More and more, Canadians are exploring their options and seeking no-fee alternatives to traditional fee-based banking products.
Sure, you can get a free chequing account at one of the big banks, but you’ll need to carry a high minimum balance or limit your transactions in order to waive the monthly fees.
Related: Canadian Chequing Account Comparison
To avoid the fees, you’ll need to open up a free chequing account with an online bank or credit union.
PC Financial has dominated the free chequing account market for more than a decade. The popular online bank has been around since 1998, and boasts more than one million no-fee chequing customers.
Then along came the Thrive account from ING Direct, followed by BMO’s Club Sobeys account, giving customers some much needed choice when it comes to free chequing account options.
The challenge is finding a free chequing account that can meet all your day-to-day financial needs. They all have similar features, like free debit transactions and no minimum balances, so I took a closer look.
Free Chequing Account Comparison
| Feature | PC Financial | ING Thrive | BMO Club Sobeys |
| Monthly fee | $0 | $0 | $0 |
| Minimum balance | None | None | None |
| # of Debits | Unlimited | Unlimited | Unlimited |
| ABM access | PCF / CIBC ABM’s | Exchange Network | BMO ABM’s |
| Cheques | Unlimited | 50 free | 25 free |
| Email Transfers | $1.50 | Free | $1.50 |
| Overdraft | $4.97 | Free | $5 |
| Interest | 0.05% | 0.25% | None |
| Rewards | PC Points | None | Club Sobeys |
| Sign-up bonus | 10,000 PC Points | $100 Apple gift card* | Up to 3,000 Club Sobeys points |
*gift card available when you switch your payroll deposit to Thrive
PC Financial stands out because they offer free unlimited cheques, plus the opportunity to earn free groceries in the form of PC Points. 10,000 points is worth $10. You’ll get free access to 3,800 PC Financial and CIBC ABM’s. The downside is you’ll pay a fee for email money transfers and for overdraft protection.
ING Thrive’s best features include free overdraft protection up to $250, and a generous $100 sign-up bonus (Apple gift card). They offer free email money transfers, but those take 1-2 business days to get to the recipient. ING is on the Exchange Network so you have free access to 2,500 ABM’s located near credit unions and banks like HSBC and National Bank.
One drawback to the Thrive account is once your free cheques run out, it’ll cost you $12.50 for another book of 50.
BMO’s Club Sobeys account is another decent option for no fee banking. The account features are comparable to the two online banks, but you get the added benefit of a brick-and-mortar location in case you need a teller-assisted transaction like taking out a bank draft.
Though there are too many to compare, your local credit union is also worth a look. More than 10 million Canadians belong to a credit union, where you’ll get the low fees and higher savings rates that online banks like ING Direct and PC Financial are known for, plus the benefit of having full service branches.
Related: Best High Interest Savings Accounts In Canada
Future of Online Banks
While more Canadians eschew the big banks in favour of free chequing account alternatives, there’s been a bit of an upheaval among existing online bank customers. That’s because ING Direct was recently purchased by Scotiabank, and Ally Financial was swallowed up by RBC.
As an ING Direct customer I’m not thrilled with the sale to Scotia, but I know it’s premature to bail on ING now before the sale is completed and we find out Scotia’s true intentions with this platform.
It’s hard to see Scotia veering too far off course with ING, but as we’ve seen with TD’s acquisition of MBNA, the big banks’ intentions are anything but benign.
Related: Changes To MBNA Smart Cash Rewards Explained
PC Financial has already noticed an uptick in new customers since the ING Direct sale, perhaps a sign that ING customers don’t want to stick around to see what Scotia has in store for them.
Still, many ING customers are hopeful that Scotia will operate ING separately and continue its tradition of no fee banking. For the sake of competition in the no fee banking segment, let’s hope so.
I was watching TV the other day and saw an advertisement for gadget insurance. I thought to myself “Gadget insurance? This must be new, I should write about it!”.
The commercial went through a few scenarios of a smart phone being lost or stolen which are two events that are covered under this gadget insurance policy.
I wanted to know more so I went to the company website, got a quote and started looking at the numbers and the policy wording. This particular company offers their policy in the United States and United Kingdom, Canadians are not eligible for coverage but I’m sure it’s coming.
Related: 6 Reasons Not To Buy Extended Warranties
There are a couple of companies that offer this service so there may be more options to choose from.
Gadget Insurance: The Numbers
To cost to insure a 32GB iPhone 5 is $8 per month, this sounds like a reasonable price. For only $8 per month I can have the peace of mind knowing that if my phone gets stolen I can have it replaced. Sounds like a great idea, but as always, we need to review the details.
Only when you get further into the application process does the company reveal that there is a $120 deductible that needs to be paid in the event you make a claim. This additional fee may make this insurance offering less attractive.
Below I’ve put together a table with the value of an iPhone 5, the cost of insurance and the deductible. It shows 3 different scenarios for making a claim at the end of the 1st, 2nd or 3rd year of ownership of the phone.
| Year you file a claim in | Year 1 | Year 2 | Year 3 |
| Value of Phone | $800 | $475 | $325 |
| Insurance cost ($8/month) | $96 | $ 96 | $96 |
| Deductible | $120 | $120 | $120 |
| Total cost of insurance | $216 | $312 | $408 |
| Insurance saved you | $584 | $163 | -$83 |
Related: Cell Phone Shopping
So, if something happens to your phone in the first year of ownership and you file a claim, you’ll come out on top and save yourself $584 that you otherwise would have had to pay to replace your iPhone 5.
Look what happens in the 2nd year though, you would only end up saving $163, that’s a big drop from $584. By the end of the 2nd year you will have paid $192 in insurance plus the deductible.
The other variable to take into consideration is the depreciation of the phone. Since a new iPhone is released each year, the value of last year’s model decreases significantly. The value of the phone in year 2 and 3 is based on average selling prices I found on Craigslist.
While insurance will save you some money in year one and two, year 3 is a different story. If you were to file a claim for your lost or stolen phone a few months into your 3rd year, you would be losing money! The cost of the insurance over 3 years plus the deductible would be more than the resale value of the phone.
The company has another option to prepay the premiums in advance to save money. In the case of a 32GB iPhone 5, prepaying would cost $226 for 3 years of coverage. Here’s the same table as above with this taken into account.
| Year you file a claim in | Year 1 | Year 2 | Year 3 |
| Value of Phone | $800 | $475 | $325 |
| Insurance cost 1 time |
$226 |
||
| Deductible | $120 | $120 | $120 |
| Total cost of insurance |
$346 |
||
| Insurance saved you | $454 | $129 | -$21 |
Prepaying seems to be a better idea but keep in mind that the company markets their product based on the low $8 per month rate, not prepaying!
Related: The Cost Of Keeping Up With The iPhone
Policy Wording
Taking a look through the policy yielded some other interesting nuggets. First off, in order to make a claim if your phone is stolen, you need to report the theft to the police.
In the event of covered Loss due to Theft, vandalism or malicious mischief, a report of such Loss must be made:
1. To the applicable police authority with jurisdiction; and
2. As soon as reasonably possible.
Secondly, the insurer reserves the right to repair the product first and if it can’t be repaired they will then replace it. Finally, the insurer only commits to replacing the insured phone within 30 days.
If the Insured Product suffers a covered Loss, We will, at Our option, repair or replace the Insured Product within thirty (30) days after:
1. We reach agreement with You;
2. Entry of a final judgment; or
3. The ruling of an arbitration award.
The Verdict On Gadget Insurance
While insurance for your phone might sound good to start with, when we dive into the numbers and policy wording the service loses its appeal. The policy is only really worth it financially if you lose your device in the first 12-18 months or so.
Related: Health And Dental Insurance – Not Really Insurance
In order to file a claim you might need to file a police report and then get the device repaired or wait to have a new one shipped to you. Since smart phones are such critical devices for many people, could you even wait 2-4 weeks to get a replacement?
Insurance for an expensive car or for your home are excellent options but insuring a depreciating consumer device is not. Remember that for many people the phone itself isn’t what’s important, it’s the photos, videos and emails that are on it.
The best way to “insure” your phone is to put it in a good case, backup the data on it and never leave it unattended!
For some added comedic value, here’s item 17 from the list of what situations are not covered by the policy:
17. War, including:
a. undeclared or civil war;
b. insurrection, rebellion, revolution;
c. warlike act of a military force, including action in hindering or defending against an actual or expected attack, by government, sovereign or other authority using military personnel or other agents;
d. terrorism;
Discharge of a nuclear weapon will be deemed a warlike act even if accidental.
You’ve got to love insurance companies, they think of every possibility!
Andrew Martin is a personal finance and investing blogger from Toronto, Ontario with a background in technology and a passion for travel. His blog, She Thinks I’m Cheap aims to help Canadians make more money by sharing facts, stories and advice.
Try this question out on your friends – or your children.
If you were to choose to get either $1,000 a day for 30 days or a penny on the first day and then double your money every day for 30 days, which would you choose?
Most people will begin to silently add up the numbers. They get to about day 10 or so, when the amounts would be $10,000 and $5.12 respectively, and then opt for the first offer, totaling $30,000.
A few people figure it’s a trick question and reflexively choose the second option.
Very occasionally will someone double the pennies on paper. When you do, you realize that in 30 days you will have amassed $5,368,709.12!
Why do people quit playing this game before finding out where it might go? Is it because we prefer instant gratification instead of what money can do over time?
Related: Delayed Gratification
We don’t respect the small amounts of money enough to believe that they can grow into a fortune.
Do you fritter you money away heedlessly? Do you go for the bargain at the mall instead of socking away an extra $50 in a savings program?
Do you automatically say no to spending, thereby valuing money itself more than what it can do for you?
When you let emotions and reflexes govern your behavior with money, you almost always fail to act in your own best financial interest.
You don’t have to be a financial genius to make your money grow. Time devoted to considering you financial decisions is essential.
Do you stash your money where it’s most convenient or follow the first piece of advice you hear? Don’t act too hastily or wait too long.
Related: Paying The Price For Financial Procrastination
What is your risk tolerance? Really?
Susan has inherited $10,000 that she wants to use towards a down payment on a house. Where should she invest it until it’s needed?
A reliable vehicle for keeping short-term money safe is recommended. But she is doubtful. “I want to get a good return and a high interest savings account only pays 2%,” she says.
Financial advisors will ask investors to choose between two options. Here’s an example:
- An 80% return on their money the first year but a 40% loss the second year, or
- A 5% return the first year and another 5% return the second year.
Almost without fail people will choose the first option, figuring that if they earn 80% the first year and lose only 40% the second they still would have a 40% gain. Right?
Wrong. An 80% gain on $10,000 is $8,000 for a total of $18,000 after the first year. The next year, the loss is 40% of $18,000 or $7,200 for a total of $10,800.
Now look at the return on the other choice. 5% of $10,000 is $500 for a total of $10,500 after one year. 5% of $10,500 (we’re compounding here) is $525 in the second year, for a grand total of $11,025.
Distinguish between short- and long-term goals
People see the above illustration of the idea that if you just plod steadily along you will come out ahead. But that’s not always true. If you have a long period of time before you need your money (more than 5 years), you are better off investing in the stock market.
When you have a limited amount of time (one to three years) you don’t want to take the risk that any of your money will be lost.
Related: The Best Time To Start Saving Is Now
Research shows that stock investors have a 28% chance of losing money during any one given year, but over 10 years that risk falls to only 3%, while the average gain totals more than 10%.
Conclusion
As I mentioned above, you don’t need to be a genius to make your money grow. Make a timely decision instead of dithering away because you don’t know what to do or want to time the market. Be honest with yourself about how much risk you are comfortable with.
Related: Financial Literacy Is A Lifelong Pursuit
Don’t risk short-term money because you deem the returns too low. But don’t shortchange your future by not giving your money the time it needs to do all it can for you.