Keep your credit card at a different bank

This tip will prevent banks from deducting money from your account

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From the January 2015 issue of the magazine.

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(Blend Images - Peter Dressel/Getty Images)

(Blend Images – Peter Dressel/Getty Images)

If you occasionally forget to pay your credit card bill on time, you may want to read the fine print on your agreement. It turns out that most banks can actually deduct money from your accounts to cover money you owe on your credit card—without asking first. Typically, this deduction will only cover the minimum payment, which might just be $10. But theoretically, if you’re carrying a large balance of $10,000, all of sudden you could see hundreds of dollars removed from your chequing account without warning. There’s an easy fix for this dilemma, though: Get a credit card through a different bank. If your card is with Scotiabank, they can’t access your savings account at TD. An even better way to avoid this problem is to always pay your bill in full and on time.


2 comments on “Keep your credit card at a different bank

  1. This isn’t a problem. This is a GOOD thing.


  2. I’m sorry but I have to disagree in the strongest terms. MoneySense ought to be encouraging its readers to exercise fiscal prudence, not training them to regard the banks as doing you a huge favour lending you money at the horrible credit card rates.

    If you have a credit card, it should be used as a convenient financial tool, recognising that it may sometimes tempt you to make unwise spontaneous purchases. Nevertheless, ALL balances should be paid promptly before the due date. My wife and I use a pair of credit cards on one account with the same bank we have a joint account in. I have made an arrangement for the bank to automatically withdraw the due amount just on the due date.

    Forgetting to pay is a common screw-up for many people, and letting your affairs slip so that you habitually “forget” to pay easily becomes the default mode, and you should be warning your readers that it isn’t free, and it isn’t cheap. In my case the withdrawal doesn’t come as a surprise — I’m always aware of this payment coming up and there is always money in the account (well, I’ve screwed up 4 times in 25 years; but I have a 5k overdraft provision that I never touch unless a screwup like this happens). I HATE to pay interest, especially in after tax dollars, and especially now that I have arranged my affairs so that I actually have the capital to pay for my purchases. I suppose I could always pay in cash, but the credit card is so convenient, and then I have a retroactive tracking tool for many of my purchases.

    C’mon Money Sense: you can do better than that. You almost redeem yourself with your last sentence, but if you really meant it, the whole tone of your “tip” is at odds with this last advice — why would you encourage people to set up a banking system to disable a prudent automatic money saver?


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