Canada’s eight largest banks have made a voluntary commitment to create more low-cost and no-fee bank accounts, under an agreement with the federal government.

Finance Minister Joe Oliver announced the plan at a seniors’ centre in Ottawa on Tuesday, saying the government had committed in its 2013 throne speech to expanding no-cost basic banking.

Banks promised to offer low-cost and no-fee bank accounts that would allow 12 debit transactions and at least two in-branch transactions a month. There would be no extra charge for services such as deposits, debit cards, preauthorized payment forms, monthly printed statements, cheque image return or online cheque image viewing.

The free accounts would be available to youth, students, people with disability savings plans and low-income seniors — described as those with low enough pension income to receive the Guaranteed Income Supplement.

Low-cost accounts would have the same services, but with a monthly service fee of $4.

Many banks already offer no-cost and low-cost bank accounts and it's not clear how these accounts would be different, except that more banks would offer them. CIBC, TD, RBC, Scotiabank, BMO, National Bank, Laurentian Bank and HSBC have signed onto the voluntary commitment.

Online banks such as PC Bank and Tangerine already offer free accounts to all customers.

Oliver claims the government has secured a commitment to more free services on accounts for seniors and youth, and to make free accounts available at more banks. 

In Tuesday's press conference, he said more than seven million Canadians will be eligible for low or no-cost banking options, and estimated seniors who move to the no-fee account will save about $50 a year.

“For Canadians on a fixed income, every dollar counts and $50 can pay for a week’s groceries,” he said.

Susan Eng, vice-president of advocacy for CARP, says it’s clear the federal government needed to do something to ensure seniors have access to low-cost banking.

“When the TD Bank announced that they would cancel these accounts, CARP members were outraged. But the bank did not change its plans. So clearly government action is needed,” she said in an email to CBC. 

Corrections

  • A previous version of this story incorrectly reported that RBC eliminated some of its free accounts for seniors in March 2012. That is not the case, and the bank still has a seniors' rebate that applies to all bank accounts, making some of them effectively free.
    May 28, 2014 3:53 PM ET