Monthly account maintenance fees, non-sufficient funds fees, and ATM withdrawal fees are some of the bank fees that Canadians overpay by billions per year, according to figures by consultancy North Economics.
The report estimated that each Canadian paid about $250 in fees in 2022. As regulators push to reduce these fees, this article will enumerate the most common bank charges and what you can do to avoid these bank fees.
Bank Fees in Canada
Below are the most common fees that Canadian banks charge their customers and their typical costs.
Monthly Account Maintenance Fees
Your bank charges you monthly for the upkeep and administration of your bank account. Called monthly account maintenance fees, these can range from $5-$25 and cover the costs related to maintaining your account. Banks may charge a flat monthly maintenance fee or a minimum balance fee.
Non Sufficient Funds Fees
A bank charges you a non sufficient funds fee when your bank account is overdrawn and does not have enough money to cover a payment. Banks charge steep NSF fees, ranging between $45 and $50 for every NSF occurrence. This has resulted in the government cracking down on these fees and issuing a directive to reduce NSF fees.
Overdraft Fees
Aside from charging NSF fees when you overdraw your account, your bank may also charge you an overdraft fee per transaction, which is generally $5. Many banks offer customers overdraft protection services that honour a transaction exceeding available funds, but you get charged an overdraft fee/interest for every transaction this service covers.
ATM Withdrawal Fees
An automated teller machine (ATM) fee is what a bank charges you for using an ATM card they don't operate or own when you make withdrawals or balance inquiries. An ATM fee can include Interac network fees, foreign ATM operator fees, or international transaction fees. ATM withdrawal fees can range from $1-$9.
Interac e-Transfer Fees
Interac e-Transfer is an electronic funds transfer service that allows you to securely send and receive money through text message or email. Depending on your banking package, Interac e-Transfers can either be free or incur a fee ranging from $1.00 to $1.50 per transfer.
Foreign Transaction Fees
Every time you use your debit or credit card to make purchases in a country outside of Canada, your bank charges you foreign transaction fees, which are typically 2.5% of the purchase amount. Many banks calculate it right into the exchange rate. Your bank may waive foreign transaction fees, depending on the banking package, transaction or criteria set by your bank.
Replacement Card Fees
Customers are charged a replacement card fee when they request a new or replacement card, which may be an ATM card, credit or debit card, prepaid card, or others. Banks do not typically charge clients for requests for new cards to replace expired ones.
Account Closing Fees
Account closing fees are charges that banks impose on customers who close their accounts, including savings or checking accounts, brokerage accounts, etc. Depending on the account type and bank policy, these fees may be a fixed amount or a percentage of the account balance. Closing your bank account can cost anywhere from $20-$50.
Inactivity Fees
An inactivity fee is a service charge your bank imposes when there are no activities in your savings or checking account during a specified period. These activities include deposits, withdrawals, payments or transfers made through your savings or checking account. The fees can range from $10-$40, depending on the bank and the length of time your account remained dormant.
How to Avoid Bank Fees
You can protect yourself against various bank fees through the following steps:
Open a Free Online Bank Account
Open a free account at a digital bank rather than a traditional one. Online banks like EQ Bank, Tangerine, and Simplii Financial offer savings and checking accounts with no monthly fees and unlimited transactions.
Maintain the Minimum Balance
Maintain the minimum balance your account requires to avoid monthly fees. Many banks and financial institutions waive maintenance fees and other charges if you keep the minimum balance in your account. Keep it above the limit to avoid fees and save money over time.
Have Multiple Products
You can waive monthly fees and maintenance charges by having multiple products, like savings and chequing accounts, loans and credit cards. Having account packages or bundles can come with perks on top of fee waivers. Financial institutions likewise offer discounts to clients with multiple banking products, including special offers and lower interest rates.
Ask for a Discount
Consider negotiating for a discount or a fee waiver with your bank, especially if you maintain multiple accounts and exhibit positive banking behaviours, such as a solid payment or credit history. Having a good relationship with your bank improves your chances of successfully negotiating for reduced fees or waivers.
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