Canadians are overpaying bank fees by more than $7.7 billion annually, compared to other countries such as the UK and Australia
A recent report by North Economics, an Alberta-based consultancy firm, analyzed fees at the Canadian Big Five banks (RBC, TD, BMO, CIBC, and Scotiabank) and highlighted several areas where Canadians pay more:
- Monthly Bank Account Fees: Canadians pay significantly more per month for their bank accounts.
- Non-Sufficient Funds (NSF) Fees: These fees kick in when you don’t have enough funds to cover a transaction.
- Overdraft Charges: Overdraft fees can add up quickly if you accidentally spend more than your account balance.
- ATM Fees at Competitor Banks: Accessing ATMs at other banks often comes with hefty charges
7 simple tips to reduce bank fees
Here are practical steps to avoid excessive bank fees:
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Choose No-Cost or Low-Cost accounts:
Consider opening an online bank account with digital banks like Simplii Financial or Tangerine. These institutions have lower overheads and often offer no-fee banking.
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Monitor your account balance
Keep a close eye on your account balance to prevent overdrafts and NSF fees. Set up alerts to notify you when your balance is low.
3. Use your bank’s ATMs
Do you know you get charged when you use other ATMs? Stick to your own bank’s ATMs to avoid out-of-network fees. Plan ahead and withdraw cash strategically.
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Negotiate with your bank
Contact your bank and inquire about fee waivers or discounts. You never know until you ask.
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Automate bill payments and transfers
Set up automatic bill payments to avoid late fees. Automate transfers between accounts to maintain sufficient balances.
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Avoid overdraft or get protection
Overdraft fees can be expensive. Set up overdraft protection or opt out of overdraft coverage to avoid these fees
With overdraft protection, you can avoid the expense and embarrassment of having insufficient funds in your account. All debit transactions (i.e. cheques, pre-authorized payments, etc.) will be honoured up to your pre-set overdraft limit.
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Monitor your transactions and statements
You need to check your transactions and statements frequently, especially for small business accounts.
There are fees charged for exceeding your monthly transactions, and this can add up to a hefty sum pretty quickly.
A Scotiabank customer who hadn’t checked her statement for months, was shocked when saw her transaction fees had piled up to over $500. She quickly moved to a new account.
Poorer or richer than you think?
By being proactive and informed, Canadians can take control of their finances and minimize unnecessary fees.
Remember, every dollar saved on bank fees adds up over time, and keeps more money in your pockets. You may not be richer than you think!
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