Banking help? Should I open a tax free account?? other options available??

[roseofblack25]

Ok so to start off I already have two bank accounts, one is a daily interest savings account that I deposit my paycheques in and take money from/use my debit card with, and I always keep a low amount in this account because there is virtually no interest on it. I only keep it with the low interest because it has the cheapest transaction fees for debit transactions. I also have another account which is a high interest account. Right now this has the majority of my savings in it. I can't really touch it because the fees are ridiculous if I were to ever withdraw money regularly from it, plus I wanted it for mainly saving for large things like a car or any emergencies that may come up in the future where I may need the cash.

I was thinking about setting up one of the tax free savings accounts. I figure I can put about $200 a month in it to save and I have around $600 saved right now that I wouldn't miss that I could put towards opening it. I am wondering though if I should keep my other two accounts and get this one as well or if I shouldn't have three accounts going at once. I don't really want to close either of my other accounts since you can only contribute $5000 a year to this account and I have managed to put away more than that in the last year and I started working about half way through the year!

I am also thinking about opening the tax free account at a different bank as well, not because I dont like the bank I am currently with, but because CIBC has it with no fees at all unless you transfer it to another bank. The bank my current accounts are with will only allow you to put the money in as a lump sum or set up preauthorized times to take money to put away for you and I don't want to have that done. I want to be able to freely put money away when I choose and how often, since the amount I can put away each month will depend on my paycheques or if something comes up where I need the cash instead of putting it in the account.

[Tylers]

If you're wanting to save some money, here is a government sight that lets you see what financial institution offers the cheapest accounts in your area. It might help you find someone that charges you less per month.

http://www.moneytools.ca/index.asp

As for the Tax Free Account - Yes, there is virtually no down side to this as long as you're not getting charged - there are lots of institutions that offer these for free.
If you're earning more than $30k-$35k a year, then you should also consider RSPs. If less, then the Tax Free is a good way to go.

[BestRates]

Yes you can open a tax free account.
As a saver, one of your primary objectives should be to maximise the return that you get from your money. In part, this involves making sure that you've done your research and have picked a savings account with a good headline

[gourmetsue]

I love our TFSA. My dh works for a bank and we have joint accounts and each our own TFSA. At the moment they don't do online transactions so the money isn't easily accessible so I have a tendency to put money into it and forget it, which is a great way of doing some extra saving. I just match our RRSP contribution every 2 weeks into that account until they are maxed out.

[shellylynn39]

I have banked for over 11 years with PC financial. I have only paid two transaction fees in that time. I bank online and love it. They have all the accounts that you could ask for. It is something to consider.

[ashedfc]

Everyone should have a TFSA.
Its the ideal place to keep your unused money (or money you don't need immediately).
Following things to consider-
1. It should be No Fee (to operate the account & No Fee to access your money).
2. It should give you a higher growth (as all the growth is 100% tax free).
3. Banks, Credit Unions, Mutual Fund companies, Insurance companies (there are lot of options available).

Example:- If you can save 1 Coffee a day - You have 1 million by the time you retire
($2 per day for an 18yrs old in a TFSA account will have a million at age 65). It sounds too good to be true, but, that's the reality.
www.edfc.ca

[kduever]

The short answer is - yes, you should have one.

But you should also understand that a TFSA is not like a regular bank account - you don't have to settle for a daily interest account if you don't want to. (At the moment, most daily interest accounts are not even keeping pace with inflation).

TFSAs can also include things such as stocks, GICs and mutual funds. But it all depends on when you anticipate withdrawing the money and what your risk tolerance is. A good financial advisor should be able to help you determine this at no cost to you.

[JumboShrimp]

Yes, opening a TSFA is a great idea! All the money that you put in there and any interest that accumulates will always be free from tax, unlike RRSP's where the tax is only deferred, meaning that you will have to pay tax when you take the money out of the RRSP. RRSP's are still good though, because they are meant for retirement when you don't have as much income, so that you end up being in a lower tax bracket. This means, you would pay lower tax on the amount of money you take out of the RRSP compared with the amount of tax you would pay if you had never invested it in the RRSP. Of course, this is assuming that you have a decent salary. If you are only working occasionally or at a part-time job and don't make much money, then investing in RRSP's right now might not really be smart since you may actually be paying less tax now than when you're retired.

Haha.... hope I'm not just confusing you! Anyway, yah... TFSA's are a great vehicle for saving money. I have mine at Ally.ca. I connect my Ally.ca accounts to my accounts at PC Financial, TD Canada Trust, and HSBC so that I can transfer money wherever I want between the banks electronically for free. It's great. And I never have to pay any bank fees since I do all my daily banking at PC Financial. I have a TD saving's account for those odd times when I need to use a real bank. This saving's account has no monthly bank fees and allows up to 2 transactions per month. Deposits into the TD account is always free and has no limit to the number of deposits you can make per month.

I only have HSBC because of my mortgage.

Really, I'm surprised that so many people seem to be content with using accounts where they get charged monthly fees. If you are just doing regular daily banking stuff, why not get a PC Financial chequing account? All regular transactions are free and you get free cheques. The interest rates at PC Financial are also better than those big 5 banks. What is there to lose? You can even keep your CIBC or whatever chequing account and open a PC Financial one to try it out for a while. If you're not impressed, just close it or stop using it. If you are impressed, you can close your CIBC chequing account and only keep a savings account at CIBC that doesn't charge monthly fees for those times that you need a real bank.

PC Financial also has a high-interest savings account and it costs you nothing to withdraw from it. The only catch is that you can only withdraw one day in advance. So you can't just withdraw money from it right now. You have to set it up to withdraw for tomorrow's date. And by "withdrawing", I mean transferring money from the high interest savings account into your chequing account. With PC Financial, you can't actually withdraw money from your savings account at an ATM. You can only do this with the chequing account.

I can understand if you live in an area where there aren't many ATM machines, but PC Financial is a subsidiary of CIBC and you can use CIBC ATM's as well as PC Financial ATM's to access your PC Financial accounts. So, if you have CIBC anywhere near you, this shouldn't be a problem.

If you get an account with Ally.ca, you can hook it up to both your CIBC and PC Financial accounts so that you can transfer money electronically between banks. Actually, I think PC Financial has a feature where you can hook it up to a different bank, but you need to send them a void cheque or something from the other bank, which won't work if you only have a savings account at the other bank. But with Ally.ca, you just need your account number and the branch/transit number, so you can hook it up with savings accounts just fine.

Okay... i'm really sorry for the long post. I just kind of cringe when i find people who are paying monthly bank fees. My in-laws opened a PC Financial bank account once but then never used it after their initial deposit. They are still paying monthly bank fees at TD. And they complain that they have credit card debt and their rent is too high and don't know how to save money. So yeah... you can lead a horse to water but you can't make it drink!

[siantzi]

Hi there,

I jumped on the bandwagon last year when they first started promoting them but a meeting with my financial advisor completely changed the way I look at them...

I initially got an ING account with 3% interest which seemed good to me.

My financial advisor told me a few good points:

1. don't simply use this account as a savings account or a place to save money for a rainy day, use it as a place to hold money until you retire. Then, when you take it out you won't pay any tax on it. You should have another place for an emergency fund with easy access.

2. If you leave that money in and don't ever spend it, you will make way more money through compound interest. Also, there are alot of other options other than these savings accounts that the banks are totting, that sort of work like mutual funds, the more risk you're willing to take, the better return you will get in the long run.

I now have a mutual fund based one with moderate risk, that hopefully will grow and earn more interest than the ING account at 3% (which I think has now dropped to a lower rate anyway). We've also set up an automatic payment plan that runs in parallel with my RRSPs to take advantage of buying at low/high times.

good luck.

[DaniDeals]

A TFSA is a must have in your financial portfolio...TAX FREE!!! you can't beat it!

[roseofblack25]

my current bank wants me to close one of my accounts before they will let me open a TFSA...sooo now can I just go open one at another bank without having a normal account with them or will I have to set up another bank account before being allowed to set up a TFSA??

[kris10]

Yes,you should get one!! ING direct has tax free savings accounts at 3% ... i can get you a orange key and u can get a $25 start up bonus..pm me if interested.That's not why i'm posting though,to get a referal. You would have up to 10 000 contribution room as soon as you open it wouldn't you?

I used to have mine in TD and i don't think they charged if you take money out one time a month from your tax free savings account either,but i don't like td personally.

I don't think having 3 accounts is that bad at all. That's how many i have. taxfree is a must really..

[Woofy]

my current bank wants me to close one of my accounts before they will let me open a TFSA...sooo now can I just go open one at another bank without having a normal account with them or will I have to set up another bank account before being allowed to set up a TFSA??

I didn't know there were restrictinos on opening a TFSA.

Did your bank provide any reasoning behind you having to close one of your accounts?

[JumboShrimp]

my current bank wants me to close one of my accounts before they will let me open a TFSA...sooo now can I just go open one at another bank without having a normal account with them or will I have to set up another bank account before being allowed to set up a TFSA??

Wow, that's weird. Why would they want you to close one of your accounts to open a TFSA? Sure, you can go to a different bank to open up a TFSA, but you might have to open up a regular account with them as well. You'll have to ask them. I don't think it's really a problem to have to open a regular bank account as long as it has no monthly fees. I have like 10 different bank accounts, but not all at the same institution. None of them charge any monthly fees.

[ashedfc]

There are good investments for as low as $25 a month, or even $10 per month, & all are no fee. You should not be paying any fee, to administer your account.

Wealth is always created over time. A regular deposit of a smaller amount is the easiest way of wealth creation, without affecting you budget.
Say $10 a month over the next 25years, do the math at 6% interest rate & see the value (you will be shocked to see how much it becomes).