What is the best bank account for a Canadian to have on a round-the-world trip?

| July 1, 2009 | 15 Comments
moneyglobe What is the best bank account for a Canadian to have on a round the world trip?

What is the best bank account for Canadian travellers?

Update (August 6, 2009) Bad news for Canadian independent travelers—Citizens Bank has just announced it is exiting the retail banking business. Citizens Bank announced today that it will be leaving the personal banking space. Citizen’s CEO Jason Farris, said that the company is converting to a non-deposit taking bank. In a message to members, Mr Farris relayed that Citizens, “in a national, online market, (was) unable to achieve the necessary size and scale to succeed.” For more information, check out our post: “Canadians Bid Goodbye to Truly Global Chequing Account“. Thanks to Neil Carey (of 2wanderers.ca) for bringing this news to our attention.

While there is a lot of healthy competition south of the border, with many US players offering global chequing accounts with attractive fees and features, Citizens Bankis pretty much the only Canadian game in town if you want a truly global no-fee chequing account.

Citizens Bank is an online national bank formed by Vancity, and it is the first Canadian bank to offer a no-fee, easy to use account with no ATM fees worldwide (it’s called the ‘Citizens Bank Global Chequing account’). At other banks, you might be required to pay as much as C$5 per transaction when you use your ATM card outside the country. With a Citizens Bank Global Chequing Account, however, that fee is zero. Well almost.

Is the fee truly zero? Well, yes and no. In order to avoid a bank surcharge in Canada, look for ATMs that are part of the EXCHANGE or ACCULINK networks (check out this page for an online locator). Out of the country, if you use the EXCHANGE ATM locator you’ll find over one million ATMs worldwide that you can access with your Citizens Bank ATM card for free (for an online locator for ATMs in the US, click here; for the rest of the world, click here).

Keep in mind, however, that Citizens Bank is on the Visa/PLUS interbank network (global ATM locator here). In some of the countries that you may visit, ATMs might only accept banks that are part of the MasterCard/Cirrus interbank network (MasterCard Global ATM locator here).

A further caveat—for any given debit card transaction, there are two other possible places where you can get hit for foreign exchange fees. Those are:

  • By the merchant/ATM-owner
  • By whoever calculates the actual exchange rate underlying everything

So, while Citizens Bank will reduce the hit on your wallet, you are still likely to incur transaction fees and currency exchange fees. Compared with the big banks, Citizens Bank’s exchange rate is likely not as advantageous (ie comparing the Citizens Bank Global Chequing account to the prevailing market rate to determine the exchange fee). This is offset, however, by the fact that they are not ‘double dipping’ into your transaction at the ATM—provided you are using an EXCHANGE ATM.

There were rumours that Citizens Bank was charging a much higher exchange rate to compensate for their ‘free’ global ATM withdrawals. However, these turned out to be only rumours. A representative from Citizens Bank explained it thusly:

Please note that Citizens Bank currently only manage rates on the ATM withdrawals for USD, EUR and GBP. For all other currencies, we are at the mercy of the ATM service provider and the rate they use. We do not aim to make a return on these transactions, merely to cover our costs. We’ve decided to go one step further and not only offer no-fee day-to-day chequing but also not charge ATM withdrawal fees worldwide. It was never our intention to recoup the loss fee income through exchange rates.

From what I’ve experienced, however, you’re likely to still come out ahead with Citizens Bank. This account offers all the benefits of a regular chequing account, but with none of the extra charges.

Some additional features:

  • no monthly fees or minimum balances
  • no fees for debit card purchases in Canada or US
  • no fees for direct deposits, account transfers, balance inquiries, bill
  • payments and pre-authorized payments
  • no fees for cheque books or cheque images that have cleared your account

Everything for free? While I insist that there is no free lunch in life, it appears that Citizens is offering a fairly costly product for free at large? Does this sound too good to be true? Well, it should. But, with no shareholders and no branch network to support, Citizens Bank has built a model that allows them to provide these services for free.

Great value is a good way for a smaller bank to attract customers. And as Citizens is essentially an online-only bank, in order to win over new customers, the benefit to the customer has to be clear.

The trump card for me, however, is that Citizens Bank also has a clear ethical policy. And to that end, they appeal to me even more. For example, they are carbon neutral. They offer term deposits for micro-credit lending in developing countries. They give back a percentage of their profits to organizations nominated and voted upon by their customers.

To those wondering whether Citizens is safe, they are registered under the CDIC (Canada Deposit Insurance Corporation). Hence, your chequing/savings account is insured in the event of bankruptcy up to $100,000.00.

While there is significant lead time before we leave on our round-the-world trip, I have opened a Citizens Bank Global Chequing Account. Why not? It’s free!

For more information, check out their website here. BootsnAll has a discussion on the go over here.

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About the Author ()

For nearly ten years now, Daniel of Two Go Round-The-World has explored how travel captures our imagination and engages our deepest emotions. One half of the duo that maintains the widely read Two Go Round-The-World blog, Daniel treats his subjects not only as works of art but also as symbols of the cultural and political forces that inspire them. Check him out on Google+.

Comments (15)

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  1. David Hawke says:

    Just a note on citizens bank; they refused to open an account for me as my address was at “mail boxes” a perfectly legal address that I use income tax, drivers license & passport.

    • Daniel says:

      I’ve heard that complaint before, David. It’s ridiculous. If I recall they cite an anti-terrorism money laundering law passed a few years ago as the reason for it. What alternatives have you considered? I’m going to continue my reasearch, so if I come across anything compelling, I will let you know.

  2. My recommendation is TD Canada Trust. This is what we are using in our RTW trip. If you have the Select Account, they don’t change anything for international withdrawls (given that you maintain a minimum balance).

  3. Dave and Deb says:

    We have always used TD ourselves. It has turned out well for us in even the most remote destinations. But good to know of other banks too. Thanks for the info.

  4. Scott says:

    We opened up a citizens bank account in May of this year for our RTW trip and so far have been very happy with them. Good service at the branch, no problems overseas and good exchange rate. I recommend them!

    • Daniel says:

      Ah, you must be from out on the left coast! Wish we had branches in Southern Ontario! But, am a fan of the bank, too, regardless!

  5. Neil says:

    Sadly, the Global Chequing account is no more, as Citizen’s bank is getting out of the retail banking business. Those of us who already have one have until December to move our banking elsewhere, and those of you who don’t will be unable to open one.

    Currently researching other options…

    • Daniel says:

      Thanks, Neil, for the heads up on this news—I just updated the post with the information that you pointed us toward and blogged about it. Will be looking at other options, too. Please let us know if you come across anything. We’ll try to put together a post as soon as possible!

  6. Francois says:

    I’m really disappointed with the handling of Citizens Bank of Canada closure. A few months ago I had lot of assets with TD bank than I move all these to Citizens Bank because they better match my values. I mean mostly because they are a credit union bank and they give more back to the community to improve both my and everybody quality of life and they’re more open to members feedback. Now Citizens Bank & Vancity are saying they move all my Citizens Bank assets to TD. That’s not going to happen. Over my dead body ;) I’m now shopping for another credit union bank in Vancouver area. Any suggestions for another credit union bank that would match my values?

  7. Molly says:

    Is there any other financial institution offering a ‘global account’like Citizens Bank had?

  8. twowander says:

    Any more news on low fee international banking for us Canucks?

    Best i have found is RCB @ 3$ a transaction
    PC bank looks promising on the outside but the site is very vague on details.

  9. holeyboot says:

    The difference between HSBC and Vancity for CDN to SGD (Singaporean dollars) is about 4%, which would be a difference of $20 on every $500.

    Of course, if I was in Singapore, Vancity wouldn’t be managing the rate for the ATM, and Singapore’s banks seem to be very international, but suppose I did find a small, regional bank in Singapore. Or a small, regional bank in Malaysia, or anywhere outside the USD/GBP/EUR countries. Perhaps the rate disadvantage would be the same or worse?

    twowander: Vancity charges $3 as well.

  10. Most major banks in Canada have a plan of ~$24.95 a month and you don’t pay the fees associated with taking $$$ out overseas.

    Flip side is, if you go to the machine less and take more you can get under that sum. Flip side again is if you get robbed you’d wish you had less on you…

  11. Neil says:

    Quick update on my further research for good options. I ended up opening a bank with my local credit union (Servus), which charges $4/month + $2.50 for international withdrawals. This wasn’t the best deal I could find, but I went with them because I know they won’t put me through the same forced change again. I did, however, find another free option, for those who are interested.

    ICICI Bank of Canada is the Canadian subsidiary of a Mumbai-based mega-bank. They offer online services similar to what Citizens Bank had, including a chequing account with a $5 monthly fee and free unlimited transactions anywhere in the world. The monthly fee is waived with minimum balance ($500), or by having at least one paycheque direct deposited each month.

    Their target market is clearly Indian immigrants who transfer money home, or visit home occasionally, but the service should be beneficial for travelers as well.

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