# Chequeing account balance



## jamesbe (May 8, 2010)

Just an interesting topic for some fun.

Co-worker was saying he moves all his money into his savings account and never has a balance of more than $200 in his chequeing account. I asked him about mortgage payments, insurance etc etc. He said he just has a calendar notification and every 2 weeks / monthly etc he moves the money into his chequeing for that payment that is about to come out. 

That seems like way too much work to me, and if you forget well I guess you overdraft and lose all the extra savings you got out of the savings account.

For me I need to keep at least $3000 - $5000 in my chequeing account or I have the hebee-jebees it just freaks me out. I see my chequeing account as a place that holds money for bills and any spending I may need to do (like purchase some paint to paint my living room or whatever). I use my credit card for everything and pay monthly but will not buy it if the money isn't available to spend in the first place.

What do others do? I consider my savings as "emergency" I have an emergency savings I never touch and a small savings for quicker emergencies that I wish to never touch .


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## Four Pillars (Apr 5, 2009)

I do exactly like you do. Having extra cash makes life a lot easier.


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## HaroldCrump (Jun 10, 2009)

Given how little "savings" accounts pay these days, I see no reason to cut it so close.
It's not like we are missing out on 10% monthly interest by keeping more cash in a chequing account.


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## the-royal-mail (Dec 11, 2009)

Ah yes, the bare bones balance!

Funny you should ask this, as just this morning I was doing my planning for the next 3 years and seeing where my tiers stand. So this concept is fresh in my mind.

Outside of the tiered savings, I would always aim to keep a basic float of $2000 in my POSA. Even if all of my 3 tiers disappeared right now, my goal would be to always keep around $2000 in the POSA. The reason for this is as a float, in case a rent cheque gets cashed before a paycheque goes in, if a wayward bill payment occurs, if I forget something, if I have a large CC bill one month etc. There are lots of things that can occur and keeping a basic float of less than $2000 is a risk most here should not be willing to take.

As for your friend, he's probably been brainwashed by people who admonish those who have money "wasting away in a savings account".

For everything else, there's Chargex.


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## Plugging Along (Jan 3, 2011)

We do the same thing. We have our operational money in our checking, and move real savings and investment into the respective accounts.


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## Barwelle (Feb 23, 2011)

I keep 4-5,000 in my daily banking account. I used to have most of it in savings for the interest, and keep less than $500 in my chequing for incidental purchases, and only transfer money into it when I paid bills... but then I sat down one day and calculated the interest on the savings account in that bank. They pay a stellar 0.25%. 

Now my paycheque goes into chequing, and I have automatic withdrawals going to a 1.35% HISA from that account as well. I just let about $2,000 sit in savings, and the rest in chequing and if I notice it's building up, I send it to HISA instead of the savings account. Like Harold says, it's not worth the effort to keep a tighter grip on where the money is in chequing vs. regular savings. Even the "H"ISA is not worth much effort, though I think I'm going to reduce my daily banking account to $2-3000. (I don't pay rent at the moment so monthly recurring expenses are low, but I share the same thoughts about wanting to have a cushion of money available in a moment's notice.)


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## Eclectic12 (Oct 20, 2010)

jamesbe said:


> Just an interesting topic for some fun.
> 
> Co-worker was saying he moves all his money into his savings account and never has a balance of more than $200 in his chequeing account. I asked him about mortgage payments, insurance etc etc. He said he just has a calendar notification and every 2 weeks / monthly etc he moves the money into his chequeing for that payment that is about to come out.
> 
> ...


The work depends on what one's bank offers. I've programmed transfers from Savings to Chequing as sequence for a year at a time. It's a basic "start this date, once a month and end that date" procedure. With a yearly review - it's not too bad, IMO.

It also helps that my pay is deposited on Thursday and the mortgage comes out on Monday - on the same bi-weekly cycle.


As for me, my float depends on what bills coming up. I usually around $300 to $500 or so in the chequing account. If I make a mistake, I can transfer from savings or TFSA next day or in an emergency, from LoC today then use the savings to pay back the LoC.

I'm usually running about $0.09 in interest about every year and a half to avoid an overdraft fee for a mistake.


My "savings emergency" fund is with a different institution so I'm not tempted to dip into it.


Cheers


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## mrPPincer (Nov 21, 2011)

one of the highest paying HISAs right now (2.1%) is a chequeing account.
http://www.acceleratefinancial.ca/products/savings.aspx

One free withdrawal per month, cheques and ETF withdrawals are free, but debit machine withdrawals have an additional charge.
You could set up direct deposit or deposit using their CU bank card at any credit union.
so, if you guys are keeping that much in chequeing just for emergencies etc., I'd say they could definitely be worth looking into.


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## crazyjackcsa (Aug 8, 2010)

I leave anywhere from $2,000 - $5,000 in the chequing account, or about a full month of expenses. When the account hits 5k, I bounce 3 grand over to the HISA and start again.


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## slacker (Mar 8, 2010)

Why would you keep more money than necessary wasting away in a account that pays nothing? Money in a chequeing account is a waste, and that's the end of it.


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## jamesbe (May 8, 2010)

Well maybe I'm the only me but I randomly buy stuff, today I needed $100 cash, a few weeks ago $400 cash. Both times on a moments notice, would have sucked to have to transfer first at a computer as taking money out of savings at the machine costs extra.


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## bgc_fan (Apr 5, 2009)

jamesbe said:


> Well maybe I'm the only me but I randomly buy stuff, today I needed $100 cash, a few weeks ago $400 cash. Both times on a moments notice, would have sucked to have to transfer first at a computer as taking money out of savings at the machine costs extra.


Personally, I get paid bimonthly so I ensure I have enough to cover that time period. I like to keep my account low to reduce the amount of random purchases like that. The extra hassle makes me reflect on whether I really need it.


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## Koala (Jan 27, 2012)

Our joint chequing account has a minimum monthly balance of 5k to keep it free. When we had separate accounts we each used to keep at least 5k in them (even with a minimum requirement). Together, we keep 8-10k at a time, which relieves any stress about the day that our 2 rent payments go through, VISA, etc.


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## m3s (Apr 3, 2010)

This whole dance is just another small predatory ploy on the masses. In more sensible countries, you simple have a banking account that pays a reasonable interest on your daily balance. That would be all too obvious, unless you're used to another status quo. Just buy some bank stocks so that the dividends puts you on their side of the game.



Koala said:


> Our joint chequing account has a minimum monthly balance of 5k to keep it free. When we had separate accounts we each used to keep at least 5k in them (even with a minimum requirement). Together, we keep 8-10k at a time, which relieves any stress about the day that our 2 rent payments go through, VISA, etc.


Another little dance to avoid the trap of falling below $5k for just one day. People justify these accounts based on $5k, when they actually hold $10k in there.


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## Sherlock (Apr 18, 2010)

My checking balance fluctuates between $1500 and about $2000. Must keep min $1500 to avoid service charges, so I do. As soon as a paycheck gets deposited, I pay off any credit card balance then transfer the remainder to either my RRSP or my trading account. I pay almost all my bills with my credit cards or LOC, so there's no danger of not having sufficient funds to pay a bill.


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## Sherlock (Apr 18, 2010)

slacker said:


> Why would you keep more money than necessary wasting away in a account that pays nothing? Money in a chequeing account is a waste, and that's the end of it.


True, and I would say the same about "savings" accounts paying 1.5% interest. Any money that is not earning you interest higher than inflation is a waste.


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## riseofamillionaire (Feb 23, 2012)

I keep about 1k in my chequing acct although my expenses are low. If I had a family and more expenses I would definitely increase that to the 3k range like most people here.

At times I see a good opportunity in stocks and may go as low as $300. This is doable for me as a frugal, single guy.


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## Cruiser (May 27, 2012)

We need to keep $2500 in our chequing account to keep it free, so every two weeks, we top it back to 3k. Other than that, we transfer everything between the chequing and HELOC. Each pay day, I just transfer some from the HELOC to the chequing to ensure that there is enough for payments. Effectively works out to 3.5% interest rate as all my money (except the 3k) is working for me.


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## Young&Ambitious (Aug 11, 2010)

Haha oh my jamesbe, I sound just like your coworker-but worse! I keep ZERO in my chequing. When I deposit my pay cheques I do up a budget for the next months expenses based on known hard figures. The two variables are how much the credit card bills will be but it's basically the current balance + expected spending until the statement date + a safety cushion. So when it comes down to it, I transfer the next months expenses into a savings account (~1.2%) which has automatic transfers into the chequing to match up with the withdrawal dates for strata, mortgage, credit card etc. On the rare occasion I need cash I'll transfer the exact amount over but I'm a credit card gal so this isn't too often. This optimizes my saving rate and it only takes 5-10 minutes once a month. Easy peasy.


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## realist (Apr 8, 2011)

I pay almost everything on my credit cards for the cash back so I rarely need to take money out of my chequing account, and my few bills are auto paid on CCs other than rent. I was keeping around $1000 in my PC chequing account for a while because there was a point where the PC points for keeping that balance were worth almost as much as the interest on it!


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## marina628 (Dec 14, 2010)

I keep min $5000 in my select service account so I do not pay any fees,I have many rentals so i have multiple mortgages coming out ,many transactions so it is worth while to me to keep the float in the account.


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## K-133 (Apr 30, 2010)

I like to keep enough in my chequing to cover 1 month Family Inc.'s of operating expenses + the minimum $3000. I am comforted by this bit of stability. The opportunity cost is worth that to me.


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## Koala (Jan 27, 2012)

mode3sour, I agree, but we're doing better with the higher service account than having approx 5k each in our own accounts (the amount of cash we both liked to have available immediately). If a bank that offered similar services to what we get now, and paid similar interest to savings accounts, we would switch. Unfortunately, I haven't seen one.


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## 44545 (Feb 14, 2012)

I don't like letting money sit in an under performing account so I keep only what I need in chequing and the emergency fund stays in the Canadian Direct Financial 3% interest TFSA.

Having a very precise (and accurate) balance of all accounts and scheduled bills is the only way to do this without risking overdraft or NSF charges.

My solution:

Microsoft Money tracking to the penny + budget forecast expenses (groceries etc)
no automatic bill payments; manual payment only (defense against possible screw ups by utility companies)
electronic transfers as needed to access emergency cash

Why leave money on the table?
$5,000 at 1% doesn't beat inflation, earning a measly $50/year.
At 3% that's $150/year.
If you're parking $5,000 in a chequing account just to avoid a monthly fee, you're effectively paying the bank $100 per year for the "privilege" of being their client. No thanks.


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## Sampson (Apr 3, 2009)

CJOttawa said:


> If you're parking $5,000 in a chequing account just to avoid a monthly fee, you're effectively paying the bank $100 per year for the "privilege" of being their client. No thanks.


Well, the truth is, you get more than $100 in additional services you would otherwise have to pay for.


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## Argonaut (Dec 7, 2010)

I always keep exactly $5 in my chequing account. RBC takes out $4 for monthly fee, then puts it back in for a rebate. If I ever needed a chequing account I would put a positive balance in my TD line of credit.

All free cash is in savings account, all purchases made with cashback VISA. Every single dollar has to work for me. At some point I have to ask myself why that $5 isn't earning me interest.


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