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If only Toronto-Dominion Bank had just been a little less nice 20 years ago.

The bank could have avoided recurring PR flare-ups involving annoyed clients and helped those customers move on from a chequing-account deal that was too good to last.

The TD Preferred Chequing Account was discontinued in 2001, but TD let clients who wanted to keep it do so. Now, it’s changing the rules on that account – again. As of June 1, you’ll need a balance of $5,000 to avoid transaction fees, up from $2,000 right now.

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The story of TD Preferred Chequing is a case study in bank decision-making about keeping customers happy. It’s also a lesson to bank customers on finding no-fee banking you can rely on. Big banks put hurdles out there for clients to qualify for no-fee banking, and they will always raise them over time. For a no-stress version of no-fee banking, try an online bank.

Preferred chequing was actually a Canada Trust account offering that TD absorbed in its takeover of the company back in 2000. TD closed the account to new business in 2001 as part of a refresh of its chequing accounts but says it allowed existing clients to keep it to minimize disruption. In doing so, TD grandfathered some terms and conditions that waived transaction fees if the account holder kept a balance of $1,000 or more.

In 2015, TD raised the minimum balance for avoiding fees to $2,000 and got itself just the bad publicity you’d expect. Newspaper articles were written and grievances were aired on online personal finance forums.

Now comes Round 2 of TD versus the preferred chequing account holders. In addition to raising the minimum to have fees waived to $5,000 on June 1, the bank is increasing the per-transaction cost in the account to $1.95 from $1.25 (you pay this fee for transactions if you don’t have the minimum balance).

“While the majority of Preferred Chequing Account holders are not impacted by the increase in the minimum monthly balance, this decision is never made lightly and only occurs after careful consideration and review,” the bank said in e-mailed answers to questions.

The better move for TD at any time in the past 20 years would have been to close preferred chequing down altogether. There would have been a fuss, but a quick one. Clients could then have moved on to other accounts, quite possibly at TD itself.

Current preferred chequing account holders should look into the TD Every Day Chequing Account, with a fee of $10.95 a month that includes 25 transactions. You have to keep $3,000 in your Every Day account to offset that fee, which is kind of like getting a return of 4.4 per cent on your money. The TD Unlimited Chequing account offers unlimited transactions for $16.95 a month, or zero if you keep a balance of $4,000.

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The drawback of relying on a minimum balance to get free chequing is that the minimum amount is virtually guaranteed to rise over the years. At some point in the future, a combination of higher minimums and better returns from savings accounts may kill the appeal of the minimum balance. You’ll be better off paying fees in your chequing account and keeping your cash in a high-rate savings account.

For the ultimate in predictable no-fee banking, check out online banks such as Simplii Financial, Tangerine, Alterna Bank or motusbank. EQ Bank and Wealthsimple Cash are also worth a look for no-fee banking. All offer deposit insurance, which should give you confidence in dealing with less-established financial institutions.

With electronic banking taking over from cash and cheques in the pandemic, we should probably use the term transactional account rather than chequing account. Whatever you call them, it’s a basic rule that their fees rise over time. There may be ways to get a discount or avoid the fee altogether, but these features will be downgraded.

TD suggested otherwise in the deal it offered preferred-chequing clients 20 years ago, but times changed. If the bank had been a bit tougher back then, both it and its customers would have long ago moved on from a deal that was too good to last.

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