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Choosing a bank shouldn’t be a no-brainer. It’s not uncommon to bank where your parents did – that bank account that they opened for you at the tender age of 5, where all of those generous grandparently cash gifts went, is still the one you use today. While this is the easy solution, it isn’t always the most financially astute one. Canada has a myriad of banking options, from higher-interest online only banks such as ING, to bricks-and-mortar Big Banks like RBC and TD.
While it seems like all banks are the same, the products, services and style of each bank will vary. Banks are more like marriages than dating: think long-term relationship, and then do your research accordingly. Take into account your own personal quirks. My best friend is addicted to movies, and her go-to stress reliever is and always has been Cineplex. Scotiabank has a program that rewards you with points that lead to free movies, and since moving her finances there, she’s found that her movie financial outlay has lessened significantly. She’s also a fan of a program they have that rounds up each of your debit purchases and deposits the difference into a savings account. I realize that a few pennies won’t even buy you that inaccurately deemed penny-candy anymore, but over time, and if you don’t touch it, it adds up, particularly if you’re a hardcore debit user.
Other banks offer rewards that range from Airmiles to flight points to bonuses such as discounted theatre tickets. Credit unions are similar to banks but smaller, and you generally have to purchase shares in them for a small amount. You then ‘own’ a teeny portion of the credit union…it’s like being a member. Credit unions tend to have higher interest rates for bank accounts and lower rates for mortgages. If you are usually local, they might be a good fit for you. The downside is that if you’re in Vancouver and want to make a deposit into your Calgary credit union account, you’ll have to wait…whereas with a Big Bank, you can make deposits at any branch in the country and have it go into your account.
Saving isn’t natural for anyone, and given that in any day, you will be bombarded with various and sundry ways to spend your money, spending comes much more easily. The easy way to save is to automate it – set up your online banking to take money out the moment you get paid and siphon it into a savings account that doesn’t have a bankcard attached to it. And then leave it there! I promise you that if you took $25 from your biweekly paycheque the second you got it, you wouldn’t notice it was missing. (That does presume that you’re working regularly. If you’re working only a few hours a week, different rules apply. Also, if you’re self employed and your income is up, down and all over the place, that will fall into another category as well).
Actually, even if you’re not local, Credit Unions can be fairly handy as well. I’m a member of two Credit Unions – one in SK (my first account, also the Credit Union where my Mom worked) and on in BC, but I live in Alberta! My main account is the BC Credit Union and l opened the account when I lived in Vancouver. But I’ve kept and used this Credit Union with very little issues or problems when I lived in Ontario and where I now live in Alberta. I can deposit money into my account at any Credit Union ATM and, equally, can withdraw cash without penalty at any Credit Union ATM. Sure, I can’t go into the bank and withdraw or deposit cash from an actual teller, but many banks now charge you for doing that. So I’ve been able to develop a relationship with my Credit Union, pay no fees for my chequing or savings accounts and benefit from great interest rates on my chequing and savings accounts all the while being able to move around the country. So, don’t overlook Credit Unions too quickly!
You know, I wasn’t aware that I could deposit cheques into any credit union bank! That’s really useful – thanks Ang!