Maximize interest earned, minimize interest paid
Last updated: November 9, 2020
Growing your savings while managing your day-to-day expenses can be a challenge. Old habits can drive you to manage your bills from your chequing account and move what’s left at the end of the month to your savings account, however, between the monthly chequing account fees that eat into your balance and the low (if any) interest on that chequing account, it leaves considerably less for savings. And if you have a credit card bill to pay, it’s a careful balance between holding your money to earn interest and paying off the card by the due date, to avoid big interest charges or a negative effect on your credit score.
A Savings Plus Account + Your Favourite Credit Card= Everything You Need
What if there were an easy way to increase the interest you earn on your balance, eliminate those monthly fees, and minimize the interest you pay on your credit card balances? Wouldn’t that make it easier to save? And what if that way was flexible, convenient, and you didn’t have to worry about those big interest charges that come with missing your credit card payment?
Consider this. If you haven’t already, opening a Savings Plus Account will help you eliminate monthly fees. Switching your direct deposit to this account can offer greater returns – you’ll earn high interest on every dollar from the moment your paycheque is deposited to your account. This means all of your hard earned money is growing, even if some of it only sits there for a short while (because sadly, we all know that credit card payment due dates always come around).
Don’t get caught by high interest charges
Next, set up your credit card to automatically withdraw funds directly from your Savings Plus Account each month, on or before the due date. Although credit cards from all of the big five banks, as well as American Express and MBNA are eligible, it might be a confusing process - so we’ve compiled a reference guide to help you get started. Doing this will help maximize the amount of interest you earn by keeping your money in your Savings Plus Account until it is needed to pay off your credit card, while ensuring that you don’t get caught paying those high credit card interest charges. Keep in mind that carrying a balance on your credit card from one statement period to the next, may incur significant interest charges.
Each bank has its own process to set up the automated payments, but once you’ve set it up, you’ll never have to worry about missing a payment again. Flexible – check. Convenient – check. And once it becomes effortless to pay off your credit card balance, you’ll want to use your credit card for all of your day-to-day transactions to maximize your credit card reward points.
Here’s how to get started:
Step One: Open your no-monthly fee Savings Plus Account, if you haven’t already.
Step Two: Move funds into your Savings Plus Account, and start earning high interest right away.
Step Three: Set up your credit card(s) to be automatically paid out of your Savings Plus Account.
It’s a simple way to maximize your savings while avoiding interest charges on your credit card for your day-to-day transactions. Now that’s Money Well Banked.
This quick reference guide could help you set up your credit card for pre-authorized payments.
|Credit Card Issuer||Offer Pre-authorized payment?||Helpful link:||What do you have to do?|
|RBC||Yes||RBC Visa Card||
Call 1-800-769-2512 or email Customer Support within online banking
|TD||Yes||TD Credit Card Pre-authorized Payment Form||
Going to your local TD branch OR faxing it to 1-888-295-4835 OR mailing it to:
TD Canada Trust
P.O. Box 337 STN AOrangeville, ON L9W 9Z9
|BMO||Yes||How to set up a pre-authorized payment||
|SCOTIA||Yes||Easy ways to pay your credit card||
|CIBC||Yes||How to make credit card payments||
P.O. Box 9625 STN T
|AMEX||Yes||Amex electronic payment enrollment form||
Amex Bank of Canada
|TANGERINE||At this time, pre-authorized payments to a Tangerine credit card can only be debited from a Tangerine account.|