Even before interest rates dropped, many banks stopped paying any meaningful amount of interest on chequing and savings accounts years ago. I generally move any savings to a higher interest rate account or into a GIC, but always felt that I was losing money by keeping a balance in a low or no-interest accounts. But, it's actually a smart investment.
The first reason is that banks often waive monthly fees if you keep a minimum balance. For example: If your bank waives a $6/month fee with a minimum balance of $1000, then you save $72 a year in fees. To get a $72 return on your $1000, you would need to be getting an (impossible) interest rate of 7.2% And even if you were getting 7.2%, the interest would be part of your taxable income, so you would actually have to earn even higher interest to see that $72.
The second reason it pays to keep a "float" balance in your account is to prevent the trainwreck of bank fees if you make an accounting error and bounce a cheque. For example: If you wrote a cheque for your phone bill and had insufficient funds to cover it, then the phone company would charge you a hefty administration fee plus interest on the late payment. Your bank would also charge you a fee (which really seems to be kicking someone when they are down) and so it could easily be in the $80 range. If your $1000 was sitting in a 4% GIC instead of your chequing account, it would only earn $40 for the entire year. If you bounced a cheque only once a year, you'd still be down $40.
Summary: Avoid bank fees and high administrative charges, by keeping a minimum balance in your no-interest bank accounts.
