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New low cost banking charges on their way!


lower bank charges

Being charged a fee for just about every bank service from using an ATM to making an e-transfer of funds to simply receiving a printed bank statement each month is a perennial irritant to many Canadians, as is the fact that such fees seem to increase on a regular basis. Canadian banks have sometimes been willing to waive or reduce such charges for some groups, such as seniors or students, but policies haven’t been consistent from bank to bank and could be changed or even eliminated at the bank’s discretion.

Beginning in January 2015, Canadian consumers will have somewhat more access to low-cost (or, in some cases, no-cost) basic banking services, and somewhat more certainty that those services will remain available to them at a minimal cost. The change will come about as the result of an agreement between the federal government and Canada’s biggest banks, under which the banks have agreed, on a voluntary basis, to provide basic banking services for a nominal cost or no cost.

The low-cost or no-cost bank accounts will provide the kinds of basic deposit, withdrawal, and cheque-writing services which most Canadians would utilize on a day-to-day basis. Such accounts will have the following minimum features:

  • a minimum of 12 debit transactions per month, at least 2 of which can be done in-branch;
  • cheque-writing privileges; and
  • no extra charge for deposits, debit card, pre-authorized payment forms, monthly printed statements, and cheque image return or online cheque image viewing.

Banks that have committed to the voluntary guidelines will offer a basic account having these features for a service or account fee of no more than $4.00 per month. In some cases, for specified groups, the same basic account will be provided at no cost. Those groups include young people, students, low-income seniors who are eligible for the federal Guaranteed Income Supplement, and individuals who are Registered Disability Savings Plan beneficiaries.

The new voluntary guidelines have been agreed to by several of Canada’s major banks, including Bank of Montreal, Canadian Imperial Bank of Commerce, Laurentian Bank, National Bank of Canada, Royal Bank of Canada, Scotiabank, and TD Canada Trust. The guidelines will come into effect as of January 15, 2015.

It’s important to remember two additional facts. First, financial institutions which have not joined in the voluntary guidelines (e.g., credit unions or online banks) may offer the same or even better choices, either in terms of cost or the kind and number of services provided for that cost. And second, even individuals who are members of a group which is eligible for a low cost account may find that they can do even better. As is the case with all financial decisions, the best approach is to do your research, shop around, and make sure that you are purchasing only the services you need, at the best price you can get.

The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.