It seems like every financial institution is always fighting for you to put your hard earned money in their bank vaults. Because of the increase in competition these days, customers have TONS of choices! Do I go with a good old reliable brick and mortar big bank, a credit union, or an online bank?
For me, it's all about following the interest rates and minimizing the fees. Every institution has their own interest rates for their products, as well as fee structures, bonuses, etc. Most people DO NOT need to go with a bank that charges you fees just so you can be privileged enough to be their customer. If all you usually do is write cheques, pay bills, put money into savings accounts, GICs, etc. you should go out of your way to avoid paying fees for banking.
Most credit unions are fee free, as well as most online banks. This includes cheques, debit transactions, teller transactions, etc.
The big banks usually will make accounts fee free if you keep a large enough sum of money with them (usually $2000+). Any less than that, and they ding you a monthly fee, which is significantly more than any interest you're making from them. You're almost better off shoving your money under a mattress if that's the case!
Depending on how much effort you want to put into saving those extra dollars, you may want to have a combination of institutions. For instance. I have 2 online banking accounts, and one big bank account. The online accounts are for paying bills since they are fee free for unlimited transactions. The big bank account is for investments since credit unions and online banks don't offer the products I want. To maximize my savings, I keep the minimum needed in the big bank to waive the monthly fee, even though the interest rate stinks. For the online accounts, my savings is shifted towards whichever online bank offers the highest interest. I check every couple months to see if there's a difference in the rates, and move the money accordingly.
If you look over the span of a year, picking the lowest fee, highest interest institution can save you quite a bit, and put you further along the road to more savings!
Friday, August 26, 2011
Credit cards... evil or money savers?
When it comes to credit cards, it can be your easiest way to save, or your worst enemy. For those that have a good control on your spending habits, a credit card saves you money in a couple ways.
1. Deferred payments. Usually when you put something on your credit card, you have between 10-28 days before your statement arrives and you have to pay it. If you have some money stored away in the bank, that's an extra 10-28 days of interest in your pocket every month!
2. Rewards. Rewards are the biggest part of using credit cards. My preference is cash back cards, as they are the most practical. They can range from 0.5% to 1+% depending on the card. Personally I use a TD Smart Cash card, which gives 3% back on groceries and gas, and 1% on everything else without any annual fee. Some of the higher cash back cards may require an annual fee, so do a quick number crunch before you sign up. Sometimes a no fee, but lower reward is a better deal for you.
For those that use certain companies often, their own store credit cards can sometimes be more enticing than generic cash back or rewards cards as they encourage using their card in their own stores. These can be upwards of 3%! e.g. Canadian Tire, Sears, HBC, etc. Many offer one time sign up bonuses as well, so keep an eye out for those!
For the more advanced credit card users, you can have multiple cards, and utilize whichever card gives you the biggest reward for the place you shop.
To maximize your savings, use a credit card whenever possible, instead of cash or debit. Every penny counts, so go out and credit card that $0.50 chocolate bar!
1. Deferred payments. Usually when you put something on your credit card, you have between 10-28 days before your statement arrives and you have to pay it. If you have some money stored away in the bank, that's an extra 10-28 days of interest in your pocket every month!
2. Rewards. Rewards are the biggest part of using credit cards. My preference is cash back cards, as they are the most practical. They can range from 0.5% to 1+% depending on the card. Personally I use a TD Smart Cash card, which gives 3% back on groceries and gas, and 1% on everything else without any annual fee. Some of the higher cash back cards may require an annual fee, so do a quick number crunch before you sign up. Sometimes a no fee, but lower reward is a better deal for you.
For those that use certain companies often, their own store credit cards can sometimes be more enticing than generic cash back or rewards cards as they encourage using their card in their own stores. These can be upwards of 3%! e.g. Canadian Tire, Sears, HBC, etc. Many offer one time sign up bonuses as well, so keep an eye out for those!
For the more advanced credit card users, you can have multiple cards, and utilize whichever card gives you the biggest reward for the place you shop.
To maximize your savings, use a credit card whenever possible, instead of cash or debit. Every penny counts, so go out and credit card that $0.50 chocolate bar!
Subscribe to:
Posts (Atom)