Today I throw myself at the mercy of TF’s readership (I was heartened by yesterday’s constructive responses to Adina’s questions) and ask for your wisdom about my Teachers Credit Union chequing account dilemma.
I eschew fees and unnecessary expenses — particularly the monthly variety. My primary chequing account is with the Teachers Credit Union (the missing possessive apostrophe is their error, not mine). I haven’t had to pay any fees since I left school (I closed my TD student chequing account before it converted to one of its fee-heavy variants).
The Teachers Credit Union hasn’t been perfect to me, but the pros outweighed the cons. It was nice to know my bankers directly. In fact, I even worked there at one time. Being a member (a.k.a. part-owner) of a credit union is better than being a customer (a.k.a. mark) of a bank. My credit union has even rewarded its members by issuing high-yield investment shares. But — let’s be very clear — the biggest benefit was always my “no-fee” chequing account.
Sadly, my beloved Teachers Credit Union called me up and told me that my ‘deal’ (a.k.a. my chequing account) is coming to an end in December, when I’ll start paying a fee. Little did they know that I’m not the kind of chump that pays fees. Worst of all, they tried to use the call as an opportunity to “up-sell” me on other products, which was a bit offensive. I’d expect such brazen idiocy from TD or BMO, not the management of the Teachers Credit Union.
I wouldn’t be frugal if my MO was to inactively abide by expensive fees. I think I’ve got three options. If I have more, do tell.
Chequing Account Option #1 – Stick with the Teachers Credit Union
- Accounting Cost: $5.95 a month ($71.40 a year); or
- Opportunity Cost: $40 per year (2% on a $2,000 minimum account balance)
Obviously, if I continued to bank at the Teachers Credit Union, I’d keep the $2,000 minimum balance to avoid their fees. Interest rates would need to almost double before the opportunity cost would exceed the accounting cost (and that’s not even counting the taxes I’d pay on earned interest).
Chequing Account Option #2 – Move to a Big, Evil Bank
- Accounting Cost: $3.95 a month ($47.40 a year); or
- Opportunity Cost: $30 per year (2% on a $1,500 minimum account balance)
I currently have a TD chequing account that I started in May. I only did this to receive a $250 bonus. I’m going to receive the bonus tomorrow, after which I had planned to close the account. Right now I have a chequing account that costs $30 a month — a fee that is waived with a $5000 minimum balance. Obviously I’d ‘downgrade’ to another account if I were going to stay with TD, which is reflected in the costs above.
The key benefit of TD, compared to the Teachers Credit Union (and compared to option #3 below), is that there are TD locations everywhere in Canada. The Teachers Credit Union doesn’t have a branch north of Burlington.
The key drawback is that, if I keep $1500 in my TD account, I’d only get a measly 10 free transactions. If I kept $2000 in my Teachers Credit Union account, I’d get unlimited transactions. (Side note: isn’t it interesting how TD has carefully balanced the accounting cost and opportunity cost of their account?)
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Chequing Account Option #3 – Give Up on Bricks and Mortar
- Accounting Cost: $0 (50 free cheques will cover four full years of my average consumption)
- Opportunity Cost: $0
I previously opened an ING THRiVE account for a $100 bonus. I could switch everything to this ING account and flip the bird to all the Old Economy financial institutions — regardless of whether they’re owned by the Bourgeoisie or fellow Proles.
Initially, I thought I couldn’t bank with just ING. I was concerned about my inability to go to a physical location to transact more complicated business on demand (e.g. to get a cheque certified, to get coin rolls, etc.). Then I realized that until May (when I opened my TD account for the bonus) I couldn’t bank “in branch” anyway. Again, the closest Teachers Credit Union branch is in Burlington. How did I survive until May? The Teachers Credit Union is on the Exchange Network. At any Exchange Network ATM (pretty much every credit union and National Bank ATM) I can make deposits and $0-fee withdrawals. ING also offers Exchange Network access for deposits and free withdrawals. Would it be less convenient to return to a branch-less banking life? Yes. Could I still ‘THRiVE’? Absolutely.
What do the Dear Readers of TimelessFinance think? Which option should I pick? Or do you have another idea? (I’m going to be honest: in writing this analysis I convinced myself that #3 is the best option, but I’m still interested in your thoughts.)