How To Make Over 10% Interest On Your Checking Account

Since my income tax post went off well, I figured I’ll back it up that with another money post.

It’s no secret that banks are making a larger portion of their profits from fees. With interest rates at an all time low, those fees for ATM, checks, Interac, etc. really helps to pad the bank’s bottom line. One of the best ways to making a return on your money is by eliminating these fees.

My Select Service account at TD Canada Trust cost $24.95 per month. However, that fee is waived if I maintain a balance of $5,000 or more. By keeping $5,000 in the account, I will save almost $300 a year in fees and still get all the added features (Interac, ATM, traveller’s checks, etc.) for free. That works out to a 6% after tax return on my money, which is not bad for a 100% safe investment.

Now you might say I didn’t make the money – I saved it – but it’s really the same thing. Were I to take the $5,000 and put it into a 6% GIC or T-Bill (assuming there is one that pays that much), I would make $300 in interest in the first year. However, this money would be taxed. At the 43% tax bracket, I would need to increase the rate of return to 10.5% in order to net the same after tax return as just leaving the minimum balance in my bank account.

If you’re paying bank fees that could be avoided with a minimum balance, then you need to top the account up to waive the fees. A dollar saved is a dollar earned.


51 thoughts on “How To Make Over 10% Interest On Your Checking Account”

  1. Money saved is definitely money earned. The thing is, there are TONS of free checking options out there. What makes this account better than just a simple free one?

    I think the “rewards” accounts are no longer allowed, so do you think the cash back accounts are the way to go now (if you can keep the min. balance to avoid fees)?

  2. Gabriel says:

    This is an awesome tip! I actually haven’t paid a bank fee in a long time (except Paypal and Alertpay) because my bank has the same deal with a minimum balance of $1000, but it’s also just a basic account.

    Thanks for the post,
    -Gabriel Johansson

  3. Well John, this is tricky one. Instead of keeping $5000 in account, if we give money at interest to other people,. we would earn around 30% per year. :)

    Well, it depends upon country and people, whom we give at interest.

    1. John Chow says:

      Name one person with good credit who will pay 30%? Would you? If you answer yes, then you’re in really bad shape.

      1. Shaun Carter says:

        Seriously, where can I invest my money @ 30% too?

        1. 30% Interest … boy you are talking like as old age landlord who robe old farmers and all.

          With that 30% interest is not ethical as way …

          1. Why it is not ethical ZK? There are Many People, who lend money for even 40% interest per year. This is not a issue regarding land lords and farmers.

      2. I’m in on this 30% thing… we’d all be there if it was that way.

        1. I am not because I do not like to have interest based earning.

          1. Free Picks says:

            i am with you ZK, interest based earning look illegal to me :-s and thats make poor more poor and rich to more rich

      3. Why not? Here in my local area, people will lend money for 3% interest per month, which turns around 30% per year.

        Really, it depends upon country, and people whom we give money.

        1. Free Picks says:

          3% is very high :-s here in Pakistan they give 10% per year:-s

  4. jpassmore

    says:

    Eh I would look at the benefits that the account gives you more than what relative % you get from it.

    My savings account charges $3.00 quarterly unless you keep $100 in there (high roller I know), but I don’t keep $100 in it and claim to earn 12%.

    Granted it also provides no real benefits, but combined with my checking account they both earn around 1%ish and my ATM fees are waived, I value that over simply keeping enough in the accounts to waive a fee (though I am glad that option is still there for now)

  5. I like the knowledge John. I also had this kind of feature with the bank but ive some interests on my credit card and etc.. though. With a better monthly service, the fee will be greater but you won’t have to pay the monthly fee that banks usually charges each month.

  6. You should always keep minimum balances in your bank to avoid the fees.

    1. Free Picks says:

      I agree with you :)

  7. Collabo says:

    Kind of a deceiving post title, but you did a good job explaining yourself.
    Agreed! A dollar saved is a dollar earned. TD is by far the best Canadian bank I have dealt with and no, I didn’t make any affiliate money mentioning them, their customer service is just that good.

    1. We need to clarify everytime we add good words about any company that we are not making money … Lolzzz

  8. Deepak Yadav says:

    i have heard that there rae applications available in the market for mobile devices which will help you in saving your money and managing it. Saving and investing Money is much more important than earning…

    1. Deepak would love to know more about these mobile applications …

      Please provide details with proper source.

  9. Who pays for a savings account? I feel dumb for reading this.

    1. John Chow says:

      Where did I said anything about a saving account in this post? And if you have money in a saving account, you should feel dumb.

      1. Here we are talking about premier account.

        Yes many big business house love to get premier or platinum accounts because they get high quality service, own accounts manager (they deal with high profile accounts) and many more benefits.

        So in this way this is win situation for the accounts holder.

  10. Martial Arts Supplies

    says:

    Interesting way to look at it. It’ll be really hard to convince myself that I’m making money with this tactic, but you’re right. If I’m able to hold off a charge, it’s as good as making money.

    1. Yeah seems to me that John is keeping a close watch on every penny he spend … And as a result we also get useful tips from him.

  11. John

    says:

    By that logic, I can make 15%-20% interest on my credit cards. All I have to do is pay off my credit cards in full every month.

    1. John Chow says:

      That is 100% correct and it’s something you should be doing!

      1. Many people saying that credit card is not good and all that …

        But let me tell you that if we will handle this credit card thing efficiently than this will be really beneficial for us.

  12. It’s amazing that people don’t think about saving fees and interest as income. You are earning by decreasing your cost of living.

    I use this website to find the best rates on Reward Checking accounts. Free plus they pay you interest. Checking Finder

    It earned me $1000 last year for doing nothing other than what I normally do.

    1. $1000 of saving in one year and that also doing nothing is awesome …

      If you have good experience on this than I think you should share with my having a blog on it.

      What do you think ?

  13. Kirk Taylor says:

    Actually, you can borrow money interest free on the credit cards if you pay them off 100% every month. You pay before the statement date and your Credit Score will skyrocket as well. You will report a zero balance even though you may have the card maxed again.

    Of course, you have to have cash flow to pull this off. I used to do this all the time and get cash back until I lost my cash flow and got stuck with all the debt! Be Careful…..

    1. Personally I do not recommend to borrow cash on credit.

      Any month if you forget to pay than this will become hefty in next month.

      In emergency this is the separate case … but however … BIG NO

      1. Abhik says:

        I also not recommend that.
        Interest rate on drawing cash from credit card is more than the interest rate on a home loan.
        If you ever forget paying the funds back to the card, you’re dead.

    2. I’d rather not use it then risk it hurting my credit. I’m a big fan of OPM but Credit Cards is hard to work with with 20% interest…

  14. Techabouts says:

    Who pays for a savings account?

  15. Mathew Day says:

    Nice! Small bank fees can really add up overtime and are usually easily avoidable.

  16. Awesomeness of this is that you do not have to do anything …. Just a simple calculation in the begining and after that you will SAVE OR EARN every month.

  17. Abhik says:

    Ghoss!!!
    I figured it out when I made my first Current Account.
    Well, I have to maintain INR 100,000 quarterly to get all those features for free.

  18. PPC Ian says:

    Sometimes it’s a lot easier to save money than make more money. As an investor and saver, I like to have that mentality and think of new ways to save money. Thanks for sharing, John!

  19. adjaya says:

    This idea is very useful. I have to ponder before making any further comments. Thank John, you already gave the idea to me.

  20. fas says:

    Nice stuff John, I am sure not many think about that.

  21. Free Picks says:

    minimum balance in account save lot of money some time..

  22. Gordon.Gecko

    says:

    Um, this is a terrible way to try and rationalize your 10% theory. A dollar not in use is 100 lost in lost opportunity costs.

  23. Centist says:

    Here in India, definitely these services are cheaper

  24. Jonathan says:

    I’m just trying to figure out why anyone would pay 25 bucks a month for a checking account. That must be one sweet checking account, John.

    1. John Chow says:

      It has a lot of features, like free traveler checks and waiving of any annual Visa fees.

  25. This is a very helpful tip although maintaining $5000 in the account is a bit hard when for me. When I know that I have the funds on my bank and I want to buy something, it’s hard for me to resist the temptation.

  26. Allen Walker says:

    That’s a good tip. :)

    i’m not sure if my bank has anything like that, but I’ll go and ask.

  27. since, my income tax post went off well, I figured I’ll back it up that with another money post.

  28. Paul Danson says:

    Nice idea, it’s always great to avoid fees, but the banks target customers that are prone to these fees, their ideal customer is not so much someone who is financially mobile, but someone who struggles to make the payments, but eventually does, so they can hit them with as many fees as they can

  29. Nice idea to make some income

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