UPDATE! Scotiabank "Bank The Rest"

This is an update for this blog post. It's important enough to warrant it's own post.

UPDATE! SCOTIABANK "BANK THE REST" PROGRAM:

I left the last blogpost with 2 things I wanted to ask the nice people at 1-800-4Scotia, which, as I thought about it, became three things. They are:

1)Are there any fees associated with the account?
2) Will this program push me onto overdraft? Furthur into overdraft?

and the new one:
3) What kind of interest will my savings earn?

Here's the low-down:

1)Fees

There do not appear to be any fees associated with enrolling in the "Bank The Rest Program". However, fees are associated with the accounts that you have with Scotiabank. You need at least 2 accounts with Scotiabank to be able to participate in their Bank The Rest program: a chequing account linked to your debit card for your usual transactions, and a money master savings account for the Bank The Rest savings. More on that in a second.

I enquired about student banking packages. They have a specific account for students under the age of 19, the “Getting There” package. According to the person I spoke to, this account has no fees and 20 free transactions a month. If you exceed 20 transactions, however, it’s 0.55$ a transaction thereafter.

I told them I was thinking of switching from my bank into the Bank The Rest program, but was over the age of 19. I currently have a free student banking program at my current bank. For students over the age of 19, there is no free package; there is however the “Student Banking Advantage” package, but that costs 1.25$ per month (though it is free if you keep 2000$ in your account, but if I had 2000$, I probably wouldn’t keep it there…).

So while there don't seem to be any fees associated with the program proper, there may be fees associated with the accounts required in order for it to function. Always ask!

The Scotiabank account selector reality check will give help you figure out which Scotiabank products are marketed towards your situation (Mine returned an account that has a monthly fee of 9.99$. No thanks.) You can find it here.

2) Overdraft

Bank the rest will not work if your account is currently in overdraft. It was a little bit unclear whether or not the program could actually send you into overdraft inadvertently, though the FAQ states implicitly ``Bank The Rest transfers will not be processed if the transfer will place your account into overdraft or put it further into overdraft, even if there is overdraft protection available.``

As always, ask!

3) Interest on Savings

Here’s the deal breaker.

The money market savings account, where all your “Bank The Rest” money is deposited, earns 2.25% (rate current as of May 22nd 2008) PER YEAR.

NOT 2.25% PER MONTH.

2.25% PER YEAR!

It may not even keep up with inflation at this rate!

It`s paid out (ie: compounded) monthly, but you will still only make 2.25% after one full year. In this sense, it`s like a GIC, except you have access to your money.

That`s a deal breaker. I am certainly not going to let my account compound at a piddling 0.1875% per month, certainly not if there are fees attached to it (as a student over 19, I would have to pay 1.25$ a month for my accounts).

FINAL VERDICT

I think if you are serious about saving, there are more economically advantageous ways of doing so. For some time, I had automatic withdrawls into a truly high interest savings account (which is no longer really all that high interest) from my free chequing account at my current bank.

I think if you're already a Scotiabank client, and the appeal of thoughtless automatic savings every time you spend is the most attractive option for you, by all means, get more information.

For me though, it's not enough for me to switch from my current bank.