Thursday, February 09, 2006

Frugal Focus Bank Shopping Part 2 - Fees

Picking up the thread from the previous post on this topic, I spent some time comparing fees. Using my current TD Canada Trust Infinity account as the control, I looked at BMO and PC Financial.

My first observation is that BMO offers many plans, with basic permutations based on account activity requirements, overdraft needs, and travel and out-of-Canada services. PC Financial on the other hand, true to its marketing model, offers just one everyday account plan. For the purposes of my investigation, I chose BMO's i.connect plan as it most closely reflected my needs.

Here are how the fees look:

Based on these numbers, I estimated my annual fees would be $51.80 with TD and $44 with BMO, assuming my balance drops below the required minimum 4 months of the year. With PC Financial I would pay no fees at all.

These costs assume that I wouldn't go over the 60 transaction limit with BMO, that I limit my ATM usage to the home bank (as I do now) and that I waive the cheque return/monthly paper statement. As I do all my banking online, I'm also not concerned with assisted service fees.

After this initial pass, its obvious PC Financial is the front runner. I still need to weigh the benefit of incentive programs (Air Miles vs. PC Points) and look at online banking.

If you are a BMO or PC Financial client and I've gotten the fees wrong, please let me know.

4 Comments:

Anonymous Canadian Capitalist said...

I've been using PC Financial for a while now. So far, I've paid $0 in fees (even cheques are free).

I still keep a checking account at the big bank because occassionally I need to get a bank draft and I like to drop into the branch to get it.

2/09/2006 8:53 AM  
Anonymous Greg said...

One other thing to consider is that with PC Financial's no minimum balance a part of that $3000.00 could be sitting in a savings (or other) account earning higher interest.

For example, keeping a personal minimum of $500 in the chequing account and dumping the other $2500 into an ING savings account tied to the the chequing account might not be a bad idea.

2/09/2006 9:07 AM  
Blogger Humble Investor said...

CC,

I can see how keeping a 'big bank' account active for infrequent special requests is a good idea. I'm going to need a bank to guarantee my signature to start a DRIP, for example.

Greg - you're absolutely right. I'll try and factor this is with as few assumptions as I can when I look at the 'benefit' side of my cost/benefit analysis.

2/09/2006 9:20 PM  
Anonymous Anonymous said...

I use PC Financial for my daily banking (ie. cheques come out of here, debits, etc...). I keep a minimum amount of money there and transfer most of it up to ING. Then, as I pay bills, I move money back down to my PC Financial account. It is great not having to leave $1,000 or more just to avoid fees. With my system, I have never paid any fees and get a decent return on my short-term money at ING.

2/09/2006 11:55 PM  

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Disclaimer: These articles are for information only, and are not to be construed as financial advice, legal advice, or a solicitation to buy or sell securities.