Ever get the feeling that you’re “leaking” money? There are many ways to do it. Maybe you get dinged a dollar for failing to meet the minimum $5 debit-charge threshold at Hasty Market, but you absolutely must satisfy your midnight jerky fix. Or perhaps seemingly negligible bank fees are the culprits. Though most people seem to think of the bank as their very own Fort Knox—a vaulted haven where their savings safely reside—your chequing account balance is regularly drained by the bank itself, due to fees being charged for your financial activities.
Understandably, most people aren’t thrilled about paying to access their own hard-earned cash, but banks approach fees like any other money-dependent business would, says Maura Drew-Lytle, spokesperson for the Canadian Bankers Association. “They try to keep fees as low as they can, but there’s a cost to operating branches across the country,” she says. “Banks have to pay rent, they have to employ people, buy supplies—all of these things cost money. They have to ask, ‘What are our competitors charging?’ and ‘What could be happening in the future that might raise our prices?’ And there’s security in knowing your money is safe.” The fees, which only account for about five per cent of a bank’s total annual revenue, also help them maintain the ATMs, and in-person, telephone, and web-based services.
At my home bank, TD Canada Trust, I have an Infinity chequing account. TD’s website describes the typical Infinity customer as one who “uses their chequing account frequently” (guilty) and values the “peace of mind and convenience” of unlimited transactions (that I do). This customer also supposedly aspires to “save money every month,” which makes sense until you add up the $14.95 monthly charge for access to the account, the multiple $1.50 email money transfers I make to pay rent, etc., and a slew of ill-advised withdrawals made at non-TD ATMs in the name of “more beer.” On their own, the charges seem minor, if not totally negligible, but cumulatively, they cost me easily over $20—and the average Canuck $16.20—per month. The good news? Many of these fees are easily avoidable.
Many Canadian bank customers probably feel like setting their monthly statements on fire, but about a third of us are paying no fees at all, thanks to a bit of financial diligence. “If you’re managing your account well, you can avoid paying fees you don’t need to be paying,” Drew-Lytle says. “Take the account you have right now, then look at three-months-worth of your transactions. What do you notice about your habits? Go online and compare account packages to see if there might be something better for you out there. Not everyone banks in the same way.”
Perfect for erstwhile fans of CosmoGirl quizzes (RIP), the Financial Consumer Agency of Canada (FCAC) has a “Banking Package Selector Tool” that uses your age, typical minimum account balance, and transaction tendencies to recommend your optimal account from over 100 packages provided by 16 banks. My own best matches were a Manulife “Advantage Account,” BMO’s “Plus Plan”, and the “No Fee Bank Account” with President’s Choice Financial, which all allow for high or unlimited transaction allowances and lower monthly balance demands. (Hey, don’t shoot the messenger, TD.)
If you can’t bear to part with your current bank, though, Drew-Lytle says there are a number of preventative strategies you can use to keep fees at a manageable level. For starters, pay attention to your transaction limits—if you’re allowed 10 a month, don’t exceed that amount. Maintain your minimum required account balance and your monthly fees could be reduced; make larger withdrawals less frequently—$100 once instead of $20 five times—and take advantage of cash-back options at grocery stores and the LCBO to minimize transactions.
Online-only banks offer no-fee accounts, so look into those if most or all of your banking takes place on the web. ATMs belonging to anyone other than your home bank (like those sneaky convenience-store terminals) will get you charged twice—once by your bank for the withdrawal, and upwards of $1.50 by the machine itself for use. Yes, it’s a pain to maintain ATM brand loyalty at 2 a.m., but it’s worth it at the end of the month.
Bank fees, when left unmonitored, are sort of like a gateway drug to total financial carelessness. I have no illusions that $15 here or there will send you or me reeling headlong into bankruptcy, but it’s a sloppy trickle-out expense that can be kept under control with minimal effort. If you don’t mind your fees, it’ll cost you. You can bank on that.