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Recommendations for a Chequing Account replacement
January 11, 2020
6:46 am
fitzy7
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Hello, first post here although I've read this site for quite some time.

I'm interested in replacing TD as my primary day to day banking account (or at least supplementing it). I have to keep a fairly high balance in my account due to all our monthly costs (mortgage, daycare x 2, automatic investments etc). I figure its costing me maybe $400-500 a year in lost interest to keep a high enough balance in there to cover everything comfortably.

Could anyone recommend a HISA that could act as a chequing account? I would be looking for something with unlimited withdrawals for all my direct deposits. I would need to get a joint account as my wife and I both put our paycheques in there. And ideally a fairly straightforward interface for daily use. I do not need to be able to withdraw cash from an ATM, as I do that pretty rarely and would keep my TD account active just in case.

Thanks!

January 11, 2020
10:04 am
Oscar
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Alterna Bank might be a good fit for your needs. They have a E savings and E chequing account that work well together and they tend to have pretty good interest rate for savings account .

January 11, 2020
10:25 am
Doug
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Unfortunately, I cannot recommend Alterna Bank, as much I as I generally like their business model and ethos. Their interest rates on HISAs and GICs are middling to underwhelming for virtual, non-face-to-face banks. Access to Acculink (credit union ATMs) could end at any time, if they grow too rapidly and the credit unions, through CCUA, decide that Acculink ATM access is to be extended only to parent Alterna Savings & Credit Union Limited customers (it's a non-sanctioned back door entry in to Acculink). As well, you are limited to $250,000 in maximum total customer balances across all your deposit accounts and GICs, which is far too low. A better strategy would be for them to remove the cap and adopt Motive Financial and LBC Digital's strategy of simply paying a lower rate on deposits exceeding $250,000.

When you compare them to other no-fee and all-encompassing HISA and GIC products from similar no-fee banking competitors, you can do better with the following (in sequence):
- Motive Financial, a division of Canadian Western Bank;
- LBC Digital, a division of Laurentian Bank;
- Innovation Credit Union (provincially incorporated in Saskatchewan and available to all Canadian residents, but federal continuance is imminent);
- Simplii Financial, a division of CIBC;
- Tangerine Bank, a subsidiary of Scotiabank; or,
- 1Q, a division of KEB Hana Bank of Canada.

For more no-fee chequing accounts like these, see:
Free chequing accounts in Canada

Cheers,
Doug

January 11, 2020
10:50 am
Norman1
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fitzy7 said
Hello, first post here although I've read this site for quite some time.

I'm interested in replacing TD as my primary day to day banking account (or at least supplementing it). I have to keep a fairly high balance in my account due to all our monthly costs (mortgage, daycare x 2, automatic investments etc). I figure its costing me maybe $400-500 a year in lost interest to keep a high enough balance in there to cover everything comfortably.

Could anyone recommend a HISA that could act as a chequing account? …

Unfortunately, most financial institution will either block or charge hefty fees for preauthorized debits on their HISA. That is to force people to keep money in their chequing account to capture that "$400 - 500 a year" in interest you mentioned. For example, Motive's Savvy Savings that pays 2.8%. After the first two withdrawals, it is $5 each.

EQ Bank's Savings Plus Account pays 2.3% and is close to what you are looking for. Unlimited bill paying and preauthorized debits. But, no joint account ownership.

Maybe you could recover some, but not all, of that "$400 - 500 a year in lost interest" by sending just your paycheques and some of those monthly preauthorized debits to a non-joint EQ Bank Savings Plus Account.

I don't recommend LBC Digital for what you want to do. Their reporting of pre-authorized debits and direct deposits is currently poor. The originator is not shown on their online banking web site or their statements. So, each transaction is just "Pre-Authorized Debit" or "Deposit". sf-frown

January 11, 2020
11:44 am
Briguy
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It may be worth it to keep a TD all-inclusive chequing account with 5000 dollars minimum in it to prevent a 29.95 monthly fee being charged. The cost of keeping 5000 dollars in it will be offset by the TD Visa card fee waver, rebate of $3.00 U.S. on Borderless Plan monthly fee, free small safety deposit box, certified cheques, money orders, and personalized cheques.

Just keep the amount in the account as close to 5000 dollars at all times- even one day below 5000 will result in a 29.95 fee. Excess amounts of money can be put into a linked HISA at Motive Financial or LBC Digital and transferred back into TD Bank if needed.

I use this strategy at Scotiabank with their similar Ultimate Package chequing account and excess cash currently at LBC Digital.

January 11, 2020
11:56 am
Briguy
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Doug said
Unfortunately, I cannot recommend Alterna Bank, as much I as I generally like their business model and ethos. Their interest rates on HISAs and GICs are middling to underwhelming for virtual, non-face-to-face banks. Access to Acculink (credit union ATMs) could end at any time, if they grow too rapidly and the credit unions, through CCUA, decide that Acculink ATM access is to be extended only to parent Alterna Savings & Credit Union Limited customers (it's a non-sanctioned back door entry in to Acculink). As well, you are limited to $250,000 in maximum total customer balances across all your deposit accounts and GICs, which is far too low. A better strategy would be for them to remove the cap and adopt Motive Financial and LBC Digital's strategy of simply paying a lower rate on deposits exceeding $250,000.

When you compare them to other no-fee and all-encompassing HISA and GIC products from similar no-fee banking competitors, you can do better with the following (in sequence):
- Motive Financial, a division of Canadian Western Bank;
- LBC Digital, a division of Laurentian Bank;
- Innovation Credit Union (provincially incorporated in Saskatchewan and available to all Canadian residents, but federal continuance is imminent);
- Simplii Financial, a division of CIBC;
- Tangerine Bank, a subsidiary of Scotiabank; or,
- 1Q, a division of KEB Hana Bank of Canada.

For more no-fee chequing accounts like these, see:
Free chequing accounts in Canada

Cheers,
Doug  

I think if you want an absolutely no brainer solution that pays decent rates, get Alterna Bank since you can phone in and activate their "coverdraft" feature which automatically pulls from savings to cover your cheques, so you can maximize money in your savings account. The Alterna esavings account functions identical to the EQ account with free PADs, ATM withdrawals,bill payments and e-transfers. But Alterna also has a chequing account available when you must absolutely pay by cheque, and also allows joint accounts. I don't see the benefit of EQ bank when Alterna is around, since EQ bank doesn't even offer an ATM card, chequing account or joint account. Alterna bank ATM card will also work at Acculink and the Exchange network ATMs.

I don't see why you are recommending 1Q and Innovation since their interest rates aren't much better than TD, and Simplii and Tangerine that only periodically have good interest rates.

January 11, 2020
12:18 pm
fitzy7
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Thanks for the suggestions.

Alterna's coverdraft function sounds very useful, I've never heard of that. Do other institutions offer it? With that in mind, the rates they offer look pretty decent.

Doug, regarding your suggestions, isn't there an issue with some of these in that while unlimited chequing accounts, they offer has a very low rates? My wife and I actually both have accounts with Motive, I think they are great. But when I want to actually pay for something there is a manual process of transferring to my chequing account and that wouldn't work for me day-to-day account.

January 11, 2020
12:24 pm
Peter
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A couple of recent articles on the topic: cash flow management between chequing and savings (which mentions coverdraft), and overdraft at Tangerine Bank (which, combined with free Interac e-Transfers, is like "coverdraft-light").

If not for the lack of joint accounts, I would have also recommended EQ Bank, but joint accounts have been "coming soon" for years.

January 11, 2020
12:45 pm
Briguy
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Also Motus is another all in one alternative to Alterna Bank since Motus has their "sweep" feature which allows you to keep a set amount in your chequing account at all times without having to transfer manually.

January 11, 2020
1:01 pm
Doug
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Briguy said
I think if you want an absolutely no brainer solution that pays decent rates, get Alterna Bank since you can phone in and activate their "coverdraft" feature which automatically pulls from savings to cover your cheques, so you can maximize money in your savings account.

Alterna's "coverdraft" feature is modestly useful, if they had a competitive HISA. I don't think 2.20% (as of today's date) is a high enough rate to justify keeping more than $500-1000 in it. Can you honestly say you would keep, say, $25,000 in that account? One generally likes to keep $200-500 in their chequing account, so, yes, you could auto-transfer every day that balance to your HISA, to earn an extra $4-11 per year. But then you add complexity, particularly when you've got a number of other HISAs and GICs at other banks. It means one more e-Statement to download, reconcile, and backup every month. So, unless you're keeping a large balance in that account or you're using Alterna's e-Savings account and forgoing the chequing account, I don't see the usefulness to coverdraft or to that account.

The Alterna esavings account functions identical to the EQ account with free PADs, ATM withdrawals,bill payments and e-transfers. But Alterna also has a chequing account available when you must absolutely pay by cheque, and also allows joint accounts. I don't see the benefit of EQ bank when Alterna is around, since EQ bank doesn't even offer an ATM card, chequing account or joint account. Alterna bank ATM card will also work at Acculink and the Exchange network ATMs.

And EQ probably won't ever offer a debit or a chequing account. EQ also a woefully inadequate to non-existent transaction narrative detail. For those reasons, I can't recommend it either. Motive Financial can do everything Alterna can, without the balance limitations, and better rates. Sure, they don't have a line of credit option, which is unfortunate, and perhaps I should've recommended Innovation above them.

I don't see why you are recommending 1Q and Innovation since their interest rates aren't much better than TD, and Simplii and Tangerine that only periodically have good interest rates.  

1Q has free e-mail money transfers, in-branch access in major metropolitan centres where KEB Hana Bank of Canada has branches, and a free book of cheques, as far as I'm aware. I wouldn't recommend them for savings, though they're installment bonus interest GICs are an innovative idea.

fitzy7 said
Thanks for the suggestions.

Alterna's coverdraft function sounds very useful, I've never heard of that. Do other institutions offer it? With that in mind, the rates they offer look pretty decent.

Doug, regarding your suggestions, isn't there an issue with some of these in that while unlimited chequing accounts, they offer has a very low rates? My wife and I actually both have accounts with Motive, I think they are great. But when I want to actually pay for something there is a manual process of transferring to my chequing account and that wouldn't work for me day-to-day account.  

Right, but I don't see how moving to Alterna Bank helps you. You'd be sacrificing 0.60% in deposit interest to go down from 2.8% to 2.2%, and you'd be limited to $250,000 across all your sole and joint accounts. You could use coverdraft, but at the expense of lower rates. Sure, you could coverdraft from your Alterna chequing to your Alterna e-Savings of $200-500 normally in your chequing, but at a potential, per annum, interest gain of $4-11. A lot of hassle for little benefit.

Hope that clarifies,
Doug

January 11, 2020
1:04 pm
Doug
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Briguy said
Also Motus is another all in one alternative to Alterna Bank since Motus has their "sweep" feature which allows you to keep a set amount in your chequing account at all times without having to transfer manually.  

@Nehpets (Stephen), @Loonie, and I do not recommend Motus Bank, chiefly because of their anachronistic, backward, and manual EFT transaction processing, lack of transparency, and issues with registered plan transfers. In fact, Stephen and I rate it a "hard avoid." Their growth rate in deposits and mortgages has now slowed to single digits, despite topping out at around $50 million, which isn't a good sign for their long-term future prospects, particularly when you consider, on most GIC rate terms, Meridian Credit Union is back to besting Motus Bank rates so it's quite possible they may just migrate Motus' deposit customers to Meridian and sell their small, predominantly Alberta-based, lending book to another financial institution.

Alterna is fine in that I wouldn't avoid them or anything, but it's just adding not-needed complexity to your financial affairs because, sure, you can use it for a no-fee chequing account, but why bother when you can get a no-fee chequing and a 2.8% HISA from Motive Financial or a no-fee chequing account and a 3.3% HISA from LBC Digital? It's like...adding an additional account and FI with little benefit.

Cheers,
Doug

January 11, 2020
1:05 pm
Norman1
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That "sweep" feature is not real time and does not prevent overdrafts.

Overnight, the feature checks the account balance. If the balance is now below a certain amount, money is transferred from another account to top it up to that amount.

Money is not transferred as needed. Cheques will start bouncing if one has not arranged overdraft. At best, the feature will clear an overdraft before the next morning.

January 11, 2020
1:06 pm
Briguy
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fitzy7 said
Thanks for the suggestions.

Alterna's coverdraft function sounds very useful, I've never heard of that. Do other institutions offer it? With that in mind, the rates they offer look pretty decent.

Doug, regarding your suggestions, isn't there an issue with some of these in that while unlimited chequing accounts, they offer has a very low rates? My wife and I actually both have accounts with Motive, I think they are great. But when I want to actually pay for something there is a manual process of transferring to my chequing account and that wouldn't work for me day-to-day account.  

If you have grandfathered in overdraft protection with Motive Financial, and don't mind checking your chequing account every day, you can keep zero money in your chequing account and transfer in money before midnight from your savings accountwhenever you see a cheque get cashed, and you won't get charged any interest.

Unfortunately I started with Motive after the overdraft protection got cancelled.

January 11, 2020
1:08 pm
Doug
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Norman1 said
That "sweep" feature is not real time and does not prevent overdrafts.

Overnight, the feature checks the account balance. If the balance is now below a certain amount, money is transferred from another account to top it up to that amount.

Money is not transferred as needed. Cheques will start bouncing if one has not arranged overdraft. At best, the feature will clear an overdraft before the next morning.  

Thanks for clarifying that, Norman. Yeah, if it's occurring in the overnight hours, any overdrafts will still show up on the bank's next-day report showing overdrafts and requiring staff intervention to pay or bounce. sf-cool

Edit: Having said that, if staff see that the overdraft is now covered, they would likely pay the item that caused the overdraft to show up, provided the pay/bounce decisioning requires staff intervention (i.e., it's not automated) and that the staff notices that the overdraft is now covered.

Cheers,
Doug

January 11, 2020
1:13 pm
Doug
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Briguy said

If you have grandfathered in overdraft protection with Motive Financial, and don't mind checking your chequing account every day, you can keep zero money in your chequing account and transfer in money before midnight from your savings accountwhenever you see a cheque get cashed, and you won't get charged any interest.

Unfortunately I started with Motive after the overdraft protection got cancelled.  

Alternatively, you can arrange a cash secured line of credit, not necessarily with Motive if they don't want to offer it, and benefit from HELOC rates. The extra pennies I've paid for 1-2 days' interest on my Coast Capital Savings cash-secured LOC attached to my chequing account (no usage fees since the limit is at least $5,000) is more than offset by the outsized deposit interest I'm earning elsewhere and from my Coast 4% GICs.

Edit: A lot of times FIs will do stuff for you even if they don't advertise it. Coast doesn't advertise GIC-secured LOCs, but had no problem doing it for me even though I'm not working, and they didn't even charge any fees to set it up. I suspect I could even convince Motive to set up a cash secured LOC for me if they manually e-mailed me LOC and security documents that I could return either via postal mail or by dropping off at a CWB branch for them to inter-office to Adam's attention. sf-cool

Cheers,
Doug

January 11, 2020
1:14 pm
Norman1
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fitzy7 said

Alterna's coverdraft function sounds very useful, I've never heard of that. Do other institutions offer it? With that in mind, the rates they offer look pretty decent.

Do you need to write cheques, fitzy7?

I was under the impression that your monthly costs (mortgage, day care, auomatic investments) are being debited out of your TD chequing account by pre-authorized debit.

If that is the case, a joint Alterna Bank High Interest eSavings account would be ideal. The interest rate of 2.2% is not as high as 2.8%. But, then one isn't moving money back and forth to cover debits or overdrafts.

January 11, 2020
1:23 pm
Briguy
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Norman1 said
That "sweep" feature is not real time and does not prevent overdrafts.

Overnight, the feature checks the account balance. If the balance is now below a certain amount, money is transferred from another account to top it up to that amount.

Money is not transferred as needed. Cheques will start bouncing if one has not arranged overdraft. At best, the feature will clear an overdraft before the next morning.  

The sweep feature would protect you against overdraft for someone who doesn't want to monitor their accounts if for eg. you knew that your maximum cheque amount you write for is 2000.00 and you set the sweep at 2000.00

January 11, 2020
1:25 pm
Londonguy
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fitzy7 said
Thanks for the suggestions.

Alterna's coverdraft function sounds very useful, I've never heard of that. Do other institutions offer it? With that in mind, the rates they offer look pretty decent.

Doug, regarding your suggestions, isn't there an issue with some of these in that while unlimited chequing accounts, they offer has a very low rates? My wife and I actually both have accounts with Motive, I think they are great. But when I want to actually pay for something there is a manual process of transferring to my chequing account and that wouldn't work for me day-to-day account.  

So what you seem to want is a single account that pays the highest savings rate available which also allows you to make payments against it. Don't we all. The closest to that concept is EQ Bank, but they still don't have joint accounts. So you need to synthesize your own convenience account.

Since you say you don't want to put much work into it, you might want to look at opening a ManuLife Advantage account and linking it to one of the top-paying HISAs out there. Direct your income deposits into the ManuLife account to pay your bills, and then periodically skim off the excess float and put it in the HISA to squeeze the most out of your cash balances. You'll get virtually free banking at ManuLife and also get paid 1.20% on every penny of your daily float balance, while earning at least 2.80% from your HISA balance.

Skim it once a week, every two weeks, once a month, not at all, whenever you get a big deposit, whatever suits you, or whatever you have time for. It only takes a couple of clicks to move the money in either direction.

EDIT: re: norman1's comments above, this works better if you actually write cheques

January 11, 2020
1:38 pm
Briguy
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I can't imagine myself not having a chequing account. I still use cheques for wedding presents, paying my life insurance, and potentially for depositing a cheque to myself to transfer large sums from one bank to another for banks that don't do linking or etransfer.

January 11, 2020
2:14 pm
Doug
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Briguy said
I can't imagine myself not having a chequing account. I still use cheques for wedding presents, paying my life insurance, and potentially for depositing a cheque to myself to transfer large sums from one bank to another for banks that don't do linking or etransfer.  

Wedding presents - nice alternative would be cash. Could also go with an Interac e-Transfer; that's never impersonal. They have nice e-cards you can use, too. sf-cool

Life insurance, with cheques? That's very odd and definitely non-standard. Most life insurance premiums are paid by pre-authorized debit or credit card (you could earn points for that, too, which I know you like since you've set up an SPP DC pension plan to which you, presumably, contribute via credit card like @xgbSs over at RFD sf-cool).

Large transfers - potentially necessary, yes, but most FIs let you transfer $100,000 per transaction and/or per day. Some have lowered it to $25-50,000.

Only thing I use a cheque for is paying for my haircuts since it's easier than taking out cash and I don't have to tell him how much to give me back in change. I can make it out for $35 ($29 + $6 tip). He'll take e-Transfers, but his CU business account isn't set up for online banking (online banking often costs money for businesses) so he'd have to, presumably, deposit it to his personal account and then transfer to his business.

I still think cheques will be phased out between 2025-2030 when Payments Canada brings in the next generation payments system that will feature real-time payments. This is scheduled to be implemented in late 2020 or 2021, I believe, so everything Norman and I have been saying about Payments Canada's EFT system will be thrown out the window. Major changes are afoot.

Cheers,
Doug

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