Posts Tagged ‘emergency fund’

So the topic of high interest savings accounts has been beaten to death in the financial blogging world. I’m not about to regurgitate some great work by other bloggers, if you’re looking for information on high interest savings accounts start with the link at the bottom of this post.

Last week I read a blog post from Twenty Something Money where he stated a few reasons why he doesn’t need an emergency fund. I completely agree with him, as long as you have your TFSA it can serve as an emergency fund, however I would be wary of having to sell some of my investments in my TFSA to cover an emergency cost.

This is where my checking account can be a useful tool. I complete my day-to-day banking with TD Canada Trust. I utilize their Select Service Account as my primary checking account for a few reasons:

  • No monthly fee if you maintain a minimum balance of $5000
  • No transaction limit
  • No fees on ATM withdraws in Canada and Internationally
  • Many other extras I don’t take advantage of because I don’t use paper!

To me this account is invaluable because I travel to the US 3-5 times a year for fun and to check in on my folks. I also love to travel abroad so this saves me a ton of money when withdrawing cash at international ATMs.

Another option is the Infinity checking account; maintain a minimum of $3000 and they will waive your bank fees but you are still on the hook for using other bank’s ATMs both in Canada and abroad.

So this bring me back to Twenty Something Money’s post about not needing an emergency fund. My $5000 minimum balance in my Select Service Account is my emergency fund. Should I need cash asap I can dip below my $5000. Of course the bank will then charge me the monthly fee of $24.95 until I return my balance to $5k. If I foresee this being a long term problem, I would obviously change my account type. And as TSM said; if I lose my job and I’m in dire straights, then it may come down to poaching the TFSA.

If $24.95 seems too steep to you should you slip up (and it kind of is), then maybe the Infinity account is a better option at $12.95.

Above all, the only way to really save money is to assume your $5k (or $3k) is zero and never dip even a single dollar below this balance in your checking account!

Otherwise, I stash my travel savings into a money market fund and my TFSA and RRSP are made up of investments with Questrade. I use to be a big advocate of ING but this method of maintaining a minimum balance at TD has saved me more money in the long run. Should I begin to amass a larger savings, I will then be using a high interest savings account again.

Compare all the TD accounts here.

See also: Million Dollar Journey’s take on high interest savings accounts.


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