The six largest banks in Canada have enrolled in a federal program to provide basic accounts at a cost of $4 per month to customers beginning Dec. 1.
The goal of the program is to improve the affordability and accessibility of routine banking services, especially as more Canadians bank online, the Financial Consumer Agency of Canada said.
“Every Canadian deserves access to affordable, modern banking,” Finance Minister François-Philippe Champagne said in a recent press release. “More transactions, fewer fees and better access. This is a clear step toward fairer, lower-cost banking for all.”
All Canadians will have access to the $4 per month bank account program, but banks will forgo that fee for some groups.
Low-income seniors, students, and disability beneficiaries will be eligible for free accounts under the program as will newcomers in their first year in Canada, the agency said. Indigenous peoples and social assistance recipients may also be eligible for a no-cost account.
The $4-per-month accounts will allow for up to 18 standard banking transactions each month, which includes a minimum of six debit transactions for point of sale activities, including transit payments, online debit purchases, or account transfers.
It will also come with no minimum balance requirements, cheque writing privileges, and free digital monthly statements.
Some online-only banks and credit unions already offer basic accounts with zero fees, but the newly introduced federal program aims to lower costs at traditional banking institutions.
The Bank of Montreal, Canadian Imperial Bank of Commerce (CIBC), the National Bank, the Royal Bank of Canada, Scotiabank, TD Bank, and seven other federally regulated financial institutions have all signed on to the federal initiative.
Also participating are Alterna Bank, Hana Bank Canada, ICICI Bank, Industrial Commercial, Bank of China, Innovation Federal Credit Union, Laurentian Bank, and Tangerine Bank.
The federal initiative is voluntary but Financial Consumer Agency Commissioner Shereen Benzvy Miller said she is hopeful other banks will join the program.
“Having 13 signatories commit to offering modernized low-cost and no-cost accounts is good news for financial consumers,” she said in the press release. “I encourage other financial institutions to join the Commitment and extend these benefits to even more Canadians.”
The government also targeted banks in March when it amended its Financial Consumer Protection Framework Regulations, capping bank fees on non-sufficient funds (NSF) transactions at $10. The new rules, which had been in the works since last year, also prohibit the imposition of more than one NSF fee in a period of two business days.
Prior to the change, banks typically charged between $45 and $48 per NSF fee, the government said in a post to the Canada Gazette, the official publication of the Government of Canada.
“The Regulations will protect financial consumers by reducing the circumstances in which NSF fees are charged and putting a limit on the cost of an NSF fee when one is received,” the post said. “In the ten-year period following registration, the Regulations are expected to result in discounted benefits totalling $4.1 billion and discounted costs of $4.0 billion, resulting in a net benefit to society of $94.1 million.”
