Canadian banks to offer more low and no cost accounts to seniors

The largest eight Canadian banks have made an agreement with the Canadian government to launch low and no-cost accounts to those who need them, including low-income seniors. While some banks like the Royal Bank of Canada already have provisions in place to offer seniors rebates on banking, or offer low to no-cost accounts for seniors, others such as TD Bank recently eliminated lower-cost accounts. The new rules come into effect on January 15, 2015.

The vice-president of advocacy for the Canadian Association for Retired Persons (CARP), Susan Eng, pointed out the need for this type of action since TD Bank did not reverse its decision to eliminate lower-cost accounts even in the face of outrage from CARP members. Seniors who have a low enough income to qualify for the Guaranteed Income Supplement (GIS) will be eligible for the new accounts.

Account holders will be able to write cheques, get monthly printed statements and get at least 12 debit transactions per month. Two of those transactions can be in-branch. Banks that have been offering lower cost accounts previously capped debit transactions at 8. The government is also pledging that Canadians without a low income could get access to the same accounts for a lower-cost plan at $4 a month, although no definitive moves have been made in that direction.

Finance minister announced the plan at a senior’s centre in Ottawa in late May 2014. Over seven million Canadians, including youth and seniors, will be eligible for the new accounts. He estimates that the new no-fee accounts will save the average Canadian senior $50 per year. Oliver pointed out the importance of even such a small dollar amount to seniors living on a fixed income. Along with the new accounts will come more free services for people who have lower incomes.

Online banks such as Tangerine and PC Bank already offer no cost savings accounts, but seniors prefer the personal service that they receive at a bank. A good argument can also be made for the fact that they’ve been paying banking fees for their entire lives, and should qualify for a break if they have a low income in retirement. Over one third of Canadians are currently taking advantage of no-cost accounts for students, new Canadians, low-income seniors and youth. This new initiative will hopefully expand that number.