7 tips on how to decrease reliance (and fees) on your chequing account

With the proliferation of high interest savings accounts, the chequing account is looking more and more unattractive. With zero to low interest and tons of fees (I cringe at the reports that say the average person pays over $200 a year in fees), you’re sometimes better off keeping cash under your mattress. Even the chequing account of all chequing accounts (at Coast Capital Savings) still has some drawbacks. For example, it gives you 0% interest and you have to pay for cheques after your first 10.

The only reason why I keep a chequing account is so that I can deposit the occasional foreign currency cheque with a teller and so that I can write cheques (although some hybrid accounts let you write cheques). However, I try to keep as little money as possible in my chequing account at all times.

Is it possible to experience high interest, no fees, and still have access to your money when you need it? No single account satisfies this, but as with most things in life, you can tweak your habits to improve you situation. Most day-to-day fees and hassles involve debit card and ATM transactions, cheques, bill payments, and transfers. Here are some simple tips that can help you to address these issues to get the most out of your bank accounts.

Use credit cards as much as possible

Stores would probably prefer that you use cash, but to the consumer, using a credit card helps you in three ways. First of all, you can perform unlimited credit card transactions (well, as long as you have the money for it). With many debit cards, your chequing account only allows you a certain number of transactions per month. Second, many credit cards have no annual fee and give you rewards like cash back or points to buy groceries and such. Third, you only have to pay off your credit card once a month. This means that you can continue to earn interest on money that sits in your bank account for up to two months before you have to pay off your credit card bill without penalty.

Of course, you have to be careful with credit cards. If you carry debt on the card, then obviously you are being charged interest. Also, if you have trouble spending money that you don’t have, credit cards exaggerate the problem. But keep track of your purchases and you should have no problem.

Pay your bills online or via telephone

Often, paying your bills online or via telephone is free. You don’t need to write a cheque, you don’t need to mail anything, and you don’t need to drive anything. In addition, online of phone payments are often posted the next day, so you don’t have to wait the week or more with other types of payments.

Use PayPal

With PayPal, once you have linked your bank account to your PayPal account, you can pay people via “pre-authorized payments”. This is different than debit card payments because there are often chequing account limits and fees on debit card transactions but none on pre-authorized payments (although you should check this with your bank).

Although PayPal became big because of eBay, you can use PayPal to pay for items and subscriptions on an increasing number of websites.

If you and your friends have PayPal accounts of the “Personal” type, you can pay each other instantly and without fees via pre-authorized payments. This lessens your need to carry around as much cash (thus lowering the need to go to an ATM) or write cheques.

Try and get your friends to open accounts with the same bank

Often, transfers within the same bank are unlimited and free. I have a friend that I’m constantly lending and owing money to. We pay each other back instantly and without fees through online banking because we both have accounts with the same bank.

Carry some cash around and don’t use other networks’ ATMs!

ATM network fees are a pain. But really, just find an ATM that is part of your bank’s network! For example, if you have an account with HSBC or any of the credit unions, you can use ATMs on any other HSBC or credit union THE EXCHANGE Network (I think it’s officially capitalized) without paying any fees. As another example, if you have an account with PC Financial, you can use any CIBC bank machine without paying network fees.

And if you have at least a couple hundred dollars in your chequing account, whenever you withdraw cash, just try and withdraw larger amounts at a time (like $200 instead of $60). This might sound simple too simplistic, but I used to always withdraw the smallest amount needed; it made a huge difference to withdraw slightly higher amounts in order to decrease the frequency of trips to the ATM.

Don’t be afraid of opening multiple accounts at different banks

Many chequing accounts that have no minimum balance simply limit the number of transactions you can do. So if you have $200, you can just keep $100 in one account and $100 in another account and thus get double the number of allowed transactions. And if you have accounts at different banks, this means that you have probably increased the number of ATMs you can access without incurring network fees.

Pick a high interest savings account over short-term GICs and pair a high interest savings account with a chequing account in the same bank

This goal of this tip is to help you earn a high rate on your money while keeping the money accessible.

High interest savings account rates are comparable to short-term GIC rates, but of course you don’t have to lock your money in. If you keep as much money as possible in a high interest savings account and have a chequing account with the same bank, you can transfer money back and forth as many times as you want between those accounts either instantly or within 1 business day on an as-needed basis. So if you know you need to write a cheque on a certain date, simply transfer your money last-minute from your high interest savings account to your chequing account. This trades off the additional simple step in order to access your money for chequing needs with the ability to earn a higher rate on your money.

Get monthly updates on bank promos and rate changes

11 thoughts on “7 tips on how to decrease reliance (and fees) on your chequing account

  1. Julia says:

    Timely article – thanks Peter.

    I’m not sure how the big banks get away with their chequing account fees anymore. You get very limited features in relation to the high fee you pay, combined with generally crap customer service. If you still want to have a chequings account (instead of just a savings that you use as chequings) – you’re much better off at banks like Coast Capital or Citizens (in the Vancouver market) – because their fees are minimal, and are on the exchange network so you still get the feel of big bank access.

    Consumers need to stop blindly paying ridiculous fees just to have access to THEIR own money.

  2. Craig says:

    As far as I know, PC Financial still offers “no fee” chequing accounts, although I have no experience with that product so I can’t comment on whether or not there are “hidden fees”, etc… I currently use RBC’s chequing account. I pay $4.00 per month which includes up to 15 transactions, although I think there is a ceiling on the number of cheques I can write before they start hitting me with extra fees. Most of my pre-authorized payments are set up by credit card, which I think is the ideal way to go provided you don’t forget to pay off the balance in full each month (and thereby avoid incurring their unconscionable interest rates). Plus, you always have the option of calling up the credit card company and ordering a chargeback if there is something fishy about some of the charges that appear (monthly rates going up without approval, etc…).

    RBC offers a high-interest online savings acount which is currently paying at 4.00% (not bad for notoriously stingy RBC). I keep enough money in this savings account to generate monthly interest equal to the $4 monthly fee RBC deducts for the “privilege” of having an RBC chequing account (I currently have $1200 in the account). So as long as I have about $1200 in a savings account, I guess you could say that the net result is that I pay no fees to RBC. If you think about it, this arrangement is not unlike the “no fee” chequing accounts offered by other banks on condition that you keep a minimum balance in the acocunt (usually $1000 or so). In this case, I’m just keeping the “minimum balance” in a savings account instead of the chequing account.

  3. Kerwin says:

    Like I’ve seen in other threads.. Getting the HSBC Direct Savings account (its basically a chequing/savings account earning you 4.25% interest on any balance no fees whats so ever and you can use the debit card to make retail purchases (again free) all unlimited). The only thing it doesn’t provide you is cheques (so just open up a No Fees PC Financial chequing account to get your free cheques there).

    Simple as that. only need 2 bank accounts to get the most of your money. HSBC Direct Savings account and PC FInancial No Fees Chequing.

  4. Abhishek says:

    I like your article on ICICI bank. I was thinking of actually opening an account there. Based on your article, I’m glad I didn’t.

    You’re right when you say that PC does not charge a fee for its checking account. The only downside (and it can be big) is that if you deposit money into the account – paycheck excluded – it takes them 7 business days to put it in your account. That annoys me, so I have another account with another bank where I deposit money.

  5. Katherine K says:

    Hey, interesting conversations, but I’m concerned about the suggestion to open several bank accounts to save a few bucks.

    If I’m not mistaken, each time you open an account (or credit card at Sears to get 10% more off that kettle you’re buying your Mom for Christmas) you will be dinged at the credit bureaus. And EACH time that happens you lower your beacon score.

    Consumers are not aware of this little item. Saving a few bucks is not worth it to me to lower my credit score, especially when I need it or go to buy a big ticket item like a mortgage or negotiate a lower interest rate on my credit cards.

    Last of all don’t forget all those mailing lists your name gets on to be sold to marketing companies….


  6. P BR says:

    I’m losing my faith in chequing accounts these days. I mean, the cost of holding money under your mattress is the rate of inflation. The only reason we don’t put money under our mattress is to avoid that cost. So when an account offers no interest, what’s the point in having it? I mean, the idea of having two chequing accounts each with a hundred dollars in them.. Most chequing accounts cost about 5 dollars a month. So that’s almost like having 60% inflation!

    I don’t get it. Why pay -more- money to have access to our money. Isn’t having it under the mattress ultimately to most convenient?

  7. Craig says:

    PBR: Your points about chequing account service charges are well-taken, but unless an employer pays its employees in cash, most people really have very little choice but to get one. You asked whether having money under the mattress is more “convenient”. I think the answer to that question is a resounding “no” (perhaps you meant to ask whether having money under the mattress was “less costly”). In fact, the chequing account evolved from the desire to avoid the inconvenience of carrying large sums of paper money around. Even if your employer does pay you in cash, you would find it difficult to pay your day-to-day expenses in cash, such as your utility bills, your mortgage, your taxes, etc… Think of the chequing account service charges as “convenience fees” to avoid the hassles of paying for stuff in cash, and by all means move all your surplus cash out of your chequing account into a high-interest savings acount or other investment.

  8. Jamie says:

    There’s one very easy way to lower your fees at ANY bank. All you have to do is go in and ask the bank to waive the fees. If you go to TD, BMO, RBC, or any other big bank and tell them that the fees are too high and you’re considering taking your business elsewhere then they’ll listen. They’ll probably put a bit of pressure on you and explain why they charge the fees, but if you stick to your point then they’ll probably waive them as long as your account is substantial enough to merit it. If you have an average balance of $5 then they probably won’t be able to help you, but if you’ve got a couple hundred dollars and maybe some investments then they’ll listen. It worked for me!

  9. Craig says:

    I’m surprised at this last comment that you were able to get all your fees waved!
    I’ve had a PC chequing account for years now and not had any fees charged.

    PC’s savings account currently does not have the best rate but I am leaving my money there for the convenience. It takes a day to transfer it to the chequing account.

    the idea of paying to have a bank account to me is bizzar when I know that in my lifetime they used to be free or only pay per transaction. Banks have the money on hand or at least recorded on paper and can lend it and more out and charge more interest than they pay me for having it there. Why would they need to charge fees on top of that?

    I appreciate the continuing discussions.

  10. Jim says:

    I haven’t paid a single fee since 1993. It was a few years before I really figured out why after my girlfriend mentioned how much fees she was paying. I looked into my situation and realized that as soon as I signed my Dad onto my account, it became a seniors account.

    Therefore, I have been completely free of fees for almost 15 years now.

  11. ellen says:

    Any one knows the bank can simply change the type of your account without even telling you ?I have an account with RBC since at least 15 years ago ,i just notice that they charged me monthly fee for $6 since 2003 ,its not only that , they uncreased the monthly fee to $13.95 without telling me either . for my recall in 15 or 20 years ago dint even have such thing monthly fee.

    Any one know how I can see my statement of 10 years ago ?
    Thank you very much .

Please write your comments in the forum.