Here’s the tip that your Bank doesn’t want you to know about
step 1: Open a regular line of credit (got income? you qualify)
step 2: Attach the line of credit to your debit card in the “chequing account” slot
step 3: Change your payroll deposit and any pre-authorized debits to your line of credit account
step 4: Close your old chequing account, and never pay anymore bank fees.
A typical major bank (in this country) will charge you upwards fo $13/month for unlimited banking transactions (withdrawals, bill payments, debit payments, cheques etc.). However, they also tend to waive all of these exact same fees on line of credit accounts. To encourage borrowing (one supposes).
And guess what, lines of credit have all the properties of your chequing accounts including cheque writing (for people who still do that), ABM withdrawals, debits etc.
But here’s the kicker, lines of credit allow unlimited positive balances as well (that’s the part they don’t advertise).
You won’t earn interest on your positive balance, but heck you don’t on a chequing account these days either. So there’s no reason not to keep all of your (personal) banking in one account.
And as an added bonus, no overdraft fees, your cheques will always clear (assuming you don’t hit your credit limit) and the lowest interest you could get on any negative balances.
And if you do revolve credit from month to month, having one account will ensure that every cent of your money is minimizing your interest. Trust me, your Bank loves it when they can earn spread on some deposits you have in account while, at the same time, earning interest on your revolving credit in another account.
Why don’t the banks fix this? The last time (a few years ago) that I was looking at this very same issue for one of the big banks, the cost of changing the policy (as you can imagine expensive systems changes plus customer disclosures, staff retraining, brand impact, expected support calls etc. etc.) far exceeded the revenue leakage from the tiny segment of savvy customers who seemed to have it figured it out.
I know this works with CIBC, TD and probably your bank too. Ask your banker.
And yes, before you say it, switching to a discount bank like PCF, ING or a credit union and you can escape fees too. But, for reasons rational and otherwise, nearly 90% of the Canadian population keeps an account with one of the majors. So, if you like to keep your full service bank, this tip is for you.
And caveat #2, this doesn’t help you with those $1.50-$2.00 ABM surcharges, those fees aren’t charged by your bank (rather by 3rd parties or somebody else’s bank, depending on the machine).