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Tips about low-cost bank accounts
What is a low-cost bank account?
A low-cost account is a bank account that csts a maximum of $4.00 per month and includes the following features:
- no charge for deposits
- the use of a debit card
- the ability to write cheques (some banks may charge additional fees for cheques)
- 8 to 15 debit transactions per month, at least 2 of which can be made in the branch. Debit transactions can include:
- paying bills
- making withdrawals from an automated bank machine (ABM) or with the help of a bank teller
- transferring money between accounts
- buying something at a store with your debit card
- writing cheques - free monthly statements or a bank book – showing you all the money that came out of and went into your bank account during the month
Do all banks have the same low-cost accounts?
No. Eight banks have agreed to offer low-cost accounts. However, their characteristics differ from one bank to another. To find out which banks offer low-cost accounts and learn the characteristics of each account, visit FCAC’s interactive tool Which Bank Accounts are Right for You? You can also ask your bank for more details about these accounts.
Some banks only allow you to make a specific number of debit transactions at a bank teller every month. If you make more debit transactions than you are allowed, you will have to pay extra fees. Ask the bank how much it will cost if you go over the monthly limit. Furthermore, the fees may not be the same for different transactions. For example, the fee for writing a cheque may be higher than the fee for taking money out at a bank machine.
Who can open a low-cost account?
Under Canadian law, everyone has the right to open a bank account.
You can open an account with a bank even if:
- you don’t have a job;
- you don’t have money to put in the account right away; or
- you have been bankrupt.
To open an account with a bank, you have to:
- go to the bank in person; and
- show the bank original identification (ID).
However, a bank can refuse to open a personal bank account for you if:
- it believes that you plan to use the account for illegal or fraudulent purposes;
- you have a history of illegal or fraudulent activity with respect to financial service providers during seven years prior to your request to open an account;
- it believes that you knowingly made false statements in the information you provided to the bank;
- it believes that opening the account would subject other customers or employees to physical harm, harassment or other types of abuse;
- you refuse to consent to the bank verifying the identification you presented, or verifying whether any of the conditions listed here apply; or
- the request was made at a branch or a point of service where the only accounts offered are those linked to another financial institution.
Note that responsibility for regulating other deposit-taking institutions, such as credit unions and caisses populaires, lies with the provinces or territories, which may have different requirements.
What if the bank won’t open an account for you?
If a financial institution refuses to open a personal bank account for you, it must notify you of its refusal in writing. The bank must also tell you how to contact FCAC. If you are unable to resolve your dispute with the financial institution, you should contact FCAC.
You can also make a complaint to the financial institution. Federal financial consumer protection legislation requires all federally regulated financial institutions to have a complaint-handling process in place to help resolve disputes between consumers and their financial institutions.
FCAC publishes the complaint-handling process for all federally regulated financial institutions on its Web site: fcac.gc.ca.
Source: Financial Consumer Agency of Canada (FCAC)
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