Bank accounts for seniors: A look at some options

Banks are required to offer a low-cost, no frills bank account and until recently, all five major banks in Canada promoted free banking for seniors.

That changed last year when TD stopped offering free accounts to its older customers. Instead, TD gives customers age 60 and older a 25 per cent discount on their monthly fee. But it’s not automatic. You have to ask for it.

The big banks often move in lock-step, but the others have yet to join TD. Bank of Montreal and Royal Bank offer free basic accounts to seniors and they’ll automatically apply a $4 seniors discount once you turn 60. Customers of CIBC and Scotiabank must request enrolment in the senior’s banking plan to qualify for a free account, plus to get other benefits and discounts offered to seniors.

Scotia has the best offering for seniors because you can access their Scotia Plus plan a year sooner than with the other banks. At the same time, you get unlimited transactions, free personalized cheques, free money orders and drafts, commission-free traveler’s cheques and free paper statements.

While TD promotes its senior’s rebated accounts online, the cheapest of these plans starts at $8.20 per month. TD customers with basic banking needs are better off with the everyday Value account, which gives you 10 free transactions for a low monthly fee of $3.95 (waived with a minimum $1,500 balance).

Many credit unions offer free seniors plans, but the limited access to branches and ATMs can be a barrier.

Information about senior’s banking options is also hard to find online.

“It’s nearly impossible to find information about senior’s accounts on the banks’ websites so we recommend you visit your branch and ask them in person,” says Susan Eng, vice president at CARP, an organization that advocates for aging Canadians.

A recent CARP survey of nearly 4,700 members found that 92 per cent feel banks should offer reduced fees for seniors because many are on fixed incomes and banking is an essential service with few options.

But for many boomers heading into retirement, receiving a discount isn’t top of mind.

“Some of our members feel that age-based discounts single seniors out as poorer than others and that few seniors actually need free banking,” says Eng.

As our population ages and the banking sector moves away from offering free services to seniors, perhaps a means-tested rebate is the answer. This way, seniors of limited means who need a no-frills account to do their banking can still have a free, or low cost option.

One thing is certain; the big banks should tread carefully. The CARP survey also found that when members were asked if they’d take their business elsewhere if their bank stopped offering no-fee accounts, 75 per cent responded yes, whether they needed a no-frills account or not.