Scotiabank recently launched its Ultimate Package chequing account, with a whopping $30.95 monthly fee (or $371.40 per year). This fee is waived if you keep at least a $5,000 minimum daily closing balance in the chequing account, or a combined balance of $30,000 between the chequing account and the Scotiabank MomentumPLUS Savings Account. Instead of comparing the value of the account against the monthly fee (which the bank could have set at any amount), let’s presume that you have the cash to meet one of the minimum account balances to waive this monthly fee. We can easily price out whether it’s worth it over the long-term considering forgone interest.
What forgone interest? Well, the Scotiabank Ultimate Package pays 0.00% interest, and if you’re going to keep so much money in your chequing account, you certainly won’t be earning up to 2.80% (at Motive Financial) in one of the bank accounts in our comparison chart. Even if you earned 2.30% (currently offered at EQ Bank; 75% of financial institutions on our chart offer 2.30% or more), let’s do a quick calculation: to be safe, you keep $1,000 more than the $5,000 minimum balance in the Scotiabank Ultimate Package account for a total of $6,000. (If your end-of-day balance dips below the minimum balance even once, you have to pay that month’s $30.95 fee.) That earns $0 at Scotiabank, but $138 at EQ Bank. If you instead put $31,000 in the Scotiabank MomentumPLUS Savings Account, you’ll earn $341 per year at a base interest rate of 1.10%, but $730 at EQ Bank, for a forgone interest total of at least $389 (since this scenario puts nothing in the chequing account).
Are you going to get between $138 and $389 of value per year from the Scotiabank Ultimate Package? Let’s look at the features it provides:
- Unlimited debit transactions and unlimited Interac e-Transfer transactions: Many other financial institutions offer this, including Alterna Bank, Motive Financial, and Simplii Financial, which have free chequing accounts with no minimum balances. As well, Scotiabank’s own Basic Plus Bank Account, which has a monthly fee of $10.95 or $0 if you carry a minimum daily closing balance of $3,000, offers 25 free debit transactions and 10 free Interac e-Transfers per month.
- Up to $139 annual fee waiver each year on select credit cards: The applicable credit cards and their annual fees are Scotiabank Gold American Express ($120), Scotiabank Passport Visa Infinite ($139), Scotia Momentum Visa Infinite ($120 and currently first year free), and Scotiabank Value Visa ($29). Those are some decent credit cards, with the first 2 waiving the foreign currency exchange fee of 2.50% (and the first 3 currently available on our cash back site). Keep in mind, however, that only with 1 of those cards will you get the full $139 annual fee rebate value.
- 0.10% bonus on the MomentumPLUS Savings Account: The regular interest rate in this savings account is only 1.10%, so you will earn higher interest by putting your savings dollars in a different financial institution, although you would lose the convenience of easier cash flow management by keeping both chequing and savings accounts at Scotiabank.
- Unlimited free Global non-Scotiabank ABM withdrawals: This can be $5 per withdrawal, although note that the foreign bank or ABM/ATM operator might still charge you an additional fee.
- No monthly Overdraft Protection fee: This is $5 when used, although note that Scotiabank-owned Tangerine Bank currently offers this for free if you pay off an overdraft balance on the same day.
- “Ultimate” (higher) rates on select GICs: That’s currently 2- and 3-year GICs (2.25% and 2.26%); but you can most definitely get higher GIC rates elsewhere!
- 10 free equity trades at Scotia iTRADE in your first year (approximately $100 value) and 5 free equity trades every year after: This is good if you want to use Scotia iTRADE or a similar big bank investment account. There are, however, alternatives that offer commission-free trades.
- Free personalized cheques and drafts: You get 1 book of 100 cheques per year. Tangerine Bank gives you a free first cheque book, then $20 for each subsequent book of 50 cheques (going up to $50 in January 2020). The cost of bank drafts can add up. At Motive Financial, bank drafts cost $7.50 each.
- $55 safety deposit box annual fee waiver: If you need a safety deposit box, you definitely cannot get one at a branchless bank.
- No monthly account fee on a Scotia U.S. Dollar Daily Interest Account: The monthly fee on such an account is $1 per month, or $12 per year. Note, however, that Tangerine Bank offers a free US dollar account that currently offers 0.45% interest versus 0.15% with Scotiabank.
The features when taken as a whole can be compelling, but you must really take advantage of many of them in order to come out ahead. For example, if you want to carry the $139 annual fee Scotiabank Passport Visa Infinite, make several global ABM/ATM withdrawals in a year (3 x $5 savings), use overdraft protection frequently (3 x $5 savings), use Scotia iTRADE ($50 savings), need bank drafts (3 x $7.50 savings), go through many cheques in a year ($50 savings), and need a safety deposit box ($55 savings), that’s a total of $324 in savings plus whatever value you put on a big bank with lots of physical branches. You could also take a short-term view and take advantage of the up to $350 Scotiabank Ultimate Package sign-up bonus (if you meet certain conditions and open an account by the end of 2019), and the Scotiabank MomentumPLUS Savings Account promotion if you make a deposit before November 30, 2019.
If you’re only in it for the free Interac e-Transfers, write a few cheques in a year, and need bank drafts and international ATM access once in a blue moon, you have plenty of other cheaper options with better savings account and GIC interest rates. Be sure to do your homework and compare also against the BMO and TD “premium” chequing accounts with high monthly fees that can be waived with a minimum monthly balance.