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rob carrick

No-fee chequing accounts are the great idea that just won't click in Canada.

Truth is, they haven't worked out great for banks or consumers in the U.S. market, either. And yet, online bank ING Direct will introduce a new chequing account Wednesday that charges no monthly fee, period.

Thrive Chequing allows you to make unlimited debit purchases, pay bills, write cheques, make withdrawals at 2,400 bank machines across the country and even incur a small overdraft without paying a cent in fees. Thrive will be available Sept. 14 to 10,000 people who register online (at This pre-launch will be used to generate feedback to be incorporated into a full launch early in 2011.

There are already a few no-fee chequing accounts available in Canada, notably from the online bank President's Choice Financial and Coast Capital, a B.C. credit union. With ING, the question is whether the Dutch-owned bank's marketing savvy can break the category wide open in much the same way as it did when the high-rate savings account was brought to Canada back in 1997.

ING claims that Canadians pay an average $185 per year in monthly bank fees (hence the Web address for signing up for the pre-launch). In a poll it commissioned, 38 per cent of participants said they were disgusted by their chequing account fees, and 66 per cent thought the fees were unfair. Three-quarters said they would switch to a no-fee, online savings account if one were available.


"Our customers are screaming for this product," said Peter Aceto, president and CEO of ING Direct Canada. "We have a regular dialogue with our customers about what they would like from us in the future, and they've consistently been saying they would like us to produce a chequing account."

ING already offers no-fee chequing accounts in the U.S. market, as well as in such places as Spain, France and Germany. Thrive was developed for the Canadian market and offers a few notable benefits:

-No minimums: Many banks offer free chequing to clients who maintain balances of $1,000 or more.

-Interest is paid: Okay, it's not much at 0.25 per cent for balances of up to $50,000, 1 per cent for $50,000 to $100,000 and 1.1 per cent for higher balances, but it's still more than almost all chequing accounts offer.

-Generous and innovative overdraft protection: ING's Whoops! Protection covers clients for up to $250 in overdrawn funds with no fees or interest provided the money is paid back within 30 days.

No-fee chequing accounts are common in the United States, but there's been a catch. Spend more than you have in your account and you trigger monster overdraft fees in the area of $35 (U.S.). Banks in the United States have just been prohibited from automatically charging these fees, which means less revenue for them. As a result, some are reducing the availability of no-fee accounts.

Rival: PC Financial

Here in Canada, no-fee chequing accounts were introduced back in 1998 by PC Financial, run by Canadian Imperial Bank of Commerce and the Loblaw supermarket chain. A perk of dealing with PC Financial is that you get reward points useable for free groceries.

The small number of copycats inspired by PC Financial suggests there's a finite number of people interested in banking strictly online so as to avoid fees. "No-fee chequing accounts were very big for PC Financial, which attracted about 1.5 million clients," said David McVay, a banking industry consultant with McVay and Associates. "But the momentum seems to have waned."

Online bank Citizens of Canada offered an excellent no-fee chequing account a couple of years ago, but it couldn't prevent the bank from being shut down by its parent, Vancouver City Savings Credit Union.

Mr. McVay further noted that free banking is already available to students, seniors and anyone who can afford to park some money in a chequing account in order to eliminate service fees.

People comfortable with online banking should thrive with Thrive Chequing. Beyond the unlimited transactions, overdraft protection and competitive interest, the benefits include easy transfers to and from other banks and a unique feature that fires off an e-mail to you every time you make a withdrawal (helps you keep track of your balance and quickly notice unauthorized transactions). Customers who need a bank machine have no-fee access to The Exchange Network, which includes National Bank of Canada, HSBC Canada and dozens of credit unions across the country.

Can ING make no-fee chequing hot? Mr. Aceto said the company has established a franchise in Canada for offering products that are simple, cost-effective and easy for people to manage themselves. "We think we've done the same thing with Thrive Chequing."

Just Say No To Bank Fees

ING Direct has announced a new no-fee online chequing account. Here's a survey of the existing competition:




Coast Capital Savings Credit Union

Free Chequing, Free Debit and More Account

Available only in B.C.

ICICI Bank Canada

HiValue Chequing Account

Requires you to have a $500 balance, or have your paycheque

President's Choice Financial

No Fee Bank Account

Run by CIBC and Loblaw Cos.