TD has introduced a program that automatically diverts a set amount of cash ($0.50-$5) from your chequing account to a savings account (including a TSFA high-interest savings account) whenever you use your TD Access card. They have also offered a sweetener of $10 for every $100 saved this way up to a maximum sweetener of $200. On the surface, this sounds like a good thing since it encourages savings and makes it automatic; plus you get a sweetener to boot. To take part in this promotion, you need to sign up by July 24.
On the other hand, this offer seems like an attempt by TD to generate additional fees from monthly account charges and per-transaction debits. First consider how many transactions it would actually take to max out the sweetener of $200. If you divert the maximum of $5 per transaction, it would take 400 qualifying transactions to reach the maximum. Furthermore, one would have to be very careful to ensure that their chequing account does not fall below the minimum balance amount, which would trigger the monthly account fee.
Once the funds have been diverted to the savings account, it becomes more difficult to access these funds without paying fees. Most savings accounts offered by TD allow only one or two free debit transactions per month (meaning any debit to the account, not debit card transactions). The charge for additional debits is typically $1.25 per transaction. And of course, the interest rates on savings accounts, even high-interest savings accounts, are very low right now. TD offers 1% interest on their high interest TSFA account, 0.75% interest on their non-registered high interest savings account (with a minimum balance of $5000 to qualify for interest), and 0.05% on all other savings accounts (0.25% for amounts above $5000). So, the additional interest earnings probably won't cover for the additional fees.
My assessment is that while this program is interesting, particularly if one needs help saving, it is a bit of a ploy by the bank to generate additional fees, particularly from people who don't track their money carefully.
On the other hand, this offer seems like an attempt by TD to generate additional fees from monthly account charges and per-transaction debits. First consider how many transactions it would actually take to max out the sweetener of $200. If you divert the maximum of $5 per transaction, it would take 400 qualifying transactions to reach the maximum. Furthermore, one would have to be very careful to ensure that their chequing account does not fall below the minimum balance amount, which would trigger the monthly account fee.
Once the funds have been diverted to the savings account, it becomes more difficult to access these funds without paying fees. Most savings accounts offered by TD allow only one or two free debit transactions per month (meaning any debit to the account, not debit card transactions). The charge for additional debits is typically $1.25 per transaction. And of course, the interest rates on savings accounts, even high-interest savings accounts, are very low right now. TD offers 1% interest on their high interest TSFA account, 0.75% interest on their non-registered high interest savings account (with a minimum balance of $5000 to qualify for interest), and 0.05% on all other savings accounts (0.25% for amounts above $5000). So, the additional interest earnings probably won't cover for the additional fees.
My assessment is that while this program is interesting, particularly if one needs help saving, it is a bit of a ploy by the bank to generate additional fees, particularly from people who don't track their money carefully.
