Thinking about making the switch to a new bank? Though we could tell you the “frugally obvious bottom line ” (aka: look for no fee EVERYTHING), there is way more to shopping around for a new bank than one might think. This counts for double if you’re in a transitional stage in life (college, marriage, buying a house, having a baby, retirement planning, sending kids off to school, etc).
Review the following questions prior when shopping around for a new financial institution & then collect each banks data that is relevant to your search. From there, give each bank a grade based on the percentage of how many features/services they have that match what you need. It never hurts to find a financial planner who can give you an unbiased opinion once your research is done, too!
What’s your banking style?
Is your job the typical 9-5? Are you an overnight shift? Do you have something in the middle? This is the foundation for which to make your decision. Most Canadian banks offer extended hours on busier days (Thursday and Friday) and some even are open on Sunday’s now (TD Canada Trust, for example). But these hours vary significantly between each city, never mind each province. Look for one that fits your idea schedule. And remember, some services at a bank (like speaking to a banking manager) are often only available during peak hours. If this is something you foresee needing a good amount of, make sure to factor that into your decision.
Additionally, are you in the need of mobile and/or online banking services? If this is your preferred method, hours of operation may not matter as much to you. Yet, online banking is a beast of it’s own. Each Canadian bank offers something different than the other (different budgeting tools, electronic email money transfer limits or fees, regulations on usage outside of Canada, etc), so review the details of each thoroughly.
Lastly, what is your ABM/Teller ratio? Do you prefer the machine to a human being? Teller services are generally not an additional cost, but depending on the plan you choose, you might have a limit on your ATM/ABM amounts before you start paying for more. You may want to have a $0 fee chequing account, but these often don’t come with unlimited ATM/ABM usage. Another service to keep in mind is your cash-to-debit ratio. Do you use the card more than actual cash to pay for purchases? Just like with ABM/ATM fees, your potential bank might charge extra for excess debit card usage. Find out what you need. If you only make 10 purchases a month with your debit card, you will probably opt in for a lower fee plan. But if you use it every day, multiple times a day, you should plan to pay something for it (probably). This also counts for pre-authorized debits (bills that you have authorized to come out of your account on a pre-determined date, like your mortgage payment, car payment, etc).
If money is tight and you’re living paycheque to paycheque, it might not be a horrible idea to get a limited amount of overdraft protection (that is, if you’re comfortable with a credit check and a few points off your score).
Some banks offer a fluctuating amount, where as others offer a stable value. A word of warning, however; don’t come to depend on it as part of your monthly cash-flow. It should be there as a back up.
If this is too risky for you, avoid it all together.
Do you plan on keeping a minimum monthly balance in your account? Some banks will waive your plan fee if you keep a fixed amount of money in your account every month (like $1000).
Do you need a safety deposit box, life insurance, home insurance, car insurance, access to money orders on a regular basis, bank drafts, cheques, bank credit card, line of credit, RRSP’s, a mortgage, currency conversion, etc? Determine your needs and then the cost of each.
Depending on the time of year, some banks will try to get you to switch to them by offering incentives. Sometimes it’s in the form of free cash, other times it’s tangible rewards like electronics or tickets to something. While this might be tempting, make sure the switch will be right for you for the rest of your time with them. Getting a free iPad might be helpful, but not if you’re going to end up paying more in fees than you need to. It adds up fast.