We have a chequing account at Tangerine but we rarely write a cheque against it because we also have a no-fee chequing account at PC Financial which comes with unlimited free paper cheques. So it costs me nothing to write yet another cheque for $16 to my child’s school, this time to pay for a field trip to the symphony, if I use my PC Financial account; Using a cheque from Tangerine would eventually cost me money as I would run out of paper cheques sometime and have to pay for another book. So this summer when ScotiaBank, the new-ish owners of Tangerine decided to cancel the Whoops! free overdraft protection program I didn’t really pay much attention: it’s time to check into it though and update my info on Tangerine.
Why Losing Whoops! Protection might be a Good Thing
Whenever a bank ends a free service it tends to get discussed at RedFlagDeals. One or two people on a chat about the cancellation of Whoops! Protection pointed out a benefit: It should help Tangerine save money to not offer this free service. Those savings could result in a higher interest rate offered to customers. Personally, I’m not counting on that!
What Overdraft Protection Is Tangerine Offering on Its No Fee Chequing Account?
Tangerine now lets you buy overdraft protection. It covers when your balance drops below 0 due to
- cash withdrawals
- pre-authorized payments
- cheques, and
- debit purchases.
You can get policies to cover from $250 to $5000 of overdraft. Tangerine will decide how much overdraft it will offer to you based on your history with them and/or your credit rating.
How Will I Know If My Tangerine Chequing Account is Over-drawn?
Tangerine will send an email if your account balance drops below 0 and your over-draft protection beings.
What If I Made a Mistake and Transfer In the Money to Cover the Over-draft Immediately?
It’s possible for anyone to make a payment by debit or make a withdrawal of cash and realize immediately that they used the wrong bank account. Tangerine is giving a “same business day” grace period: if you make up the shortfall to restore your account balance to a positive number before the end of the same business day that you dropped below 0, they will not charge any fee or interest charge. (WARNING: This probably only applies if you have purchased their Overdraft Protection! If you have no overdraft policy, you might be able to get them to waive fees and interest if you phone in immediately to ask for an exemption.)
How Much Do I Pay If My Tangerine Account is Over-drawn?
There are two things you pay if you owe Tangerine money: a monthly fee and a high daily interest rate.
At the end of the first business day after your account balance drops below 0, you will be charged a $5 fee. Then, on the first day of each month when your balance is below 0 you will be charged another $5.
On top of the $5 fees (which will be added to the amount you owe and interest will be charged on those fees too!) you will also be charged interest daily. The interest rate is 19.00% per year but calculated by them as a daily rate and applied to your end-of-day shortfall each and every day until the amount is paid back.
Given that they are paying you a measly 0.8% interest rate on your savings, an over-draft rate of 19% is astonishingly high. DON’T spend money you don’t have!
Will I Be Applying for Tangerine Overdraft Protection?
No. I can’t see any realistic scenario where I would need it.
If at all possible, I strongly recommend all customers of any banks do not allow their accounts to slip into over-draft. It’s an incredibly expensive mistake. Keep an eye on your transactions, balance your bank book before you write a cheque or make a debit withdrawal and if necessary, look for other better ways to borrow money.
Is Tangerine’s Overdraft Protection Better or Worse than Other Banks?
Some banks charge a fee every month for overdraft protection whether it is used or not. Tangerine’s offer is better than that because it costs nothing if you don’t use it.
The fee and interest rate charged by PC Financial for overdraft protection is about the same as that charged by Tangerine as of the time this was written. (November 9 2015) Both banks could change their fees and rates at any time so always check directly with the bank before you make any decisions.
Tangerine’s free Whoops! Protection used to make their chequing account a bit better than some others; now that it’s gone, it’s getting harder to find a big difference between it and some of the other no-fee chequing accounts available online.
Related Reading
- Tangerine is Charging a Fee to Transfer your RRSP or TFSA
- When Will I Get my Bonus Interest from PC Financial and Tangerine?
- Do You Transfer Your Cash Between Tangerine and PC Financial to Get the Best Rate?
Join In
Did you ever use Whoops! Protection? Did it make you happy to know that it was there, at no cost, even if you didn’t use it? Please share your views with a comment.
