August 11, 2022 | By: Kristina Delville

How to Use Banking Services to Get Rid of Debt and Build Credit

Debt Management | Financial Resources

I see it all too often — clients who don’t understand how to maximize their banking services to build credit and manage their debt. And as a result, they get frustrated and end up talking to me. Many of the people I speak to every day don’t have a full grasp of how to maximize their banking and what banking services could really help them achieve their goals. 

A Confusing Marketplace Makes for Confusing Decision-Making

There are so many different types of companies and products in the financial mix nowadays — from credit unions and digital banks to debt consolidation loans and debt refinancing. Plus, electronic transactions can cause additional frustration and confusion, especially for seniors. 

What's more, is if you’re a busy person, you may forget to make a payment to a credit card and it feels out of control after that.

Not Maximizing Your Banking Services Can Impact Your Credit Score

I recently spoke to someone who pays off their credit card in full every month, but last month forgot to make a payment on a credit card they rarely use. Not only did they pay a significant amount in interest, but they were also hit with a $48 fee and their credit score dropped 9 points.

Electronic Banking Has Its Pros and Cons

Over the last 10 years, our banking services have increased electronically — with international transfers, electronic bill payments, preauthorized debit, consolidation, credit scores — I could go on.

One issue I come across is the lack of understanding of what our banking services actually are. I continually tell my clients to make better use of their bank. Ask for support, it’s what they’re there for.

Our Banking Needs to Focus More on Bill Payments and Less on Spending

The big hit nowadays is using “tap” when paying for items with our debit bank cards and credit cards. Some bank cards can offer us the ability to make purchases online with our bank card, too.

As a Credit Counsellor, I see how easy it is for many of my clients to spend, but how confusing it can be to make their bill payments on time.

Many of the banking services we familiarize ourselves with are geared towards spending. But what about bill payments? They can be on different dates and times. How can our banking services help simplify the bill payment process, too?

Use Your Bank’s App to Optimize Your Payment Services, Build Credit, and Save Money

If you haven't done so already, check out your bank’s app on your smartphone or desktop computer. Get online and start using the services you pay for. We know technology can be a hurdle, so if you need technical support, let your bank know.

Set Up Automatic Bill Payments Online

One of my favourite tips is to set up automatic payments. You simply set up a payee (e.g., a utility company, cellphone provider, credit card, etc.) to be paid on the same date every month, for a certain amount. 

If you’re not sure how much that monthly payment should be because it might change month to month, choose an amount that is more than the minimum payment and less than the highest monthly bill you’ve received from your provider. And of course, it should be an amount you can safely afford to pay — more on that later.

Once you’ve set it up, you no longer need to remember to pay the bill on time — your bank does it for you. You can easily edit dates and stop the automatic bill payment if you need to make changes to it or your budget.

Not only can this practice help you with bill and debt payments, but it can also help you build good credit and increase your credit score thanks to timely payment history.

Get Overdraft Protection on Your Chequing Account

When setting up automatic bill payments, it’s always a good idea to also get overdraft protection on your chequing account, in case you end up paying more than you actually have in your account one month. 

Your automatic monthly bill payments should always be an amount you can safely afford (and if you can’t, please call us and speak to one of our amazing Counsellors at Credit Canada — all of our counselling is free!). 

But sometimes life happens — your car unexpectedly breaks down, there’s an emergency vet bill, or dental bill, or maybe your stove stops working — and our budgets take a hit one month. When this happens, having overdraft protection can ensure you are still able to pay your bills in case there are insufficient funds in your chequing account.

Check Your Credit Score on Your Bank’s App

Did you know that on most major bank apps, you can check your credit score? Your credit report information can also be accessed for free with your online/electronic banking services.

Canada has two major credit bureaus: Equifax Canada and TransUnion Canada. And their job is to collect your credit information (provided by your lenders and creditors) in your credit report, and based on that information, calculate your credit score.

Most, if not all, of the big 5 banks (BMO, Scotiabank, CIBC, TD, RBC) offer their clients access to their credit scores from either of these credit bureaus online.

Send Money Overseas with Your Bank

Sending money overseas? Your bank can do that, too — and at a lower rate than most of the better-known money tranfer services. Plus, by sending money overseas using your bank, you can ensure your money is safely transferred to your loved ones without having to line up in-store.

What Can Your Bank Do For You?

There are so many services our banks can provide us with that we’re simply not taking advantage of because we don’t ask.

For example, years ago I needed a printed copy of my bank statements for the last 2 years. I could have easily gotten the electronic copy, but I didn’t have a printer. 

I checked the printing service near me and it would have cost me $15 to print all the pages I needed. Instead, I went to my bank.

I pay $16.95 a month with my bank for services. So, I went to my bank and asked them to print my statements for me, and they did. No questions asked.

And there's so much more they can do!

What You Can Do to Make the Most of Your Bank

We usually pay a monthly fee to be with a banking institution that will hold onto our funds, allow us easy access to those funds for purchases, and provide us with a detailed record of those purchases. But they can do so much more.

If you haven’t done so already, visit your bank online and learn about their services. If you’re not familiar or comfortable with technology, schedule an appointment with the bank and get them to show you step by step how to use their services and make your banking life easier.

Credit Canada Can Help You Pay Off Your Debt

And if you’re looking for extra advice on how to pay off your debt, your different payment options, and how to manage your expenses, we’re always just one phone call away. 

We have incredible, certified counsellors on our team who speak to hundreds of people facing challenges in their budgets due to debt. There is free help available. We’re 100% judgement-free, unbiased, and confidential.

Call us at 1.800.267.2272 to book a free appointment and learn about all your debt solutions and options.

Download-Our-Budget-Planner-And-Expense-Tracker-Today

 

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