The golden rule of banking when you are in school or starting your career is not to help the banks get more gold.
You can do this by paying zero fees to do your day to day banking. There are no monthly account fees, and no fees for transactions such as electronic transfers.
Later, when you earn a decent salary, the monthly bank fee may be acceptable. But when money is scarce, paying the fees to the bank is a complete waste. All it does is support dividends paid to baby boomers, seniors and other investors who own bank shares directly or through trusts.
Almost all major banks now offer bank accounts for youth or students without fees with unlimited electronic transfers and discounts. One notable feature is the recently introduced package from Canadian Imperial Bank of Commerce CM-T called CIBC Smart Start.
Aimed at young people aged 13-24, Smart Start offers unlimited free banking, including electronic transfers, as well as no-cost investing through the bank’s digital brokerage, CIBC Investor’s Edge. This means there are no account fees or commissions for trading stocks or exchange-traded funds.
The no-cost investment experience sets Smart Start apart, but also available to anyone under 25. A student checking account is available free of charge from the TD Canada Trust until age 23, while the BMO-T Bank of Montreal gives you an additional 12 months of eligibility after graduation. Student bank accounts at BNS-T, HSBC Canada, and Royal Bank of Canada RY-T are available to full-time students. National Bank of Canada NA-T offers free banking services to people between the ages of 18 and 24.
With branch networks and marketing ubiquitous, the major banks in Canada have built tremendous brand strength. This explains why alternative banks, while plentiful and worthwhile, are less powerful in the Canadian banking landscape than they should be, given the value they provide.
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Two online banks with solid payment options for all customers are operated by major banks – Tangerine by Scotiabank, and Simplii Financial by CIBC. The list of widely available fee-free check options also includes Alterna Bank, Motive Financial and motusbank. Some credit unions also offer a no-fee screening procedure.
Some features to look for when comparing no-fee accounts:
- Unlimited transactions, including electronic transfers
- Remote Check Deposit – Just take a picture with your phone
- There is no minimum balance
- Access to the national ATM network
- Access to a savings account at the same bank that pays a competitive rate
- Well-designed mobile app with biometric login – you use your fingerprint instead of typing a password
Some non-traditional bank accounts are also worth looking into. The first is the EQ Bank Savings Plus account, which pays a competitive interest rate of 1.5 percent and allows you to send wire transfers and pay bills at no cost. Important: There is no discount card for buying things or making purchases.
Koho is an app that pays you 1.2 percent of your savings, which you can access with a prepaid card. Load your own money onto the card and use it just like any other credit card. An advantage with Koho is 0.5 percent cashback on all purchases.
If you are a regular customer of Loblaw or Shoppers Drug Mart, take a look at PC Money Account from PC Financial. You can only earn PC Optimum points with this account, which provides most banking services except for Jut.
Another banking app to consider is Wealthsimple Cash, a zero-fee prepaid Visa account that generates 1 percent of paid spending in the form of cash, shares or crypto. You can also get a refund of foreign exchange fees that are charged when you use your card in other countries.
One area where major banks excel at building tools is in their online and mobile banking apps that help customers budget and track spending. There’s one thing you never want to see in any summary of your spending: the fees charged for everyday banking.
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