The way I see it, life milestones are the perfect time to re-evaluate your finances — whether you’re finally escaping school, getting hitched, buying a home or making more money at a new job. Your needs are changing, so your accounts might need changing, too.
I’ve finally bid farewell to my undergraduate years (with a virtual celebration from the laptop that got me through it all — thanks, COVID-19). That means it’s also time to bid farewell to a few financial benefits that came with my student status.
As my perks rapidly evaporate, I’m starting to realize just how much money I was saving. A discounted Amazon Prime subscription, a student price card for discounts at retailers and fast food joints and, yes, a bank account with zero monthly fees.
My account at BMO, which I obtained way back as a wee, unemployed 18-year-old, only remains free for up to 12 months after I graduate. They say you never forget your first, but I’ve discovered there’s no need to stick with a bank that charges me just to have an account.
Here’s how I made a change, and why you should, too.
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Making a switch
I started my research with my old bank. BMO charges $10.95 a month for its Plus Plan; that adds up to over $130 a year. Heck no.
Now, I’d heard of the digital bank Tangerine before — who hasn’t seen the ads for its alleged zero fees? — but I was skeptical. How could it charge you nothing, when brick-and-mortar banks like BMO and TD get away with charging people every single month?
I looked at what Tangerine offers beyond zero fees: a promotional 2.10% savings rate — later dropping to between 0.01% and 0.10%, depending how much money you hold in the account — and a $200 cash bonus if I set up direct deposit for my paycheques. (Plus unlimited free transactions and Interac e-Transfers, of course.)
While Tangerine’s touted as a completely digital service, I could still use my debit card in stores and pull out cash for free from any Scotiabank ABM. I would only be losing in-person teller service — but I think I speak for all millennials when I say, who needs that?
As for the competition? Well, Scotiabank is offering a bigger signup bonus of $300 if you sign up for an Ultimate or Preferred package, but you need to hold thousands in the bank to keep your account free. And EQ Bank boasts zero fees and an oh-my-gosh 1.25% interest rate but doesn’t offer any special bonuses for switching.
What’s the pick?
After weighing all the pros and cons, I decided to go with the funky orange bank.
Signing up with Tangerine was super easy: I just entered my personal info and transferred some money from my old bank account to confirm I am indeed an Actual Human Being.
And, of course, I snapped up that cash award. Say what you will about college students, but we can spot a good deal when we see one.
Once I made the switch, there was no point in keeping my old bank account around, especially if it was going to charge me money just to keep it alive.
Closing a bank account won’t hurt your credit, but it is kind of a hassle. You can’t just click Close Account and then watch it vanish forever. You might be able to close an account over the phone, or you’ll have to visit the nearest branch in person; it just depends on the bank.
Once you’re sure you’re banking up the right tree, take a look at the rest of your finances to ensure they match where you are in life now. Maybe it’s time to finally jump in the stock market so you can dream of retiring some day?
As for me, I recently received an offer for Tangerine’s Money-Back Credit Card — and I snapped it up.
I had planned to get another credit card anyway. Students and other young folks usually don’t have a lot of credit history — one of the factors that count toward your credit score. That could spell trouble when I try to get an affordable rate on a mortgage or car loan later in life.
And it made perfect sense to go with Tangerine’s credit card offer. Not only did it promise zero annual fees, I’d get 2% cash back on two categories of my choice, like groceries, entertainment or recurring bill payments. Y’all know I’m going to be redirecting my Netflix bills here.
Just remember, before you start applying for new financial products, you should probably check your own credit score first. If you have a poor score, you won’t be eligible for the best products and rates.
When I last checked my credit score for free with Borrowell, it advised me to increase my credit mix if I wanted to improve. I’ve been bumped up by 39 points since! Not too shabby at all.
Bank based on your needs
The bottom line is that you shouldn’t stick with an old banking or investment account out of sentiment (or laziness).
Take a moment to reassess your financial priorities at each stage of life and figure out whether you need to make a change.
Especially when it comes to banking, you don’t want to lose money for allowing a company to hold your cash — so choose the service that best benefits YOU.