Bank fees can be a pain, especially when it comes to sending money. You’re telling us we have to pay EXTRA on top of the money we’re already sending someone? Unfortunately, that’s how e-Transfers often work.
Today’s blog post is a brilliant hack I picked up a few years ago that can reduce your bank fees. While $1.50 per e-Transfer may not seem that much, even a few transfers a month can add up to over $50 over the course of a year.
More specifically, I’m referring to e-mail money transfers which enable the sender to transfer money electronically to anyone with an email address, even if they don’t bank at the same institution. This eliminates cheques and speeds up the process of sending funds.
The way it works in Canada (and in some other countries too, I assume) there is no specific fee, however, for paying a biller, whether it be a service provider, credit card, or another company. (Note that depending on your bank plan, you may pay for transactions over your monthly allowance, and paying a biller counts as a transaction).
The key is to make a payment to the recipient as if they were a biller, instead of sending them an eTransfer which comes with a price tag.
But how the heck can you pay them as a biller?
By making a payment to their credit card.
All you’ll need is the credit card number of the person to whom you’ll be transferring money; no expiry date, no CVV number, and no name on card required. This is good protection for the recipient since it means you won’t have enough information to charge anything to the card, or do any other fraudulent damage.
Here’s how to set it up:
Step 1: Get Their Credit Card Number
The first step is to get the credit card number of whoever you’ll be paying. Again, no expiry date, CVV number, or name on the card is required.
Before going this route, assess your relationship with the recipient and whether or not it would be an appropriate option to suggest. With close friends and family, it should be a no-brainer, but for others (your boss, an acquaintance), an e-Transfer or cheque may be a safer bet.
Once you get the number, double check it with the recipient. If you send the money to the wrong account, it will be a pain to get it reversed.
Last, have the recipient confirm they use their credit card frequently. If it’s a card they rarely use, having a credit on it won’t be of much use. If it’s their primary credit card and they rack up a sizeable bill, you should be safe!
Step 2: Set It Up as a Payee
Set up the credit card as you would any payee, with a payee name (e.g. “Andrea’s Visa”), account number (credit card number), and the province (or state!) in which the payee lives.
Step 3: Pay Your New Payee
You can then make a payment in the amount owed from your account of choice (e.g. your primary chequing account) to the payee, and even select the date you want the payment to go through.
Recipients will see a credit on their statement for the amount “paid” which will be deducted from their amount owing. A smaller credit card bill is a win for them too!
Once the payee has been set up, you can send money whenever required, making subsequent payments even faster to initiate.
What do you think of this tip? Do you have any workarounds of your own for avoiding transaction fees?
Looking to master your money? My post on five easy ways to accelerate your savings is a great place to start!