There are a number of options for unlimited banking in Canada. These are a few from Canada’s most popular banks. I was disappointed to hear recently that citizensbank no longer offers a personal banking option. Share with us here if you know of other Canadian banks that offer unlimited free transactions or where it’s possible to have the fee waived.

I was surprised to see that CIBC is the only bank without any option to waive their fees. I even called their customer service line inquiring about this specific account. I asked if there was any way to have to fee waived, any multi-product discount or a minimum balance required. The representative apologized and said that no, it wasn’t possible to have the fee waived under any conditions with their unlimited chequing account.

What is even more surprising is that President’s Choice Financial is a division of CIBC. I bank with PC Financial and regularly use CIBC machines at no cost. When I put my card in, the screen on the ATM at CIBC welcomes me to President’s Choice Financial. I even deposit cheques and withdraw money at no charge from CIBC ATMs. Why is it then, that they can’t offer their own customers free banking?

I was also surprised to see how complicated eligibility is for the RBC No Limit Banking Account. I understand the idea of a multi-product rebate and agree that it encourages loyalty. I have our children’s RESP accounts at RBC and have a RBC Visa card. It makes me eligible for a multi-product rebate on their Day to Day Banking Account which would give me 15 transactions a month. In order to receive unlimited free transactions I would also have to hold a mortgage or equity line. Fifteen transactions a month is not enough for my daily banking needs.

There is so much information available easily online. I’m surprised with so many other options out there, banks can continue to charge such high fees when their competitors have other alternatives. I understand that some people like having a brick and mortar bank. Internet banking isn’t for everyone. I’ve always been happy with it but I know for the first few months using it, I was a little bit uncomfortable with the idea of virtual banking. It’s been over 10 years now, and I’ve never had an issue. I’ve even ordered bank drafts, deposited US cheques and used my debit card internationally, all without any issues.

If I were to choose a brick and mortar bank today, I would choose one where, for a minimum balance, I could have my monthly fee waived.

The types of people who read personal finance blogs are probably already pretty careful with their money. It wouldn’t surprise me if most Million Dollar Journey readers pay no fees for unlimited banking in Canada. What continues to surprise me is that hundreds of thousands if not millions of Canadians continue to pay these fees when there are other options.

If you are looking for banking options in Canada, you have a choice. If you’re unhappy with your current bank, it’s easy to switch.

Are there other Canadian banks you want to tell us about? Feel free to share in the comments.

Kathryn works in public relations and training for a non profit. In her off hours, she volunteers as a financial coach helping ordinary Canadians with the basics of money management. Her passions include personal finance and adult education. Kathryn, along with her husband and two children live in Ontario.

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Kayla from PEI emailed me for some advice about her financial situation.  She is 50 with a mortgage and small RRSP.  She’s wondering where she should focus her money as she hopes to retire when she is 55.  Here is more information about Kayla.

• RRSP Portfolio Value: $6,000
• RRSP Contribution: $110/month
• Gross Income: $67,000 (after tax ~$3,220/month) increasing 2.25% per year
• Mortgage Payment: $504 bi-weekly ($50 to property tax) @ 5.4%
• Mortgage Balance: $84,000, 10 years remaining.
• Car Loan: $14,000 @ 5.25% (~$265/month for 5 years)
• Pension can start at age 55 with annual pension income of approximately: $42,000 per year (after tax ~$2600 /month)
• Monthly Expenses (not including debt servicing): $1,400
• Total Expenses: $2,757/month (without RRSP contribution)

With retirement on it’s way, Kayla will have to make a few changes.  I’m of the belief that all debt should be eliminated by the time that retirement starts.  For many, retirement income is fixed, who wants a portion of that income still servicing debt?

Another point I’d like to make is regards to RRSP contributions in addition to pension contributions.  In my opinion, if someone is fortunate enough to have a lucrative defined benefit pension plan, then debt servicing should come before any RRSP contributions.  Once debt is eliminated, I would personally move to maxing out the TFSA, then to the RRSP.  I would go that route because RRSP withdrawals are taxed as income which would be on top of any pension income received during retirement.

Having said that, looking at the financial specs above it seems apparent to me that she should focus on paying down her mortgage.  Even without looking at anything else, paying off the mortgage represents a 5.4% guaranteed after tax return which would be challenging to find anywhere else.  Once Kayla eliminates her mortgage, she will free up about $1,000 /month in cash flow (she’ll still have to pay property tax).  Should Kayla take her $110/month RRSP contribution and put it directly on her mortgage payment, her mortgage amortization would reduce to 8 years. If she really want to retire in 5 years mortgage free, she would need add $300 to her bi-weekly payment.

If Kayla turned 55 today, her car payment would be gone but a mortgage payment would remain.  Her total monthly expenses would be about $2,500 with a monthly income of approximately $2600.  Too close for comfort especially if inflation is added to the expenses over 5 years.  However, when the mortgage is paid off, the monthly expenses would reduce to $1,500/month leaving a healthy cash cushion.  To add to the picture, when Kayla turns 65 and assuming she qualifies, she’ll be eligible for Old Age Security which would give her another$516 /month (in today’s dollars).

In conclusion, it may be in Kayla’s best financial interest to pay off all debts before calling it quits.  It will give her a more comfortable retirement and perhaps peace of mind.  If Kayla were to simply redirect her RRSP contribution to her mortgage, then she could join the retired club in as little as 8 years.  Not exactly freedom 55, but freedom 58 has a nice ring to it too.

Back to you, how would you advise Kayla about her financial situation?

Disclaimer:  I’m not a financial advisor, anything written in this post should be used for informational purposes only.

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