- Banking
- False Advertising
- Saving
By Beau Humphreys 8 years ago
YOU MUST MAINTAIN A MINIMUM BALANCE
Many banks require that you keep a minimum balance in your account in order to receive some kind of benefit from them.
Is the benefit worth the minimum balance? Let’s have a closer look.
The TD all-inclusive chequing account looks like a great deal:
- TRANSACTIONS: All transactions are free – up to a $804.50 value per year. Includes a free safety deposit box and personalized cheques. Whoa.
- CREDIT CARD: They waive the annual fee on one of 5 top TD credit cards. Up to $120 per year saved. Nice.
- MONTHLY FEE: And…you can get all of this for free, with no monthly fee, if you keep a minimum balance of $5,000 in your account at all times. Otherwise the monthly fee is $29.95 for all of the awesome stuff.
- TOTAL SAVINGS: So, if I add that all up, I’m saving $804.50+$120+($29.95 x 12 months) = $1,283.90 per year!
Seems like a no-brainer. You keep $5,000 in your account and you save $1,283.90 annually.
That’s like investing in something and getting a 26% return. If you have $5,000 to invest, you are totally better off to just leave it in your bank account and you’ll make 26%.
Right??
WRONG.
This is how they get you.
YOU CAN’T SAVE SOMETHING THAT DOESN’T EXIST
It all looks so magical and wonderful. But there are actually no savings at all because you have equivalent alternatives that cost NOTHING.
Let’s try this again:
- TRANSACTIONS: Free transactions are great, but they only have value if there is a situation where you might have to pay them. I bank with Tangerine and my transactions are always free. So free TD transactions are worth $0 per year to me. I don’t want a safety deposit box as that would imply I want to visit a branch. And I’m hoping that people stop using cheques any day now, because email money transfers are so much better.
- CREDIT CARD: I have two credit cards – my Tangerine Mastercard with no fee and 1-2% cash back, and my Scotiabank Visa with no fee and car rental insurance benefits. I don’t pay fees so I don’t need to save any.
- MONTHLY FEE: I pay no monthly fee at Tangerine and I even make a tiny bit of interest on my chequing account. No minimum balance required.
- TOTAL SAVINGS: So, if I add that all up, I’m saving $0+0+($0 x 12 months) = $0 per year!
For $0 per year in savings, I can choose to leave $5,000 of my money in my TD account forever.
Or I could put $5,000 in a GIC and make $150 per year.
Or buy $5,000 of Canadian bank shares and make $200 in dividends per year.
There are a lot of things to do with your $5,000 that don’t involve fake savings.
Always remember when banks quote savings, they are only comparing to themselves. It’s up to you to compare their offer to the other products out there.
BUT I WANT THE FREE TV!!!
TD also has a free TV offer along with this account.
As I’ve already discussed in my RBC iPad post, if you were already going to switch to TD and buy a 40” TV, then please proceed.
But otherwise, the life energy you are spending to get a free TV doesn’t seem worth it.
Many of the terms are similar to RBC’s offer, but the TV is worth a bit more ($500), you have to be approved for a TD credit card within 14 days and then spend $500 on that card before October.
Then the TV comes 3 months after all of the conditions have been met.
All that, plus holding your $5,000 hostage for 6 months or more.
The whole thing gives me a headache.
Ultimately, you make the decision that is right for you. My goal is to provide you with as much information as possible to make that decision. Decide wisely.
Related posts:
- Mint.com is good…but you can make it great
- That time RBC told me my bank wasn’t real.
- The Day I Won $20,000 and Then Lost It All
- Ok, enough with the bank fees
Tags: Blog Post
Go and try to take your hard earned money from your account and then you will see the difference !!!
I have more than 60-80 K in my Simplii account . I pay no money annually for maintaining my accoutns, so it was all good. Once upon a blue moon, I need to take almost $10000 CAD urgently for a private car deal from my bank account and when i called Simplii, the customer rep. told me i can take maximum up to $5000 CAD per day with special request due to privacy reason, do you think the seller will wait according to my bank’s policy ?? What privacy, its my hard earned money man !!! And if I need a bank draft, I have to pay almost $28 CAD and wait for 5-7 business days or make a special request and pay more , so they will send it to CIBC. But if you have $5000 to park aside, get TD all inclusive , so you can take your hard earned money how much ever you want from any of their branches anywhere in Canada on a working day !!! So i’m gonna switch today !Reply
Hi Mathew – thanks for the comment!
Sounds like you’re in a situation where leaving $5,000 in the account is totally worth it for you. I was in a similar situation when needing a bank draft for a deposit on a house. But as you said, it’s once upon a blue moon. That is pretty long a wait though. Tangerine is $10 for a draft and it usually takes a day by courier.
It’s definitely good to know the pros and cons of a bank account. For those that don’t need drafts or don’t care about the wait, the no-fee accounts are still the better option.
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I have this account along with the visa which comes with free roadside assistance which adds a bit of value to the equation for me.
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Hey Rob! Thanks for the comment. As long as you are happy with your situation, that’s all that matters. I just want to make sure you have all the information to make the decision that’s right for you. And I’m sure there are other benefits that I’m not taking into consideration in addition to the free roadside assistance, so thank you for mentioning that.
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I was considering this banking plan, but primarily because I wanted a safety deposit box. Thoughts?
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Hey, great article!
I currently have a TD First Class Travel Visa credit card with the first year $120 annual fee waived.
I’ve already gotten the first 70,000 TD travel points from the sign-up bonus but will have to keep the card for the full year to get the remaining 20,000 TD points.
I’m wondering if it’s worth upgrading my checking account to the all-inclusive account to get the remaining 20,000 points and waive the credit card’s annual fee?
My current checking account only requires a minimum balance of $2000 to waive monthly account fee (it’s not available anymore) while the all-inclusive account would require $5000.
If I do upgrade my account and decide to downgrade my account and credit card later, which I probably will, I would have to keep a minimum of $3000 in my TD checking account.
Thoughts?
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A lot of selective data picking (and ignoring in this post). This post really misses the mark on financial savvyness. If you’re that hard up to earn $150 a year on GICs I guess you should pull your money out, or you could just keep your money in place and continue to contribute to your TFSA/RRSP on a regular basis. In the grand scheme of a 30-40year investment time horizon, $5000 is literally nothing. What’s a lot? 10% of your pay every month over 30 years, now you’re talking about returns on compounding interest.
I guess your solution is applicable to anyone living under a rock or someone who never leaves the country…but then again if you don’t enjoy getting smashed with ATM fees when travelling overseas and you use the generous travel insurance that comes with that card, that alone is probably worth $150 per year. It’s cool that you want to be frugal. I dig that, but there is a time and cost associated with everything.
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