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KeyDirect Chequing Account
January 11, 2010
7:00 am
Doug
British Columbia, Canada
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Canadian Western Bank's online, "virtual" and branchless banking subsidiary Canadian Direct Financial recently launched their KeyDirect Chequing Account. It's very similar to both VanCity's E-Package chequing account and ICICI Bank's HiValue Chequing account that offer unlimited debit transactions and no monthly fee, so long as you maintain a minimum monthly balance. Both feature surcharge-free, unlimited usage of The Exchange Network linked ABMs. With KeyDirect's account, you can have a totally-free chequing account and your first cheque book with 50 cheques in it for free if you either (a) maintain a minimum balance of $5000 in your KeyDirect Chequing Account, (b) hold $5000 in a non-redeemable KeyReturn GIC or (c) get 15 free debit transactions for every $1000 in minimum monthly balance. If neither of these appeal to you, you may pay a $2.00 monthly fee and per-transaction activity charges.

I think this is the way to go in terms of free chequing accounts. With the exception of PC Financial which offers totally free chequing, banks just can't make money offering free chequing accounts with free cheque orders when all you do is maintain a very minimal balance. The free chequing account should be used as a carrot to entice people to hold significant deposit balances with them, either in that chequing account or in a linked GIC or savings account. That way, what the bank loses in non-interest revenue, they can at least make up in net interest income.

I think it seems like a good account. The $5000 in your chequing account option to waive the fees isn't that attractive (the Big Five offer this with anywhere from $2500 to $4000 minimum monthly balance) but the fact you can keep it in an interest-bearing GIC, which is why one would go with Canadian Direct Financial anyway, makes sense.

It also comes at the right time, on the heals of Citizens Bank effectively ceasing operations and becoming a Visa credit and prepaid card issuer only and HSBC demising its HSBC Direct operations.

Which free chequing account do you use?
(a) PC Financial No-fee Bank Account
(b) ICICI Bank Canada HiValue Chequing
(c) VanCity E-Package (B.C. residents only)
(d) Coast Capital Savings Free Chequing, Debit and More (B.C. residents only)
(e) Canadian Direct Financial KeyDirect Chequing Account
(f) HSBC Advance Savings (grandfathered, product no longer marketed)
(g) "Big Five" bank account with minimum balance (if so, which one?)
(i) Other bank account (if so, which one?)

Cheers,
Doug

January 12, 2010
1:13 am
Doug
British Columbia, Canada
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Wow, I am surprised no one has replied to this post yet.

Oh well.

- Doug

January 12, 2010
4:58 pm
Prag
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I noticed yesterday that something seems to have changed with this forum where registration is now mandatory. I have never bothered registering before and finally got around to doing it today, so now I have a chance to reply.

I am currently using HSBC Advance Savings (formerly HSBC Direct).

The once or twice a month that I need to write a cheque for my horse board or a staff association discount ticket purchase, I use a BMO Mastercard Cheque and pre-pay the amount on my BMO Mastercard BEFORE the cheque is cashed so that I avoid paying interest for using this method. All my other recurring bills and transfers are all done online for free using HSBC Advance.

If I ever actually need certified cheques or some unusual service at some point in the future I'll probably open a chequing account with my local Education Credit Union (http://www.ecusolutions.com/) where the minimum balance is only $1000 for a Personal1 account. At this time, there is no need.

I also think Ally, once it becomes Ally Bank in Canada, is rumoured to be launching a chequing account, presumably no fee. I would be interesting in learning about that product once (and if) it launches since I have been very happy with them so far. In the USA, ING DIRECT has their Electric Orange chequing account which is very unfortunately not offered in Canada.

January 13, 2010
2:50 am
Doug
British Columbia, Canada
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Yeah, I noticed you have to register to post a new topic but you've always been able to reply as a guest. Yesterday, replying as a guest was impossible. Today, it is so perhaps Peter has listened to your quality feedback, Prag. 🙂

Ally or ING may launch a chequing account but I tend to think some sort of minimum balance will be required for unlimited transactions. What they may do is not require a minimum balance in chequing, but for you to have a minimum on deposit in one of your savings accounts or GICs. Otherwise, you'll get clients with very little to offer in terms of net interest income (deposit spread) or non-interest revenue (service charges) and they will be money-losing clients.

It's worth noting, however, that if you hold $1000 in your KeyDirect Chequing, you get 15 free debit transactions. So, it's still a great account.

Cheers,
Doug

January 13, 2010
6:19 am
Peter
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I'm not sure how the settings got changed, but they should be back to normal now 🙂

I hold a couple of the accounts you listed but none are completely satisfying. I don't mind having to hold a reasonable (read: $1,000) minimum so the KeyDirect option is quite appealing. I'm also trying to move away from cheques and debit cards as much as possible so that the transaction limits simply become less of an issue!

January 13, 2010
4:07 pm
Prag
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Doug said:
It's worth noting, however, that if you hold $1000 in your KeyDirect Chequing, you get 15 free debit transactions. So, it's still a great account.

Yeah, I really like that option where the greater your balance, the greater the number of free debit transactions you get. That's a definite plus! With my local credit union the $1000 minimum balance includes unlimited debits, so it's still a better option for me (should I ever need a chequing account) and I prefer to deal with companies headquartered in my own province or locale where possible. I'm not sure what my average number of debits is a month and is something I'll need to track. I know it's more than just a handful.

I look forward to the day where paper cheques are a thing of the past. They are such a hassle and the only reason I have to do that for horse board is otherwise there's zero proof I paid it. Cash is the only other option and they won't write receipts since I am quite sure they try to keep the horse boarding under the table as far as taxes and income declaration goes.

January 14, 2010
1:30 am
Doug
British Columbia, Canada
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Peter: thanks for fixing the board settings. Indeed, it's a good account (not the greatest) but the escalating minimum balance to waive service charges at various levels is an appealing option and it's good to have a third nationwide, free unlimited chequing account to compete with ICICI Bank Canada (free with $500 or $1000 minimum balance) and PC Financial (free with no strings attached). Various credit unions, as Prag said, do offer this type of account but it's not a nationwide option. For B.C. residents, I'd have to say one's best bet is either Coast Capital Savings or VanCity (which is free with $1000 minimum balance in one's chequing account).

Prag: I do agree it would be nice to completely eliminate cheques but they're still so versatile, even the credit card companies issue paper-based chequebooks. I've written the odd credit card cheque and while I don't pre-pay it, I pay it off every month so the only interest I pay is on the actual cheque wrote till the time it's paid off - usually amounts to no more than about $0.30 interest. When you factor in the chequebook itself is free and there are no fees, it's a pretty good deal. Generally though, I write cheques on my HSBC chequing account (which is free being that it's a staff account).

Cheers,
Doug

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