If you’re tired of the high fees charged by many Canadian banks, it may be time to consider moving your money to a no-fee bank account.
» MORE: How to open a bank account online or in-person
What is a free or no-fee bank account?
For many years, Canada’s financial landscape was dominated by what are known as the “big five banks.” The country’s five largest banks are Royal Bank of Canada (RBC), The Bank of Montreal (BMO), the Canadian Imperial Bank of Commerce (CIBC), the Bank of Nova Scotia (Scotiabank), and TD Canada Trust. These financial institutions continue to dominate the banking system, but over the last decade or two, a number of alternative financial institutions — often referred to as online banks — have sprung up. These digital banks compete with the big five by offering low or no-fee savings and chequing accounts.
While the large traditional banks also offer some low-fee or no-fee accounts, they tend to allow only a limited number of transactions, require the account holder to maintain a minimum balance, or charge a monthly fee instead of fees for individual services. However, alternative or online banks tend to offer free or nearly free bank accounts with few restrictions, no minimum balances and no monthly fees.
» MORE: Common Canadian bank fees and charges
How does a no-fee bank account work?
With a no-fee bank account, you can perform withdrawals and deposits, pay bills and send e-transfers all for free or for a very low fee. Some banks may limit the number of free transactions you can complete each month or charge a monthly fee, so make sure you read the terms and conditions before opening an account.
Many of the Canadian banks that offer free accounts are online-only banks, which means you must do all your banking through a website or mobile app. Some don’t provide access to ATMs, so if you want to withdraw cash, you may have to transfer money to an account at a different bank. But others are subsidiaries of larger institutions and do offer access to large networks of ATMs for convenient cash withdrawals.
Types of no-fee bank accounts
You can get no-fee savings and chequing accounts, as well as high-interest savings accounts and hybrid accounts (a savings and chequing account in one). Some banks also offer registered accounts like tax-free savings accounts (TFSAs) and retirement savings accounts (RRSPs) with low or no fees.
» MORE: How to switch to a new bank
Examples of free bank accounts in Canada
Many Canadian banks offer chequing and savings accounts with low or no fees, but how they create the low-fee experience varies. Here are some examples of the terms, conditions and rules you’ll encounter when considering free bank accounts in Canada.
EQ Bank is a fully digital bank. Its Savings Plus Account consistently features some of the highest interest rates in Canada, and it has no monthly fees or minimum balance requirement. Account holders enjoy unlimited free transactions, like bill payments, Interac e-transfers and transfers. It’s also one of the few banks in Canada that doesn’t charge a non-sufficient fund fee.
The main drawback to this no-fee savings account is that you can’t withdraw money via an ATM; you must transfer funds to another bank that has ATMs. EQ Bank also has registered no-fee accounts like TFSA and RRSP bank accounts with the same benefits and high interest rates as its Savings Account Plus. It doesn’t offer a chequing account.
Motive Financial, an online-only bank, has several low or no-fee account options, including the Cha-Ching chequing account and Savvy savings account. The Cha-Ching chequing account requires no minimum balance and account holders get unlimited free deposits and withdrawals, free Interac e-transfers, free ATM withdrawals and 50 free personalized cheques. The account even includes two free out-of-network ATM withdrawals per month.
The Motive Savvy savings account offers free unlimited deposits and transfers between your Motive accounts. However, it only permits two free withdrawals a month, such as e-transfers or bill payments.
Tangerine has offered free online bank accounts for Canadians since 1997, when it launched as ING Direct. It offers a range of no-fee bank accounts, including chequing, savings, investment, and registered accounts.
Tangerine’s chequing account offers free unlimited transactions and free Interac e-transfers. And since there’s no minimum balance requirement, you can easily move more of your cash into savings or registered accounts like a TFSA or RRSP. Plus, Tangerine clients have access to more than 3,500 ATMs nationwide.
Tangerine also allows customers to have multiple savings accounts, which makes it easier to save money towards dedicated goals like a down payment or emergency fund.
Scotiabank’s Ultimate Package Chequing account comes with free unlimited debits, Interac e-transfers, ATM withdrawals, 100 cheques per year, overdraft protection and international money transfers. Extra benefits include a free safety deposit box, 10 free equity trades at Scotia iTRADE and an ongoing annual fee waiver on select Scotiabank premium credit cards.
Unfortunately, this is only a no-fee bank account if you maintain a minimum balance of $5,000 at all times (or keep a combined balance of $30,000 in your Ultimate Package account and MomentumPLUS Savings Account). If not, you’ll be charged $30.95 per month.
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