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Make 6% Interest On Your Checking Account

written by John Chow on March 10, 2006

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I got a letter from my bank today advising me of fee changes to my full serve checking account. Amazingly enough, the bank actually lowered my monthly fee from $9.95 to $8.95 (waived if the min monthly balance is $2,000 or more). Of course they raised some other fees to make up for the lowering of one. They increase the fee from $3 to $5 for taking cash out from an ABM outside of North America and they increase the fee for bouncing a check to a whopping $37.50!

What I want to talk about is making a return on your checking account. How is this possible when most checking accounts pay little to no interest? By taking advantage of the min balance required to waive the monthly fee. In my case, if I keep a $2,000 min balance in my account my monthly fee of $9.95 (now $8.95) is waived. That works out to a saving of $119.40 a year, just for maintaining the min balance. That’s a 5.97% 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 $2,000 and put it into a 5.97% GIC (assuming there is one that pays that much), I would make $119.40 in interest on the first year, but my bank would have taken $119.40 in fees. So it’ll be a wash. Since 100% safe investments don’t pay as much as what you can get by maintaining a min balance, it’s best to take advantage of the bank policy and use it to your advantage.

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Digital Rabbit November 3, 2006 at 1:24 pm

Hello John,

I love your website, I keep on finding more interesting information, which I am currently looking into.

After reading your article, I was wondering who is your bank ? I am currently with TD Canada Trust, and as I am aware, they don’t offer anything like this.

John Chow November 3, 2006 at 6:00 pm

My bank is TD Canada Trust away. The account you want is call a Value Plus Account.

Kenric January 2, 2007 at 4:02 pm

I just transfer my money over to ING from my checking as soon as its deposited. I only leave small amounts in my 0% checking.