Probably the best Canadian banking setup


in Canada, Economics, Geek stuff

A while ago, I abandoned the Bank of Montreal due to their excessive fees. Really, most Canadians have no reason to be paying fees of any sort for most of their financial needs. I have found the following trio to be convenient and well matched to my needs:

1) Day-to-day banking: President’s Choice Financial

Free chequing and savings accounts, free Interac transactions, free cheques, and free use of CIBC bank machines – PC Financial acts as the clearing house for my basic banking. Pay gets directly deposited in, and I pay bills electronically there. My monthly rent cheque is also provided free of charge by them, including PDF versions of the endorsed cheques that can be accessed online. They never send me annoying paper statements.

They don’t have as many bank machines as some of Canada’s other banks do, but I think that is more than made up for by unlimited free Interac transactions.

2) Savings: ING Direct

With no fees and relatively high interest rates, I think ING Direct is the best choice in Canada for many savings purposes. I have investment savings accounts with them (mostly tax free, but one ordinary one for when my TFSA contribution is maxed out), GICs, and index tracking mutual funds. The 1% MEF on the mutual funds is a bit high, but ING doesn’t charge any fees for buying and selling. ING also provides no fee retirement savings options, which can include any mixture of investment savings accounts, GICs, and mutual funds under an RSP umbrella.

It is easy to transfer money electronically between ING and PC Financial, with about a three day lag in either direction. ING pays interest on the days during which you are waiting for funds to clear.

If anyone is planning to join, give them the ‘Orange Key’ 14534017S1 and they will give you (and me) $25.

In the long run, those wanting to make investments in index tracking funds are probably better off just buying the Vanguard funds best matched to their investment strategy directly. Though such an approach, it is possible to get an MEF of under 0.5%, though it requires paying one-off trading fees and dealing with a bit of inconvenience.

3) Credit card: Citibank Enrich Mastercard

No fees, with 1% cash back. This is the best credit deal I have been able to find in Canada, and I use it for routine payments like internet, my cell phone,, and insurance. Just make sure to pay it off in full at the end of every month.

If you spend a lot of money at a particular store, it may be worth getting one of their branded credit cards. That said, many of them are less generous than the Citibank offering. The Sears card, for instance, gives 1% cash back, but it can only be used in blocks to get gift certificates from particular retailers. Citibank just gives you the cash once a year.

Note: The former Citibank Enrich MasterCard is no longer available, since CitiBank got rid of its Canadian credit card operations. The same basic card can now be acquired from CIBC. They call it the ‘Dividend One’ MasterCard. It provides 1% cash back on all purchases, and has no annual fee.


With this this trio, you get most of the financial services ordinary Canadians need while earning decent interest rates, getting 1% back on credit card purchases, and paying no fees whatsoever. Those who are paying $10+ per month for the privilege of having chequing and savings accounts, $0.50 a pop for Interac transactions, or $50+ per year for 1% back on their credit cards should contemplate making some changes.

Are there any even better deals out there that I haven’t found yet?

[Update: 10 September 2010] ING is rolling out a chequing service in Canada, called ‘THRiVE’. Like PC Financial, there are no monthly fees. ING also pays interest on chequing accounts and offers your first chequebook free. Whereas PC Financial allows free use of CIBC machines, the ING service allows free use of machines on the Exchange Network. This mostly seems to consist of local credit unions. All told, I think the PC Financial offering is better.

[Update: 10 November 2010] I have written an open letter to both of these banks encouraging them to stop investing in fossil fuel projects.

{ 12 comments… read them below or add one }

Padraic May 19, 2010 at 11:29 am

That sounds like a great combo. My set-up:

1. Chequing: Scotiabank. I qualify for a free premium account due to my university routing their financial aid program through them, so the only fee I have ever paid is for cheques. I am generally happy with them: my main beef was when I was getting paid by cheque last summer, and they would consistently put 5-day holds on the deposits. I am locked in with them for a while due to a line of credit.

2. Credit card: President’s Choice Mastercard. The reward is 1%, as with your Citibank card (in groceries instead of cash but it makes no difference to me). However, I find their online interface incredibly clunky, and they refuse to stop sending me paper statements, so I would consider changing to yours. Is the online interface good? What is the delay before purchases show up?

3. Savings: ING Direct. Been using it for years and very happy.

Milan May 19, 2010 at 11:34 am

Is the online interface good? What is the delay before purchases show up?

I don’t have any complaints about it. The only annoyance is that it can take them 4-5 days to register an electronic bill payment from PC Financial.

When I had both my chequing account and credit card from BMO, payments happened overnight.

I find that purchases generally appear within hours of being processed electronically. Sometimes, they are delayed for a few days. This tends to happen with things like payments for taxi rides or deposits on large purchases.

R.K. May 19, 2010 at 11:55 am

It is probable that all three of these financial institutions fund climate-destroying activities, such as oil sands development and the construction of coal power plants.

Milan May 19, 2010 at 12:05 pm

We discussed this before.

If anyone is aware of particular ‘ethical’ options in Canada, please feel free to bring them up. That said, I am wary of both greenwashing and additional financial risks that might arise from choosing such options.

. May 20, 2010 at 7:12 am

Ethical investing: Your options

Thursday, May. 20, 2010 06:14AM EDT

How do you actually go about it? A look at funds and ETFs in our Let’s Talk Investing video

Myths surround socially responsible funds

In fact, there are several SRI mutual funds that stand out as good investments. One example is Ethical Special Equity, which invests in smaller-size firms or, as they say in the investment industry, small-capitalization stocks.

“This is one of our top funds right now,” said Frank Arnold, a Victoria-based adviser who specializes in SRI investing. “Coming out of recessions is usually the best time for small-caps.”

Small-cap stocks offer a higher level of risk than larger companies, mainly because they’re not as well-established. But Mr. Arnold said that Ethical Special Equity manages risk well. It lost 32.6 per cent in 2008, which is horrendous but still less than the 33-per-cent decline posted by the S&P/TSX composite index, which is a benchmark for bigger companies.

Ethical Special Equity has been below average in the past year or so, but that’s hardly a concern because the 10-year average annual gain is twice the category average. “It’s been one of the best funds in its space, regardless of whether it’s SRI or not,” Mr. Arnold said.

Avi May 22, 2010 at 1:48 pm

I find I can get better GIC rates than ING offers (~ .75% higher) by calling up TD Waterhouse and asking for the best available rate at the moment. Needs to be done from within a brokerage account though, so you’ll need a certain minimum investment to avoid fees. But if you do the Vanguard ETFs through the same account…

slantendicular May 25, 2010 at 9:33 pm

In terms of day-to-day banking, if you’re going to do unusual things, then you’ll want a different company (e.g. for international travel in places like South America, PC Financial isn’t a member of the most widely used ATM card network – the Plus network – so your banking options can be limited)

Milan May 25, 2010 at 10:35 pm

Good to know, for next time I am out of the country.

Joseph September 3, 2010 at 11:27 am

I use PC banking and I was nervous when I went to Europe last year becuase PC wasn’t on the plus system, there was no guarantee my card would work at foreign ATMs. My friend was with TD and his card was part of the Plus network.

Oddly enough my PC card was never rejected, but my friend’s TD card was rejected at certain banks in certain countires.

slantendicular September 6, 2010 at 9:50 pm

I just signed up for ING Direct’s chequing account today. The added feature of having no-fee overdraft protection (so long as it is repaid within 30 days) is compelling to me – someone who made a mistake paying a cheque earlier this year and didn’t transfer in enough money to cover it and had to pay an NSF fee with Royal Bank ($55!)

Milan September 7, 2010 at 9:41 am

I applied for their chequing account, but have yet to hear back.

So far, it doesn’t seem to offer any compelling advantage, compared with the free chequing from PC Financial. That said, if ING had chequing when I joined, I would probably never have opened the PC Financial account.

Robin December 19, 2010 at 5:49 pm

I use the PC financial Master Card for the free groceries. I find it’s come in handy numerous times.

And I find that TD has the best checking account as long as your balance is over 1000$. All fees are waived, so there’s no monthly fees for the account or for overuse of your interact transactions.

I have few ING accounts, which I just love. At the moment I’m looking for the best place go get a GIC account.

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