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Spend your way to a no-fee chequing account

Not that you're interested, but there's a new way to pay zero in chequing account fees.

Bank of Nova Scotia recently introduced a new account called Moneyback that earns you $1 in cash for every $100 you spend using Interac debit to an annual maximum of $300. A family could easily spend enough through debit in this account over a year to offset the $14.95 monthly fee.

Pay $14.95 per month to a bank? Sounds expensive, but Canadians do seem to be bafflingly tolerant toward paying fees on their chequing account. That's the conclusion to be drawn from the ho-hum attitude shown toward the perfectly fine no-fee chequing options now available.

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The online bank ING Direct's Thrive Account had attracted just over 50,000 customers as of last month, which banking consultant David McVay describes as modest given ING's big base of clients for its savings account and mortgages.

"I would say they're on track to meet their target, but I would also say that it's not a barn burner," said Mr. McVay, who runs McVay and Associates. "It's not a huge deluge."

President's Choice Financial, co-owned by Canadian Imperial Bank of Commerce and the Loblaw supermarket chain, has been around since 1998. PC Financial has a loyal and satisfied client base, if comments received by this column are any indication, but Mr. McVay isn't bowled over by the growth there, either.

"None of the banks are worried about them any more," he said.

The Moneyback account fits into a cash-back marketing theme that Scotiabank is employing as well through its Scotia Momentum Visa, Scotia Momentum Visa Infinite and Scotia Momentum No-Fee Visa cards. The difference between these three credit cards is mainly the annual fee and percentage of cash that customers receive back (I'm researching cash-back credit cards and your comments on the best options out there are welcome).

The Moneyback chequing account is an indirect way of offering what amounts to fee-free banking.

"It's completely relevant in that area," said Mike Henry, a senior vice-president at Scotiabank who oversees retail banking. "For the person that likes self-service banking and likes using debit a lot, Scotiabank is giving them an option that says, be rewarded for what you already do every day and come out ahead as a result."

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Scotiabank's Scotia One is an example of how it and other banks offer fee-free banking through another route. It offers unlimited transactions of almost any type for $11.95 per month, but you pay nothing if you keep a daily minimum balance of $3,000.

The Moneyback account rewards your spending, not your ability to never go below a $3,000 balance in your chequing account. One per cent cash-back for debits is tallied on a continuing basis and annually paid in cash to your account at the end of November.

With a monthly fee of $14.95, it would take annual debit spending of about $18,000 to get to a point where you're essentially banking for free.

Mr. Henry quoted Statistics Canada numbers showing that average household spending on food, transportation and recreation is just a few dollars shy of $25,000 per year. He also noted that Scotia One customers are spending a bit over $16,000 per year using debit.

Want free chequing automatically, without having to buy lots of stuff or keep a brick of money in the bank? Then your choices are ING Direct, PC Financial and, if you live in British Columbia, Coast Capital Savings Credit Union.

Mr. McVay, the consultant, said part of the reason why no-fee chequing is a such niche business in Canada is that it's already available to some segments of the population. Students and seniors can bank for free at most financial institutions, while financially secure people can eliminate fees by keeping a big balance in their account.

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Another factor is that the banks offering no-fee chequing are online operations, with no branches for clients to visit. There's a limited number of people who are willing to bank online only, without recourse to stop into a branch to deal with someone face to face.

"If there was no-fee chequing in the branch channel, it would catch on like wildfire," Mr. McVay said. "But I don't anticipate any of the major banks will do it because of the loss of revenue."

This brings us back to Scotiabank's Moneyback account. It's no-fee chequing through the back door.


Bank of Nova Scotia's Moneyback account gives you cash back for debit purchases and you can earn enough to offset your monthly account fees. Here's how it works:

Monthly fee

$14.95, or $179.40 per year.

What you get each month

Unlimited self-serve transactions, two free transactions at non-Scotiabank ATMs, one in-branch transaction.


1 per cent of debit purchases up to $30,000 per year, paid into your account annually at the end of November.

Joint accounts

Purchases made on each card linked to an account will earn rewards up to the yearly maximum.

Eligible purchases

Earn rewards by using Interac debit, Interac Online and cross-border debit purchases.

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About the Author
Personal Finance Columnist

Rob Carrick has been writing about personal finance, business and economics for close to 20 years. He joined The Globe and Mail in late 1996 as an investment reporter and has been personal finance columnist since November 1998. Rob's personal finance columns appear in The Globe on Tuesday and Thursday, and his Portfolio Strategy column for investors appears on Saturday. More

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