Savings Accounts Top 10 Tips

We've looked at lots of research and have spoken to industry experts to compiled our RateSupermarket.ca Top 10 Tips. Read below to learn how to get the most out of your savings accounts.

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1.Get the highest rate

Putting your savings into an account that isn’t offering you the highest interest rate is practically giving money away. Even half a percent can make a big difference to your balance over time. Compare interest rates on savings accounts and go with the highest.

2.Switch to get a better rate

It might seem like a hassle, but these days switching is pretty easy. Most providers will let you sign up for a savings account online, so you don’t even need to take a trip to your nearest branch.

3.Don't pay fees

When you deposit your money with a financial institution, they use that money to lend out to other customers. The interest they get on the loan, minus the interest they pay you on your savings is extra money that the bank makes (and they make a lot of it). With a slew of no-fee savings account options available, you’re sure to find a product paying a high interest rate with no fees.

4.Start young

Compound interest is a beautiful thing, but it works the best over longer periods of time. If you start saving $100 every month for 20 years, at a 3.5% interest rate, you can earn over $11,000 in interest. But that same savings over 10 years will give you just over $2,500. Start saving when you are young to make your money grow exponentially.

5.Set a budget

Budgeting and saving go hand in hand. When you stick to a budget you’re likely to save more. There are a number of fantastic budgeting tools available that can take the monotonous work out of this task. Mint.com is a free software solution offered by Intuit. It lets you view all of your accounts at once and automatically classifies certain expenses (i.e. Tim Hortons will automatically hit your coffee/meals budget).

6.Make regular deposits

It's great if you can put a lump of money into a savings account, but most people don’t have that option. Saving can seem daunting, but by making smaller regular deposits the task is more easily achievable. Create an automatic withdrawal from your chequing account to your savings account each month for whatever you can afford (even $50 every month will start to add up).

7.Avoid withdrawals

Don't just use your savings account like another chequing account. Once you put the money in your savings account avoid taking it out. When you start saving create a list of goals or emergency that would warrant a withdrawal from the account. If the item doesn’t make the list then don’t take out the money.

8.Make sure your money is protected

For member financial institutions, the Canada Deposit Insurance Corporation (CDIC) automatically insures up to $100,000 of your savings if your bank goes bust. For a list of CDIC members visit: http://www.cdic.ca/members.html. If you have more than 0,000 in savings, it’s a good idea to spread it out among different financial institutions to maximize your coverage available.

To see if all of your savings is insured, use the CDIC Deposit Insurance Calculator.

9.Get advice

With the right savings vehicle your money will grow more quickly. There are a number of options available from GICs to TFSAs to RESPs. If you don’t quite know which direction to go in, get some professional help. Speak to a financial planner or set up a meeting with your bank manger.

10.Use more than one savings vehicle

It's very likely that your financial goals justify more than just a chequing and savings account. When it comes to building for your retirement, saving for post secondary education, investing to get the most tax benefits or putting money aside for a new bathroom, you’ll probably need more than one savings vehicle to effectively achieve all of your goals. Speak to an expert about the variety of products and services available and what would work best for you.

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