Tag Archives: ING Direct

How to Choose a Standard Bank Tax Free Savings Account, TFSA, with Minimal or No Fees

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When Tax Free Savings Accounts, or TFSAs, were first created in 2009 most banks offered the accounts with no fees to entice customers. It also was practical: Who would pay a $100/year fee for an account that could be opened with, at most, $5000? But in 2010, 2011, and 2012 another $5000 contribution was permitted, and in 2013 and 2014 a $5500 contribution was allowed. That means anyone who was 18 in 2009, and who lived in Canada in 2009 and each year after that, can now have up to $ 31 000 $25500 contributed to a TFSA, not counting any re-contributions of withdrawals. Unfortunately this also means that some banks are charging fees for TFSAs. This is a review of some options and what, if anything, they cost.

As with RRSPs, there are roughly two types of Tax Free Savings Accounts: those that can hold almost any type of investment, called self-directed TFSA brokerage accounts, and those that can only hold a very limited number of investment choices which I will call standard Bank TFSA accounts.

Fees for Standard Bank TFSAs that Can Only Hold Cash, GICs, Term Deposits and Some Mutual Funds

For many people, a tax free savings account is the first place they start saving for the long-term. It may hold their entire emergency fund. It may hold their savings for education, a first home, a wedding or retirement. They may have very little money saved or invested outside of the TFSA. These investors often start with a simple bank TFSA account.

Within the bank TFSA account, they can hold cash in a savings account that pays interest. They can also usually buy cashable term deposits, non-cashable guaranteed investment certificates (GICs), and mutual funds that are offered by that particular institution.

For example, if a client sets up a TFSA account at Tangerine (formerly ING Direct), they can use a daily interest savings account, buy a cashable GIC, or invest in the “Streetwise” mutual funds managed and sold by Tangerine ING Direct. They cannot buy mutual funds offered by other institutions, nor can they buy ETFs.

As shown in the table following, many of these bank TFSAs have low or no fees for most situations. That makes them appealing to beginning investors. Be careful, though, about fees for transferring and closing these TFSAs. You may want to move your TFSA in the future and those fees can sting.

If you know you ultimately want to move to a self-directed brokerage TFSA in a few years, to avoid transfer and closing fees either choose a no-fee bank TFSA (such as the one from Tangerine, formerly called ING Direct) or set up your bank TFSA with the bank affiliated with the brokerage you want to use in the future. For example, BMO does not usually charge a closing fee if a TFSA is moved from BMO to BMO InvestorLine.

BMO CIBC Tangerine
ING Direct		 National Bank
Set-up Fee  0  0  0  0
Transfer Fee  0 $50
  $100  0 $45
  $50
Closing Fee $50 + tax  $100  0 / $45  $50
Minimum Balance  $50  $25  0  0
PC Financial Royal ScotiaBank TD
Set-up Fee  0  0  0  0
Transfer Fee  $50  $50  $50  0** $75 plus tax
Closing Fee  0*/ $50  $50  $50  0**$75 plus tax
Minimum Balance  0  0  0  0

* The PC Financial/Tangerine situation is a bit mixed. It costs nothing to withdraw your entire cash balance from a savings account if you transfer it to your PC Financial/Tangerine chequing account. However it apparently costs $40 to close a mutual fund PC Financial TFSA. It should not have a fee to sell your Tangerine Mutual Funds so long as you have the cash move into your Tangerine cash TFSA savings account. You can then withdraw the cash from your Tangerine TFSA savings account for no fee–but you can’t transfer it out for free. PC Financial and Tangerine do not automatically close an account just because you withdraw all the funds, which is why it can be $0 to close but $50 to transfer.

** I was very surprised to find that TD is not charging a fee to transfer out or close a TFSA. This information was accurate on December 4, 2012. I would strongly recommend checking with TD to find out if this has changed before opening a new TFSA at TD,  just in case. UPDATE: As of early 2016, TD  now charges a fee to transfer out of a TFSA or close a TFSA.

February 2014 Update Sources

  • BMO: http://www.bmo.com/home/popups/personal/investments/tsfa-faq and
  • https://www.bmo.com/home/personal/banking/rates/tax-free-savings
  • CIBC: https://www.cibc.com/ca/investing/tfsa/tax-advantage-savings-acct.html
  • National Bank: http://www.nbc.ca/bnc/files/bncpdf/en/2/tarification_en.pdf#xml=http://www.nbc.ca/bnc/cda/searchEngine/0,2648,divId-2_langId-1_navCode-1000,00.htmlxml.txt?query=fees&query2=fees+fees+FEES+fees&query3=fees&pr=bnc_en&order=r&cq=&id=52f9af2e2
  • President’s Choice Financial: http://www.banking.pcfinancial.ca/mkt/investments/taxfreeinterestplussavingsaccount-en.html?region=ON&language=en&signinop=OB and click on the Fee link under the Legal section.
  • RBC Royal: http://www.rbcroyalbank.com/tfsa/tfsa-basics.html I can’t find the exact $ amount for the transfer out fee online, but as recently as 2013 it was $50.
  • ScotiaBank: I can’t find a specific number for the transfer out fee in February 2014. The $50 cost was valid in 2013.
  • TD: http://www.td.com/to-our-customers/tdhelps/#psce|cid=871|lid=1|tid=001|vid=b0f1321fe
  • TD fees on July 2016 (not for TD Direct Investing, just regular bank branch TFSAs)
    https://www.tdcanadatrust.com/document/PDF/accounts/513796-20160428.pdf

By Transfer Fee I mean the fee to transfer the money to a different bank or financial institution. Usually to transfer money back into your regular chequing or savings account at the same institution is free.

Unfortunately fees and costs may be changed at almost any time. Before actually opening an account, contact the financial institution to confirm all costs. I’d hate to cause you a costly mistake if the bank raises its fees just after I issue this report!

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Do you have TFSA? Did it surprise you with any unexpected fees or costs to use or maintain? Please share your experiences with a comment.

How to Set Up Automatic Transfers to an ING Direct Account

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Many people find the faster they move their pay out of sight the less of it they spend. You can automatically transfer money every day, week, or month to an Tangerine [formerly called ING Direct]  bank account from another institution to help you save. You can also transfer money within your Tangerine accounts. For example you can transfer from a chequing account to a savings account or to a TFSA or RSP account. It’s extremely easy and quick to set up automatic transfers with Tangerine. They call it their Automatic Savings Program although you don’t have to be saving to use the transfer process.

And you can cancel your automatic transfers at almost any time. (You can’t send a cancel order on the same day as the transfer is supposed to occur. You could try to phone Tangerine though and see if there’s still time to stop it.) It’s also a quick online process to cancel contributions.

How to Set Up a Regular Automatic Account Transfer for a Tangerine ING Direct Account

Log in to your Tangerine account online.

  1. From the list on the left hand side, click on Start an ASP.
  2. In the Amount ($) field, type the number of dollars you want to transfer each time to your account.
  3. From the Frequency: drop-down list, select how often you want to make an automatic contribution. The choices include
    • Daily
    • Weekly
    • Bi-weekly
    • Monthly

    Bi-weekly means once every two weeks. It does not mean twice a week.

  4. From the From: drop-down list, select the account from which you want to take the money.
    For example, if you want to transfer $45 per week from your TD chequing account, look on the list for it. The TD account number will be listed but not the current balance because Tangerine does not have access to your account information at another bank.
  5. From the To: drop-down list, select the account to which you want to make the deposit.
    For example, if you want to deposit the money in your Savings Account, look on the list for it. The Tangerine account number will be listed and the current balance will be shown.
  6. In the Start Date: field, type the date you want to start the contributions.
    It appears that the earliest date you can select is 2 business days after today’s date.
  7. In the End Date (optional): field, type the date you want to stop the contributions.
    If you want to contribute indefinitely, just leave that field blank.
    For information on how to stop automatic contributions, please see How to Cancel a Tangerine Automatic Savings Program (ASP).
  8. Click on the Next button.
    You may receive an error message if the amount per contribution you selected is too low. For example, I tried to set an automatic contribution of $5 (just to test the procedure) and was warned that the minimum for the types of accounts I had selected was $10.
  9. If all goes well, you will receive a review screen. It will list where the money will come from, how much, and where it will be deposited. It includes the start date and the frequency.
    If all of the details are correct, click on the Confirm button.
    To cancel the transaction, click on the Cancel button.
    To correct your selections, click on the Change button.

If you’re finished using Tangerine click on the Log Me Out button. For increased security, clear your browser cache and close your browser session.

To Check Your Regular Contribution Instructions for a Tangerine ING Account

  1. Log in to your Tangerine account.
  2. To check your settings at any time, click on the View My Accounts tab.
  3. Click on the account that will receive the transfer.
    (Or if you are automatically sending money away from a Tangerine account, click on the account that will be making the transfer.)
  4. From the list on the left side of the screen, click on View Pending Transactions.
    The effective date of the next transfer will be shown, along with a transaction description, type, frequency and amount.
  5. When you’re finished click on the Log Me Out button. For increased security, clear your browser cache and close your browser session.

You’re done!

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Do you find it convenient to set up automated transfers to or from your Tangerine accounts? Did you do it just to get the sign-up bonus or was there another benefit for you? Please share your experiences with a comment.
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