Packaged Bank Accounts In Canada

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.


7 Responses to Packaged Bank Accounts In Canada

  1. These accounts all sound pretty expensive to me. I remember checking out the All-In-One account a year or so ago and found that the interest rate charged wasn’t competitive with mortgages. For a person who runs his or her finances sensibly, this extra charge cost far more dollars than was saved in other ways. I have no idea what the rates they charge are like right now.

    • Boomer says:

      @Michael James: The accounts are expensive but the stress is on how much you can save or earn with these accounts not the fees involved. That’s why it’s important to look at the whole package.

  2. Beth says:

    See? This is why I go for a no-fee bank account and forget chasing rewards. I never spend enough to make these accounts worthwhile, and I’d rather have that $5000 in a TFSA or RRSP than in a checking account.

    I apply this same thinking to loyalty programs you have to buy into. For instance, I dropped the Chapters/Indigo reward card when I realized how much I would need to spend just to break even. The discount at point of purchase feels great, but it’s not worth it over the course of a year.

    • Boomer says:

      @Beth: I agree. I don’t know why the banks need to come up with all these gimmicks when all most people want is simply a no (or even low) fee account. Also, any program that you have to buy into (and I include the Costco membership fee) has to be weighed against how much you use it and can actually save.

    • MikeO3 says:

      The Chapters card for me is a no brainer… I save much more then I pay for the membership because of the cost of the books I have buy.My ROI is 2-3 books and then rest of the year it’s pure discount. Well worth it for me (or an avid reader).

      • Beth says:

        Great example, Mike! Different strokes for different folks. Since I usually buy online, it was only a 5% discount. That would mean I’d have to spend $300 on books just to break even. When I was a student, it worked really well for me.

        Now that I can read what I want, I hit the library and used bookstore first :) I use Chapters’ Plum Rewards instead of iRewards — it’s free.

  3. MikeO3 says:

    These packages aren’t for me either as I can’t bare having to pay fees for daily banking products. We use no fee banking for everyday banking and invest in HISA for holding short term funds and interest… At least it makes me feel like they pay me interest for using my money.

    Indeed you need to spend a lot of money to earn a payback on cash or credit transactions… AND offset the monthly fees that they charge you. @$14.95 per month that is almost $180 in fees for using my bank account.

    Buyer beware and read the fine print because banks are not looking out for your best interest…

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