Pros/Cons of opening multi bank accounts

[Greenstoner]

As the title stated, pros and cons opening multi bank accounts?

I have my primary account with TD, but i am thinking to open another account form a different bank just for saving.

I'm thinking of doing this is to help myself with better money management, put aside the money that I would like to save in a different bank to prevent myself from spending it.

[taylor192]

How to you plan to manage transferring money between bank accounts? Most of us get direct deposit paycheques, so you'd have to withdraw from one bank, and deposit in another.

I have 3 bank accounts, yet all with the same bank.
1. High interest online only account - to park money while I decide what to do with it
2. Chequing account - I put money in this account to cover all bills
3. Savings account - the account I spend out of

This way if I write a cheque or know my rent is due, I transfer enough from 1 or 3 into 2 and not worry about when the cheque is cashed, cause the money will always be there to cover it.

[Greenstoner]

I have only a chequing account that recieves money from direct depost from paycheques and I use it to pay my bills and loans and eveyrthing else.

Yes, i was thinking of phsically withdraw money from my primiary account and deposit into a dedicated SAVING account from another bank. ( kept me from withdrawing it unless emergency )

Dont ask me why but i know i will be having problem with manage my money if all my accounts are within the same bank :P

So back to my topic, I also want to know if there is any affect on my credit score if I do it this way? Does it helping me in anywhere or not helping any at all?

[johny]

Originally Posted by taylor192

How to you plan to manage transferring money between bank accounts? Most of us get direct deposit paycheques, so you'd have to withdraw from one bank, and deposit in another.

I transfer money from TD to PC online. no problem no cost. takes 2-3 days though for the money to move.

[misteranswer]

or just write yourself a cheque.

[Greenstoner]

Originally Posted by johny

I transfer money from TD to PC online. no problem no cost. takes 2-3 days though for the money to move.

PC ??? as in CIBC ?

[taylor192]

Originally Posted by johny

I transfer money from TD to PC online. no problem no cost. takes 2-3 days though for the money to move.

I do the same to my iTrade account - I was being a bit sarcastic cause I figured he'd give that answer. Physically transferring money is dumb. Cheques cost $$$, and besides PC and iTrade, most other bank-to-bank transfers have associated fees.

[johny]

presidents choice. which is part of CIBC

[taylor192]

Originally Posted by Greenstoner

Dont ask me why but i know i will be having problem with manage my money if all my accounts are within the same bank :P

Fix this problem.

Your plan was to physically transfer cash from one bank to another. Since you cannot even trust yourself to manage 2 accounts at the same bank, do you trust yourself to hold onto cash and not spend it?

What's to prevent you from taking money out of the other account after you've transferred it? hope? faith?

I cannot spend out of my high-interest online account, its not connected to my debt card. This should help you since it seems you're terrible with finances.

Learn how to save and manage your money, don't depend on stupid tricks to force you to save.

[Greenstoner]

Originally Posted by taylor192

Fix this problem.

Your plan was to physically transfer cash from one bank to another. Since you cannot even trust yourself to manage 2 accounts at the same bank, do you trust yourself to hold onto cash and not spend it?

What's to prevent you from taking money out of the other account after you've transferred it? hope? faith?

I cannot spend out of my high-interest online account, its not connected to my debt card. This should help you since it seems you're terrible with finances.

Learn how to save and manage your money, don't depend on stupid tricks to force you to save.

WOw, i never knew you can do that ????? Damn, i should look into it

[Greenstoner]

Is there a difference between Saving account or Tax free saving account ?
If there is a difference, should I be opening a tax free saving account then ?

[taylor192]

Originally Posted by Greenstoner

WOw, i never knew you can do that ????? Damn, i should look into it

Scotiabank has a Money Master account that is not linked to your debit card. Its only available online.

[sexyaccord]

taylor192 should be a mod in this forum.
he gives good info

[SumAznGuy]

Originally Posted by Greenstoner

Is there a difference between Saving account or Tax free saving account ?
If there is a difference, should I be opening a tax free saving account then ?

Tax free savings account is one where you use the money to invest, and any earnings on that money is "Tax free" hence the name.

What you want is a regular savings account, unless you do plan on investing with that money.

Another thing to consider is that some accounts charge fees if you have below XXX amount of money. If you have 2 or 3 accounts that charge $6.95 per month, you can possibly spend $250.20 in service fees in one year.

One trick that I do is have a spread sheet and mark down where you spend your money each month. Seperate it into different catagories like gas, car payments, etc. These are things that you will budget yourself.
Then there are things you might spend on. Food, clothing, etc.
Lastly, and the lowest priority, things you want to spend on. Hookers, drugs.

Use this budget and try to keep yourself within the budget.

[taylor192]

Originally Posted by Greenstoner

Is there a difference between Saving account or Tax free saving account ?
If there is a difference, should I be opening a tax free saving account then ?

Lets separate the terms first:

- Savings account is an account that pays a decent (3%) interest rate.
- The TFSA is poorly named. Its a tax-free account that you can save money. It does not have to be a traditional "savings account" paying only interest from the bank. It can be used to hold mutual funds, stocks, bonds, ...

Here's a good plan for you:

1. Keep your current account as a chequing account.
2. Open an "online only" savings account (at the same bank).
3. Open a TFSA (at the same bank), use it to hold mutual funds
4. Practice transferring money from your chequing account to your savings account regularly. Every paycheque, logon to your bank accounts and transfer money. Its easy, I do this every paycheque.
5. Then setup a regular transfer from your savings account to your TFSA to buy more mutual funds
6. If you save > $5K/yr, setup either an RRSP and/or regular investment account. Then setup a regular transfer to these accounts.

I suggest mutual funds cause you seem to have limited financial knowledge and this would be a good start. As you learn more you can invest better.

This is exactly what I do. Every paycheque I transfer money into my savings account. Anything in excess of my "rainy day limit" (3 months salary) gets transferred to my TFSA, RRSP, or non-registered investment accounts, or none at all if I made a large purchase and need to replenish my "rainy day limit".

[Greenstoner]

^ thanks for the awesome tips ... i have barely any financial knowledge and I found the advisors in the bank are pretty useless explaining things to me.

[taylor192]

Originally Posted by SumAznGuy

Another thing to consider is that some accounts charge fees if you have below XXX amount of money. If you have 2 or 3 accounts that charge $6.95 per month, you can possibly spend $250.20 in service fees in one year.

Very good point.

Counter-point: my Money Master online savings account with Scotiabank has zero fees since its not linked to a debit card, thus the only transactions are transfers which are free.

Originally Posted by SumAznGuy

One trick that I do is have a spread sheet and mark down where you spend your money each month. Seperate it into different catagories like gas, car payments, etc. These are things that you will budget yourself.
Then there are things you might spend on. Food, clothing, etc.
Lastly, and the lowest priority, things you want to spend on. Hookers, drugs.

Use this budget and try to keep yourself within the budget.

My recommendation is a CIBC visa. It has budgeting software built into the online account, and can send you emails/txts/calls when you go over custom budget limits.

It does have its faults, as transactions can be delayed before being posted causing you to go over budget before getting a notice, yet for the most part it works really well.

You can assign every purchase to a category and track your spending for the entire year. For instance, it lets me print a report of every purchase I classified as "booze" for the entire year - and damn I drink too much.

[taylor192]

Originally Posted by Greenstoner

^ thanks for the awesome tips ... i have barely any financial knowledge and I found the advisors in the bank are pretty useless explaining things to me.

You're welcome, I'm glad to help anyone out. I didn't know much when I started, yet found the right people to ask and got some great advice early on. Now I want to return the favour.

Bank advisors you'll see... well... suck. Since you have so little to invest they set you up with an adviser that's probably still in training (ie just out of school, first "real" job). The better advisers are reserved for people with 6+ figure investment accounts.

If you do open a TFSA and invest in mutual funds, post up which bank you're with. I'll lookup the various funds and give you a plain english rundown of what you may want to do. Please don't listen to the personal adviser's "chart" they will convince you to do XX% equities, XX% bonds, ... which means splitting your investments so thin the management fees will kill your gains.

Its against common advice, yet when you have very little to start its a good idea to stick "all your eggs in one basket" then diversify as you save more.

[Greenstoner]

Originally Posted by taylor192

You're welcome, I'm glad to help anyone out. I didn't know much when I started, yet found the right people to ask and got some great advice early on. Now I want to return the favour.

Bank advisors you'll see... well... suck. Since you have so little to invest they set you up with an adviser that's probably still in training (ie just out of school, first "real" job). The better advisers are reserved for people with 6+ figure investment accounts.

If you do open a TFSA and invest in mutual funds, post up which bank you're with. I'll lookup the various funds and give you a plain english rundown of what you may want to do. Please don't listen to the personal adviser's "chart" they will convince you to do XX% equities, XX% bonds, ... which means splitting your investments so thin the management fees will kill your gains.

Its against common advice, yet when you have very little to start its a good idea to stick "all your eggs in one basket" then diversify as you save more.

I am going for your route but probably wont be opening a TFSA shortly or until my finacial is a bit stable. Def going to open a saving account under the same bank and proceeds further with your planned route. Thx again !!!!

[tiger_handheld]

Originally Posted by sexyaccord

taylor192 should be a mod in this forum.
he gives good info

agreed!



hey does anyone remember where that 0000000000000 guy went?

[Devastator]

any mutual funds you'd recommend from rbc taylor? I have my rrsp's in rbc canadian dividend, and haven't put my money in my tfsa into any mutual funds yet.

thanks in advance.

[taylor192]

Originally Posted by Devastator

any mutual funds you'd recommend from rbc taylor? I have my rrsp's in rbc canadian dividend, and haven't put my money in my tfsa into any mutual funds yet.

thanks in advance.

Let me first say I'm not a replacement for a real financial adviser. This is just my opinion:

I have some mutual funds, including a Scotia equivalent of Canadian dividend. I'm going to cash this one in particular out after the RRSP rush. Why?

- Every Feb Canadians flock to make RRSP investments in lump sums cause they didn't do periodic transfers all year. This pumps a lot of cash into the system and usually causes prices to rise, especially Canadian investments as small time investors typically like to stay domestic.

- Taxes and rates are going up this year. When, I don't know, yet consider this:
* HST starting in June is guaranteed
* property tax increase has already been approved
* business/corporate taxes may in Mar (Flaherty has only promised not to touch personal income taxes)
* we haven't heard from our provincial government how they plan to balance the books with a $2B deficit this year and Olympic fallout to come

- Housing cannot keep driving GDP growth. We've had frozen salaries, higher unemployment, negative GDP, yet a 20% housing surge. Something has to give. Until it gives the surge will continue, and continue to drive the economy.

Given all of the above, Canadian dividends look good in the short term. It'll be timing when to get out as the Canadian economy turns worse in the face of weaker housing, increased taxes, and less government spending/stimulus (and likely increased unemployment).

[quasi]

I have 6 different accounts all at the same bank. I have 2 chequings and 4 savings but 4 of the 6 are joint with my wife. I used to have 6 accounts between two different banks but it was a pain in the ass. My work doesn't use direct deposit so every payday I had to withdraw cash and deposit it into the other bank to cover the mortgage, did that for 5 years. Now I have my mortgage at my main bank and I don't think I'll ever leave unless they try and totally screw me on the rate.

It's been said but you just have to be careful about fees, I actually pay zero fees. My main spending account has no fees as long as I keep a certain balance which I do. The savings accounts don't charge fees for transfers so I just transfer money online to my chequing account if I need to get at it.

[waddy41]

i bank with RBC and ING....both don't have service charges

but IMO you don't need different accounts to keep track of your money...
you need to THINK before you SPEND

you can also calculate your month expenses and savings....and make sure that your account goes up by the amount you planned on saving

for me, i log on to online banking every few days just to see my general account balances....even if it's just a number on the computer screen, it helps to see the number increase

[turb0fr3ak]

Originally Posted by waddy41

i bank with RBC and ING....both don't have service charges

but IMO you don't need different accounts to keep track of your money...
you need to THINK before you SPEND

you can also calculate your month expenses and savings....and make sure that your account goes up by the amount you planned on saving

for me, i log on to online banking every few days just to see my general account balances....even if it's just a number on the computer screen, it helps to see the number increase

this dude got it right