Making your Bank Accounts Work for you

When choosing a bank account its important to make an informed decision. Each financial institution will have at least one product that will peak your interest. For example, banks are now starting to carry high interest savings accounts. The interest rate can vary from 3 to 5 percent. It has been my experience that banks will set the rate high at first to attract new clients then lower it a few months later.

The first thing you should look at is the benefits your primary institution is offering you. For example, some banks will reward customers for their loyalty. So in this case if you have certain products you will actually get a discount on your monthly fees. Ask your institution if this is something they offer.

The next thing you should do is determine how many transactions you will be making per month. If its under the lowest checking account package, then go with a Savings Account as they charge per transaction. The reason for this is because it will be more cost effective, plus most people don’t realize that you can actually write cheques on these accounts too! If you will be making more transactions than the lowest chequing account package look at the package to help you determine which account would suit you best. Also, when looking at a chequing account review the additional benefits that the account offers. Ask yourself if the additional benefits would in fact benefit you. For example, if a certain package offers free cheques but you don’t write cheques. Don’t pay extra for you won’t use.

Then you choose an account that will suit your savings needs. Most institutions will have basic savings account, however, they are not ideal if you’re looking to build and grow your savings. Most of those account earn interest on a tiered basis. As mentioned above, check to see if your institution offers a high interest savings account. These account are usually dollar for dollar with no minimum. By saving with this account you will earn interest on a monthly basis taking advantage of compounding. In basic terms you will earn money on top of money each month.

The best advice I can give is choose a main institution and stick to it. Paying fees to one, two or even three institutions just to get one or two benefits that they each offer is costing you additional money that may not be necessary.