Remember back in the day when you had to go to a physical bank to take out money or pay a bill or open a new account? If you’re my Dad, that day is still today. But if you’re pretty much anyone else, then that’s likely a thing of the past. If you’re banking with one of the big banks, then you’ll still have access to brick and mortar locations, but I’m going to guess you do 99.9% of your banking online. The big questions though; are you paying for it? If the answer is yes, then I’d like to share with you the upside of no fee banking in Canada. Seriously, bank fees are outdated. And not in the quirky vintage way.
It used to be standard practice that you’d open a chequing and a savings account and pay a monthly fee for your bank to maintain the accounts. They used those fees to run branches, hire staff, make their CEO’s super rich, etc. Now, more and more institutions are using the internet to their (and your!) advantage. Online banks don’t have the overhead costs that regular old banks do, and that means they can offer no fee banking to attract new customers. Sure, they’re still making bank on the dollars you deposit, but you’re eliminating the monthly fee and often getting a higher interest rate on your savings. Win. Win.
Making the Switch
The process of opening a new bank account is super simple. You’ll be able to complete the application directly on the website of the institution you choose. They’ll ask you for a bunch of personal information, you’ll select the products you want, and then presto. Your new accounts will be open, and a debit card will be in the mail.
That’s the easy part. The hassle comes when you have to switch over all your pre-authorized payments. If you are anything like me, you hate having to deal with bills and automate every possible payment. That’s great, it makes your life way easier in the long run, but it also means you have extra work when changing bank accounts.
Before making any changes, you’ll want to go through your last few statements and make a list of all the companies set up for automatic withdrawals. This will likely include your employer if you get paid by direct deposit and any recurring bills or deposits to savings. It’s worth checking back a full year in case there are annual payments you may be forgetting. It’s not a bad idea to temporarily keep a balance in your old account just in case you miss something. The last thing you want is to have to pay NSF charges. Kind of defeats the whole purpose of eliminating bank fees.
If you are a person who makes frequent use of the services provided at their physical branch, then online banking may not be for you. Before I made the switch, I very rarely went inside my bank. Sometimes I’d use the ATM to get cash, but I can count on one hand the number of times I’ve gone up to a teller in the past decade. I’m precisely the target for the no fee banks in Canada.
When you make the shift, you will no longer have access to typical teller services. You can’t stop by and get a bank draft, or foreign currency, or anything else you might need. These services are available through online banks, but you’ll need to phone in, and they will ship the order to you. It’s just not the same day service you might be used to.
The one time this was an issue for me was when we purchased our house. We needed a bank draft for the deposit and weren’t able to get on from our online bank in time. Since CIBC backs Simplii I was able to go to a CIBC branch and pick one up after speaking to Simplii but did have to pay for it. That one extra step was hardly a deal breaker for me, but if you use the branch services regularly enough, then it might be for you.
Your No Fee Banking Options in Canada
I have been using Simplii since back when it was still PC Financial, so it’s the platform I’m most familiar with. I initially chose to switch over to PC Financial because of a promotion they were running. At that time, you could collect PC Points through their banking platform, and they tempted me with an offer for $300 worth of points for signing up. We do the majority of our grocery shopping at Superstore, so I couldn’t pass up $300 of free groceries.
Now that Simplii has taken over the PC points are no more. I’ve maintained my accounts because, well, they’re free. The initial bonus was awesome, but I didn’t earn many points through the debit card because I get better points returns for groceries through my credit card. PC Financial still has the Mastercard, which is an excellent option if you shop at Loblaws branded stores.
I also like the account features Simplii provides. There’s no monthly fee and no minimum balance, free Interac E-Transfers, no ATM fees at CIBC machines, and unlimited daily banking transactions. Their app is also easy to use and lets you deposit cheques with a picture and set up automatic bill payments or savings deposits.
Even better, if you sign up by July 31, 2019, you can get a bonus of $200. To do so, you’ll need to open a no fee chequing account and set up either a payroll or pension deposit or two automatic bill payments.
I’ve never personally used Tangerine, but I’ve heard a lot of positives and will likely jump on it the next time a good promotion is available. They offer very similar services as Simplii. You’ll get no fee banking with no minimum balance and higher interest rates than at the big banks and free ATM use at Scotiabank machines.
The one noticeable difference is that Tangerine does not offer free Interac E-Transfers. You can use them, but it will cost you $1 a pop. Instead, they have their own email money transfer service that is free. From what I’ve read, it works almost the same as the Interac system, but it is better if you’re sending between Tangerine users. If you are sending a transfer to someone outside of the Tangerine network, then it can take 1-2 business days to go through, and the receiver will need to input their banking information. A big deal? Probably not, but if you send a lot of transfers then the delay and extra step may be annoying.
One of the biggest perks for Tangerine is their refer a friend program. You and your friend will each get $50 if they use your unique Orange Key when they open an account and deposit $250 or more. There is a limit of three referral bonuses per year.
Tangerine doesn’t currently have a sign-up bonus running, but they are offering new clients a 2.75% interest rates for the first six months if you open a savings account. You’ll find that banking promotions are constantly changing, so if you don’t see one you like right now then hold off and keep checking back.
EQ Bank is a newer no fee banking option in Canada and works a bit differently than the first two options. It’s not for your everyday banking. Instead, it’s just for savings accounts. I use EQ Bank for my emergency fund and travel fund because it keeps the money safe but also readily available. Right now you can open EQ Bank Savings Plus Account and get a 2.30%* interest rate. That’s really good for a savings account!
*Interest is calculated daily on the total closing balance and paid monthly. Rates are per annum and subject to change without notice.
Remember, this is a savings account not a chequing account, so you won’t be getting a debit card. This isn’t for money you need to be dipping into all the time. However, it’s not hard to access your funds when you do need them. You get five free email money transfers each month so you can easily transfer funds to your regular chequing account. You’ll be able to set-up your existing bank account and can have money transferred to that account in just a couple of days.
EQ Bank isn’t for daily transactions, but it’s a fantastic option for your savings.
One thing I will point out is about interest rates. There’s a good chance you’ll find a new client promotion at a different financial institution that is higher than EQ Bank’s current rate. The difference is that promo rates are almost always temporary. You want to figure out what that rate will drop to after the term expires. If you’re willing to chase the best interest rates by opening and switching accounts, then go for it! You’ll get the most bang for your buck that way. I’m lazy though, so I’ve found it easier to leave my savings with EQ Bank instead of putting in the work to chase rates.
Sum it up
You no longer need to pay banking fees to get access to good banking services. I made the switch to an online bank over five years ago and have never regretted it. Financial institutions are becoming more and more competitive, and finding a no fee banking option in Canada is easier than ever.
Have you made the switch to a no fee bank? I highly recommend it if you haven’t already done so. I’d love to hear about your experiences, and if you have an institution you would recommend.
This post was proofread by Grammarly