the interest you earn is much higher than what you’d get with an everyday bank account.

Making these few adjustments can save you a lot in service and interest charges. By the end of the year, you’ll certainly see the difference. It’s also well worth it to do the drill again, year after year, since the service charges of financial institutions change (increase) regularly.

 

Source: Financial Consumer Agency of Canada

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