Banks are probably one of the most misunderstood sectors of our economy but no one can live without one.The consumer sees billions of dollars of profit every year, then looks at their bank statements and shakes their head.It doesn’t have to be that way because there are alternatives both within the big banks and in the secondary banking market.
Most people carry a savings account, a chequing account, a mortgage account, a line of credit and of course credit cards.All of this is tied together with the debit card.The selling point of the debit card is that it is central to all your banking needs and with it you can usually access any of your accounts from an ATM or your computer.It is integrated banking and for that you pay a price.That price is the usage fee.These fees can add up but there is an alternative.
If you go back through your statements you can get a feel for the average usage on your debit card in a month.This is the first step to saving your money.
Most of the major banks now offer basic accounts like the ones mentioned above then you choose the service plan you want to accompany that account.In this plan you will find the limits on free access to your accounts through the debit card.Choose the plan that is going to give you free access for the average number of times you use your card.Make sure this plan includes all your accounts not just one, then bring all your accounts under that service plan.
The plan will also provide interest rates on savings that will fluctuate with the plan.There may also be other perks attached to it such as senior’s discounts or free travelers cheques.You need to assess your needs then select the plan that is going to most closely meet or exceed them.This can save you money every month.
Another area that can save you money is an All in One account.This is a singular account that integrates all of your banking needs including your mortgage.The beauty of this is that as soon as you make a deposit, that money is automatically deducted from your mortgage thus reducing the balance for interest charges.This can significantly shorten your mortgage and save you money.It functions like a revolving line of credit in this respect but your money on deposit is still available to you.
The secondary banking market is attracting a lot of attention these days because they are virtual banks.In other words you only have access to electronic banking.They generally offer higher rates on deposit as well as competitive or better rates on mortgages.They do this through investment.Your deposit is placed in their investment portfolio and so it earns a high rate of return without all the overheads the physical banks have to pay.You benefit from this by saving money.Its major disadvantage is that it is all electronic banking so getting answers to your questions regarding your personal situation is difficult as opposed to your physical bank branch where you are known.
In the end, only you can make the decisions about what is right for you and your circumstances.Obviously an All in One account would be a poor choice if you don’t have a mortgage or maybe the HELOC combined with a savings account or chequing/savings account would be the better choice.Talk to your banker, talk to your accountant and make an informed decision based on your needs.It will save you money.