Skip to main content Skip to chat

Are these fees eating away at your money?

November 17, 2020

Written by Sara Jane Breault

Key takeaways

  • The more places we keep our money, the easier it is to forget it. In Canada, millions of dollars are sitting in forgotten accounts.

  • Having fewer chequing accounts means you’ll pay less in monthly account fees and potentially avoid "NSF" (for non-sufficient funds) fees as well.

  • Keeping your money together in fewer chequing accounts and depositing what you don’t need to spend into a savings account means you’ll earn more interest overall.

Are these fees eating away at your money?

How is it possible to forget about your money? It's almost inconceivable given that we never seem to have enough. And yet, it happens much more easily than you might think.

Maybe this is a familiar story: After a $40 ABM withdrawal, you spend $20, but forget the other $20 in a coat pocket. The season ends, and the following year when you take that coat back out of the closet — surprise!

There's a happy ending there, but if you happened to give that coat away without checking the pockets, well… you just lost $20.

The more places we keep our money, the easier it is to forget about those we rarely use. In Canada, an estimated $888 million is sitting in forgotten accounts. As they say, out of sight, out of mind! 

Apart from the fact that an account may be completely forgotten and the money held in it lost forever, here are some other good reasons to avoid having multiple chequing accounts unnecessarily.

Reducing banking fees

Many banks charge a monthly fee for each chequing account that you have. Although the fees may seem insignificant at first, multiply them by the number of accounts you have and that monthly cost can end up being pretty hefty. Next time you're sifting through your chequing accounts, consider whether it might be a good time to move your funds into a single no-fee chequing account.

Avoiding inactivity fees that can eat away at your balance  

A chequing account is meant to be used to facilitate the flow of money. To encourage you to use your account, banks charge inactivity fees if no transactions are posted to the account within a certain time frame. It's pretty annoying to lose money by doing nothing, so you're best off to make sure you don't have accounts you're not using.

Dodging NSF fees

If a scheduled payment fails to go through because there isn't enough money in the account, you could end up seeing the letters "NSF" (for non-sufficient funds) — along with a sizable fee — on your next account statement. In addition to incurring fees due to insufficient funds, this could lead to a decrease in your credit rating. Some banks report this type of blunder to the main credit reporting agencies. Double whammy! After it happened to me, I changed strategies and drastically cut back on the number of chequing accounts I have. I won't make that mistake again!

Keeping everything together helps your money work harder 

With multiple chequing accounts, you can lose sight of small amounts, and larger ones, too. And maybe you had plans for that money: a trip, a child's education or debt repayment. Having it scattered means you're not making it work as hard as it could. By keeping all the small and large amounts that are scattered around here and there in one place and depositing them into a real savings account, your money can grow a bit more than it would in a chequing account with a much lower interest rate (or even no interest at all).

A chequing account should be used as a transit point for money — a sorting station that distributes it across various bills and savings accounts. Money really shouldn't stay in the account for long, so there's no need to have too many of them.

This article or video (the “Content”), as applicable, is provided by independent third parties that are not affiliated with Tangerine Bank or any of its affiliates. Tangerine Bank and its affiliates neither endorse or approve nor are liable for any third party Content, or investment or financial loss arising from any use of such Content.

The Content is provided for general information and educational purposes only, is not intended to be relied upon as, or provide, personal financial, tax or investment advice and does not take into account the specific objectives, personal, financial, legal or tax situation, or particular circumstances and needs of any specific person. No information contained in the Content constitutes, or should be construed as, a recommendation, offer or solicitation by Tangerine to buy, hold or sell any security, financial product or instrument discussed therein or to follow any particular investment or financial strategy. In making your financial and investment decisions, you will consult with and rely upon your own advisors and will seek your own professional advice regarding the appropriateness of implementing strategies before taking action. Any information, data, opinions, views, advice, recommendations or other content provided by any third party are solely those of such third party and not of Tangerine Bank or its affiliates, and Tangerine Bank and its affiliates accept no liability in respect thereof and do not guarantee the accuracy or reliability of any information in the third party Content. Any information contained in the Content, including information related to interest rates, market conditions, tax rules, and other investment factors, is subject to change without notice, and neither Tangerine Bank nor its affiliates are responsible for updating this information.

Tangerine Investment Funds are managed by Tangerine Investment Management Inc. and are only available by opening an Investment Fund Account with Tangerine Investment Funds Limited. These firms are wholly owned subsidiaries of Tangerine Bank. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.