How To Bank When You’re Living Paycheque To Paycheque

Nearly half of Canadians are living paycheque to paycheque.  A recent survey by the Canadian Payroll Association found 47% saying they would face financial hardship if their pay was delayed as little as one week.

Living Paycheque To Paycheque

One of the easiest ways to save money is on your bank fees, but it can be tough to change your banking routine when you’re living paycheque to paycheque.

Switching to an online bank or credit union will help save on fees but it can cause you stress in other ways.

Related: Free Chequing Account Comparison

Some banks limit the amount of money you can withdraw or transfer, especially when you don’t have an established history.

Having your deposit held, even for a few days, could mean the difference between making rent and getting evicted.

Still, when you’re ready to turn your finances around, you should start by fixing your banking.  Here are five ways to do that:

How To Fix Your Banking Routine

Stop using debit.  Debit cards are a convenient way to pay, but we pay a premium to use them.  The big banks charge $11 to $15 a month for unlimited debit use.

Related: How Debit Cards Are Costing You Money

Use cash.  Figure out what you spend each month on groceries, gas and other discretionary items and take out the cash you’ll need to pay for them.

Whether you use the jar method or the envelope system, try and make it work on just one or two ATM withdrawals a month.

Switch to a basic banking plan.  If you can stick to cash, you won’t need to use a debit card as often, so consider switching to a basic banking plan.

These plans offer 10 to 15 transactions for about $4 a month.  Fees are waived when you carry a minimum balance of $1,000 ($1,500 for TD customers), which is reasonable compared to $3,000 or more with an unlimited account.

Make it automatic.  Set up all your recurring monthly bills to come out of your account automatically, or make the payments using online banking.  Just make sure to stay within your free monthly transactions or you’ll pay up to $1 for each additional one.

Related: Best No-Fee Cash Back Credit Cards In Canada

Open a no-fee account.  No matter how hard you try, you may find that 10 transactions won’t be enough to get you through the month.  That’s where a no-fee account can help.  Open one online or with a local credit union and use it for making small debit card purchases when you don’t have any cash on hand.

Use one of the 10 free transactions at your main account to transfer a slush fund – $50 to $100 – to your free chequing account so you’re covered for any small discretionary purchases.

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  1. DaveG on April 1, 2013 at 5:55 am

    My goodness, you are making things overly complicated. Just open a chequing/savings accounts at President’s Choice Financial to do your day to day banking. All your problems above go away.

    • Echo on April 1, 2013 at 8:30 am

      @DaveG – What about the issue with holding deposits? On the website, it says PC Financial holds your deposit up to 7 business days. That’s not ideal when you’re living paycheque to paycheque.

      • Bernie on April 1, 2013 at 9:06 am

        I don’t understand the “holding your deposit” you mention. Maybe it’s a temporary thing for new customers. I’ve been with PCF for over 12 years now and have never had any issues with holding deposits or anything else! In the meantime I’ve literally saved hundreds in bank fees and made thousands in PC points which I’ve spent on groceries & merchandice.

        I also have a Mastercard with PCF which contributes to my PC points. I held my mortgage with PCF until I paid it off and now have a home secured line of credit with them. As I said, I’ve never had any complaints with this bank. I should add the customer service reps are very helpful & courteous should you have need to call them.

        I may invest in the big banks but I will never bank with fee based banks again!

        • Echo on April 1, 2013 at 9:23 am

          @Bernie – from PCF’s website:

          Direct deposits into your President’s Choice Financial bank account are available immediately.

          Canadian dollar bank machine deposits will post to your account immediately but funds available are subject to a hold of up to 7 business days or your daily hold limit, as outlined in your product letter.

          I’m all for using a no-fee account but I think it’s beneficial to keep an account open with one of the big banks, especially if you don’t want any problems getting at your money.

          • Doug Mehus on March 28, 2014 at 10:01 pm

            That’s not correct, actually. While they can be subject to that hold period, generally if you have an average, good or excellent credit score, you’ll have a daily and/or weekly ATM “access to deposited funds” limit that generally can be as low as $200-500 and upwards of $5000, $10,000 or more. For higher limits, it generally helps to have additional funds on deposit and/or various other credit products.

            Basically, they just state their official “policy” but they also state once you open an account, you will receive your “deposit limit” in your “product limit” and it can be automatically or manually increased at regular intervals. 🙂

            Hope that clarifies,

      • DaveG on April 1, 2013 at 9:56 am

        Can’t say for sure, but I suspect all banks reserve the right to put holds on deposits. I’ve been a PCF bank account holder shortly after they went into business (12 years ago?). I’ve never had a deposit put on hold to my recollection. I think that once you have been a customer in good standing for a while, that hold policy is simply waived.

        • Colleen on April 2, 2013 at 3:26 pm

          I love PC and they hold when it is over $1000 but now only 5 days. No issues at all when direct deposit.

  2. Jane Savers@ The Money Puzzle on April 1, 2013 at 6:22 am

    My goal for 2013 is to get to a $1,000 minimum monthly balance and stay there because my bank doesn’t charge fees if you have a $1,000 in the account. Easier said than done. Today there is $42 in the account.

    I am too focused on eliminating my HELOC debt to think about savings but I am wasting $14 each month in bank fees. I haven’t found the solution to this problem yet.

    • Echo on April 1, 2013 at 8:31 am

      @Jane – I think you’d get a quick win by switching to a basic banking plan (for $4 a month) and opening up a no-fee account.

    • Rosemary Wells on April 1, 2013 at 3:25 pm

      ING charges zero bank fees, has an interest paying chequing account and high interest savings accounts. It is my primary bank and I pay NO fees. Also, some of the big banks waive monthly service fees for clients 60 plus but you have to ask….they don’t tend to point it out to you. I have auto payments to move money from chequing to savings and when it gets to around $500, I move it to a GIC’S or into TFSA or RRSP also at ING. Takes seconds online!

      Love, love, love this way of banking!

  3. Wendi on April 1, 2013 at 7:04 am

    P.C Financial may be wonderful for points but they are terrible in keeping the balance up to date. I’ve emailed customer support several times and have been told there is a delay for posting transactions up to 7 days and 2 to 10 days delay in posting payments. P.C is CIBC’s sister company which has almost real time transactions. RBC also has real time transactions so what’s the hold up with P.C. ?

    If you don’t want to pay fee’s call your bank. One year we had $300 in fees with the Everyday Chequing account, min $1000 balance, at CIBC. I called, spoke to a CSR in Halifax, was credited the $300 back and for the rest of the year everytime fee’s appeared for monthly transactions they were also reversed. Every January I review my account for fees and then call. Every year they put the monthly fee reversal back onto my account. But I have to call.

    • DaveG on April 1, 2013 at 7:21 am

      The original post was not about credit cards. You don’t need to use a PCF credit card just because you have PCF banking account. In fact, I use a Capital One Travel Aspire credit card myself.

      Also, PCF chequing accounts have no minimum deposit requirements. No fee reversal pleading required! 🙂

  4. Echo on April 1, 2013 at 9:28 am

    For the record, I don’t live paycheque to paycheque but I have been burned recently by a bank’s hold policy.

  5. Judy on April 1, 2013 at 9:34 am

    ING also has a free chequing account. According to their website they even have free overdraft protection.

    I have used PCF for years as a second account in much the same way that Echo recommends, but still had trouble keeping my debits low enough to not incur extra fees. Don’t forget that automatic bill payments also count as debits. Now I just keep a $1000 minimum balance to avoid any fees. I realize that this might be hard for some people, but once you have it in there, just think of it as $1000 = 0.

    I don’t use cash much. I find it disappears much too easily and is hard to track. I prefer to use my debit card for all but the smallest purchases. I get $50 cash out on paydays, and that has to last me until my next payday.

    • Echo on April 5, 2013 at 8:45 am

      @Judy – I’ve set up automatic bill payments to come off my cash back credit card rather than coming straight out of my bank account. At least I’ll make a few bucks on those transactions.

      I agree about the minimum balance. I don’t think twice about it, other than the fact that it’s saving me $4 a month to keep it there.

  6. Joe on April 1, 2013 at 11:30 am

    If people insist on banking with the “big guys” — they should NOT, especially if they’re broke — then at least keep the minimum in the account to waive the fee. It’s way higher than interest you can earn on the account and can double as a small liquidity fund (I hesitate to call $1500 anything other than a baby emergency fund or liquidity fund).

    I think with the free accounts discussion you missed out on two things. At ING, you can often get $50 free for setting up an account (depends on the promotion). For somebody living paycheque to paycheque that’s a godsend. Even more important, there’s free “whoops” protection for some small amount, I think like $300, which sure as hell beats overdraft.

    • Echo on April 5, 2013 at 8:49 am

      @Joe – Yes, the overdraft protection is nice. It’s $250.

      I still think it’s important to have two chequing accounts, even for a short while. When you set up your ING account you’ll need to mail them a $100 cheque and it can take a while to get the account set up and running the way you need it to work.

  7. CanadianDaniel on April 2, 2013 at 9:20 am

    I know that credit unions have a reputation for lower banking fees, given that their directive is to serve members rather than prioritize profits.

    Would you say that credit union credit cards offer superior rates, fees and rewards to bank credit card issuers?

  8. Bet Crooks on April 2, 2013 at 1:33 pm

    In some ways it’s too bad that employers don’t just pay in cash anymore. Imagine having to pay someone every time you withdraw your own money! It’s ridiculous! They used to have a minimum balance to get free chequing because handling the cheques actually took the bank staff a fair amount of time, pre-automation. But to charge people for making a withdrawal seems outrageous.

    • Echo on April 5, 2013 at 8:55 am

      @Bet Crooks – I can only imagine the amount of cash my employer would need to pay 1,500 employees once a month 🙂

      I know the banks have invested a lot of money in their websites, encryption, mobile apps, etc, so I don’t think it’s completely fair to say online banking and automation should make banking free.

      BUT, it is ridiculous to have to pay a fee to withdraw your money.

  9. Dona Collins on April 3, 2013 at 9:29 am

    I bank with a smaller bank to avoid fees. As a freelancer, I do sort of life check to check, and it can be scary. If a client doesn’t pay, I’m in trouble. There are some basic waiting periods for checks to clear, depending if they are local or not; but paychecks issued through payroll companies, and government checks (like tax refunds), are available immediately.

    • Echo on April 5, 2013 at 8:56 am

      @Dona – Yes, that’s what I’m referring to when I talk about the banks’ hold policy. Cheques that are manually deposited and transfers from other institutions can take up to 7 business days to clear, depending on the institution.

      Direct deposits are not an issue.

  10. KC on April 4, 2013 at 2:30 pm

    I bank with PCF personally due to being screwed over in the merger from Canada Trust with TD (long story but lost over $500 in fees which I never got back) and love it. I never had any issues with the hold on deposits right from the very start (11 years now) so this must be a new policy for some new customers for a 1-year period.

    For my business, I use Caisse Populaire (French Credit Union). Their fees are still similar to the big banks (some lower than others) but are highly flexible to match my needs, I get far better service from them and I take comfort in knowing that none of the profits goes to the fat cats in suits but rather to the members. Of course, it does help when they are close by. Oh yes, and I’m an Anglophone and they’ve had no issues with that. There was another credit union that I was checking out. Fees were similar but I was insulted by an “old boy” at the bank when he learned about my business (opening accounting practice). In contrast, everyone at the Caisse was far more supportive including sending me some referrals. They’ve just gained a loyal client for life.

    • Echo on April 5, 2013 at 8:58 am

      @KC – Credit Unions have a reputation of offering superior service to the big banks.

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