Tips and Tricks: How to handle regular banking with an online bank
I’ve been with online banks since I was 19 (like President’s Choice (PC) Financial or Tangerine in Canada).
I basically hate paying bank fees, don’t like leaving money as a balance in there just to waive the fees (sometimes I use more than I need and I don’t want to think about that) and have run the gamut in learning how to handle online banking.
1. HOW TO AVOID THE DREADED BOUNCED CHEQUE / NSF FEE
So I am an idiot.
I like to keep zero dollar balances in accounts and I move money all over the place to try and get the best interest rate.
In doing so, sometimes I totally, utterly EFF UP and end up putting in a transfer for MORE than what is available in my account and I get charged a NSF (insufficient funds) fee of $45.
The trick to avoid this is simply to EMAIL THE MONEY TO YOURSELF.
It only costs $1 and you can email however much you need to yourself and deposit it at your other bank account to avoid this fee. It’s instant, super fast, and $1 is way cheaper than $45 especially if you KNOW you don’t have enough and you can see the collision happening.
$1000 in my PC Financial account
I ask Tangerine to debit $1500 from PC to move into Tangerine
OOPS! I realize I only have $1000 to debit because I had already moved $500 the day before and screwed up.
Enter: Email money transfer $500 to myself, and deposit it into PC
Wait for Tangerine to debit the money which is now $1500
Avoid: $45 NSF charge.
*dusts off hands*
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2. HOW TO GET A BANK DRAFT
When I bought my car, it was around $9000. I needed a bank draft / certified cheque or else I couldn’t buy the car, but what’s a girl to do when you have the cash sitting in your online bank account to buy said car, but you can’t get a bank draft from an online bank like Tangerine or PC?
Solution: You have an account at a standard bank like TD Bank, and you have a LINE OF CREDIT you can draw upon (who cares what the interest rate is), and use the money, then pay it off with a cheque from your online bank.
I have to get a bank draft for $9000.
I go to TD Bank. I get a bank draft for $9000 from my line of credit and pay the $7.50 draft fee.
On the spot, I write a cheque to myself from PC Financial for the entire amount of $9007.50
I deposit that amount into my line of credit.
The debit cancels out the credit, and I end up with a balance of $0.
To icing on the cake is I didn’t pay a SINGLE CENT in interest for using the line of credit, because I paid it off THAT DAY. If I had paid it off the next day, I’d have been charged 8% annual interest on the $9000 (compounded daily).
3. HOW TO GET U.S. DOLLARS
Have a USD account with a standard bank like TD. This is what I do, and I deposit all my USD cheques in there that don’t come via Paypal, and I convert it to CAD or keep it in USD and transfer it to Questrade to buy stocks.
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Any other tips and tricks to share?