In order to woo new customers, financial institutions are becoming creative in the way they package their bank accounts.  All of them promise their unlimited bank accounts will simplify your banking as well as save you money.

For all their hype, some can be quite confusing and you have to manage the account exactly as prescribed to be rewarded with the benefits.  Most will waive the monthly fee if a minimum monthly balance is maintained, but beware of additional fees.

Related: 10 Fees To Avoid Paying

Here are a few of the most common unlimited bank accounts in Canada.

Scotia Moneyback Account

Scotia advertises this account as one that pays you just for using the account.  The reality is that you receive 1% money back on all your debit purchases to a maximum of $300 per year.

With a monthly fee of $14.95 you would have to use your debit card a lot to break even – $18,000 in purchases annually.  Additional fees are applied for other services such as e-transfers and info alerts and if you use overdraft protection.

Bank of Montreal Premium Account

BMO has a similar plan, but instead of cash back you earn 1 Air Miles reward mile for every $40 you spend on your debit card.  Also, if you maintain a daily balance of $5,000 or more in your bank account you earn 25% more reward miles on your purchases using a BMO Gold Air Miles MasterCard.

The monthly fee is $25 but is waived with a minimum monthly balance of $5,000.  If you collect Air Miles you would have to calculate whether this account would be of benefit to you.  At the very least I would maintain the minimum monthly balance.

CIBC Everyday Plus Account

You can earn Aeroplan miles (100 monthly) if you have at least one direct deposit to your account or at least three pre-authorized monthly debits.  Also available is an “Anniversary Reward.”

You receive $100 each year for using an eligible chequing account, plus savings account, plus charging a minimum of $1,000 on the CIBC credit card.  At $8.95 a month it is the least expensive of the accounts here.

RBC Signature Account

The monthly charge on this account is $13.95.  It can be reduced to $9.95 if you also have a qualifying investment with them as well as an RBC credit card and a mortgage or home equity secured line of credit.

The No Limit Account is similar and the $10.95 fee is fully waived with the additional products.  It is strictly for electronic banking and other services such as personal cheques, other bank ATM transactions and e-transfers will cost you more.

Manulife All In One Account

You’ve seen the Manulife One account advertised on TV.  The principle is to combine all your “inefficient” accounts (chequing, savings, GICs, loans and home mortgage) into one equity secured line of credit which charges a monthly fee ($14) as well as a prime rate based interest.

The concept is that when you apply your income immediately against your debt you will save in interest costs.  Why leave money in a so-called high interest savings account or no interest chequing account when it can be reducing your debt interest?

While the concept sounds good, you have to be extremely organized to know where you stand regarding savings vs. debt vs. monthly expenses.  People generally underestimate how much they spend and overestimate what they save.  If you are not disciplined you can easily overspend and inadvertently increase your interest costs instead.

Unlimited Bank Accounts: Conclusion

Just like when people use credit cards to collect rewards and then pay the balance off each month, unlimited bank accounts can benefit those who stay within their parameters.

But make no mistake about it; banks are in the business of increasing their own profits not ours.  They are well aware of the psychology of their customers and how they use their accounts, and chances are they will end up paying out more than they save.

I suggest you read the features carefully and compare them to your banking style.  Then monitor the account for several months to make sure you are receiving the full benefits you expect.

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