My strategy with banking is to reduce fees wherever possible (to zero ideally), and to maximize rewards wherever possible (which means always spending with credit card). As a result, I actually earn money by banking, I don't lose it to fees, and my cash keeps up with inflation. Let me preface this section with a few rules:
- Unless you've done the math, and will come out on top in terms of benefits utilized, never pay an annual fee on any credit card.
- Never pay a fee on any chequing/savings account products, for anything (except wire transfers). There is always a free alternative somewhere else.
- If the store you're shopping at accepts credit card, always use a credit card that pays you back with rewards.
- Make an annual budget, and track every transaction against that budget in real time. Immediately record credit card transactions, don't wait until the statement comes.
- Automate your credit card statement payment by setting up pre-authorized debit on the due date. Never pay your credit card bill until just 2 days before your bill, and always pay in full. This will maximize the interest you earn on the cash you have. The longer you have it the more interest you earn.
- Don't pay any foreign currency transaction fees.
- If possible, do your day-to-day transactions and keep any excess balance, emergency fund, or cash savings in an account with the highest available interest rate.
My current arrangement, detailed below, provides me with the following benefits at absolutely no charge:
- Direct Deposit
- Free cheques
- Unlimited transactions
- 5 free Interac eTransfers every month
- Access to a human teller (so I can get laundry coins)
- 2.3% annual interest income on all cash deposits
- 0% foreign currency transaction fee
- Free rental car insurance
- Free emergency medical trip insurance
- Identity theft assistance services
- Doubling of manufacturer warranty on purchases, and 90-day purchase insurance
- 3% reward on groceries, medication, gas, flights, rental cars, hotels, vacations, and mobile phone bill
- 2% reward on all restaurants and recurring bills
- 1.75% reward on all other spending
The financial products I use to deliver the benefits mentioned above are listed below, along with the main features each delivers. None of these products charge a regular account maintenance fee, and none of the benefits mentioned charge a per-use fee.
- Deposit accounts
- Credit Card accounts
- PC World Elite Mastercard
- Rogers World Elite Mastercard
- 1.75% back on all purchases
- No foreign currency fee (charged at 2.5% then cash back at 4%, netting you 1.5%)
- Tangerine Money-Back Credit Card
- 2% back in two categories of your choice (I chose restaurants and recurring bills)