Lower Your Bank Fees
Posted by John Draper | Filed under Money Management
I am totally amazed at the amount of money people are willing to shell out on bank fees. Over and over I meet people who are racking up $80, $150, $300 a month in bank charges. When I do up a budget for a family, I always allow for $20 a month. Many of my readers think THAT’s too much, but not everyone I work with has a PC Bank around the corner. Where I used to live, for example, the closest branch was a Royal Bank that was only open two days a week and never when I wasn’t working. Everything else is ATM-based. And if you’re not a Royal Banker, then you’re automatically paying ATM fees.
Generally, ATM fees run from $1.00 to $2.50 per transaction. This doesn’t look like a lot of money if you look at each transaction separately, but those small fees add up very quickly. And they double if you use a machine that doesn’t belong to the bank with which you have your account.
Obviously the easiest way to avoid ATM fees is to switch to a no-fee bank and only use your bank’s machines. But that’s not a reality for many people who live in rural areas that aren’t well serviced.
When access is limited and expensive it means that instead of withdrawing smaller amounts many times, you must figure out how much you need in a pay period (or better yet in a month, if you have the cash flow) and withdraw one large amount.
Many grocery stores allow you to take “cash back.” That’s when you add cash to your debit transaction when you pay for your groceries. This is a smart way to get cash without paying fees, but it only works later in the day when there’s money in the till.
If you’ve got the discipline to pay your credit card bills off every month in full and on time, use a credit card instead of paying in cash. This also gives you a monthly summary of where your money has gone for your semi-annual financial review. And if you have a smart card, then you’ll collect useful points. My last grocery shop of the year cost me $140 less because of the points I’d racked up on my grocery credit card.
Often, paying your bills online or via telephone banking is free. And your online or phone payments should be posted the next day. If your bank is making the hold on your transactions longer, ask for the hold to be removed. If they won’t make it happen, then shop around.
Don’t assume that the bank account you’ve had since Moses was a lad is still the best account going. Do some research and find the most suitable account with the lowest fees to meet your current banking needs. Take a look at your banking habits. Do you use ABMs, write cheques, do telephone or internet banking? These transactions are priced differently from one institution to another. The Financial Consumer Agency of Canada has the Cost of Banking Guide that will provide a list of packages or accounts that best fit your banking profile.
The big downside of switching accounts is that all your auto deposits and auto debits must also be switched, and that can be a royal pain in the ass. Some financial institutions offer a free service that gives you a hassle-free way to transfer your pre-authorized transactions and bank accounts from one place to another. Ask if the company you want to deal with will do this for you. That should earn them extra brownie points.
January 2, 2009 at 9:00 am
I’m a PCF person myself (you can use PC or CIBC machines for free, and there are usually CIBC machines in the convenience stores and gas stations).
Here’s a comparison table of some accounts that aren’t terrible:
http://www.redflagdeals.com/deals/main.php/articles/chequing3/
It’s kept fairly up to date, too.
January 2, 2009 at 9:24 am
I am always amazed that people living in cities as I do just don’t seem to understand that there’s a bank machine within a stone’s throw in either direction connected to their banks. I’ve had friends not want to go an extra block to save $3! Crazy, but hey, that’s what makes them them and me me I guess. But I do have to get off my high horse and admit that I pay overdraft fees monthly on my PC account. I used to at CIBC as well, but that’s been taken care of for over a year now. This year I attack the overspending of my PC account, not to mention the whole debt thing.
I like the idea from a blog of one of yesterday’s posters that said to focus not on what’s left owing but instead on what has been paid down every month. I have tended to focus on the big picture, each time feeling like I barely make a dent when I KNOW I’m throwing huge HUGE chunks towards my debt every month. Time to look instead at what I’ve accomplished instead of what’s still there I think…that may be the pat on the back I need to keep rolling through ‘09 towards my consumer debt-free goal. (and sorry Gail, I think I’m using your website as my own personal blog somedays, but I just don’t have room in my brain to figure out how to create one for myself…my brain’s been full for about 10 years now…time to dump some stuff and start learning again!)
January 2, 2009 at 9:39 am
I am always astounded by the amount of bank fees couples on your show are paying each month. It is an extremely rare occurance that I use a bank machine from a bank other than my own – I’m sure it happens less than 3 times in a year. I was paying $18/month to have a full service account but looked into it earlier this year and found that I would get all the same privileges with an account that is $12/month but that fee is waived if you keep $1500 in the account at all times, which I always do so I made the switch and now have not paid a penny in bank fees in several months.
January 2, 2009 at 9:57 am
How about ING Direct? They’re all over North America with decent fees… the only thing is getting money out, but I think they have some sort of banking agreement. Nothing like PC Financial but pretty decent I’d think.
I hate paying fees. I got mad at myself last week because I forgot I wrote BF a cheque and it bounced.. ARRG!H!H!H!H!H! I haven’t had a bank fee in 4 years so I was pretty angry at myself.
Anyway, I try to not pay any bank fees because it’s just being smart about taking out $300 at once and making it last, or avoiding quick ATMs and debiting less.
Fabulously Broke in the City
Just a girl trying to find a balance between being a Shopaholic and a Saver…
January 2, 2009 at 11:38 am
I don’t have any bank fees!
I “cheat” and have my grandmother as a joint holder on our chequing account to take adavantage of our credit unions “gold” status for 59 plus.
Although it does get annoying how many tellers comment that I don’t look “over 59″ until they see that it’s a joint account!
January 2, 2009 at 11:55 am
My husband and I were very lucky to sign up for an account back when your minimum balance to avoid bank fees was low. By keeping that amount in our account at all times, we’ve avoided paying any fees for 8 years now. I realize our chequing account doesn’t offer a significant rate of return, but when you consider the fees we’re saving it makes a lot of sense.
January 2, 2009 at 11:57 am
Because I have an at-home business, I need to keep 2 checking accounts (personal seperate from business at all times) at a credit union that treats small businesses fairly and has great hours and the best location for me and really easy online services. Then my husband has his checking account at a big bank that his paychecks automatically go to and a lot of our pre-auth expenses come out of.
Then of course there is the emergency savings account too linked to my credit union accounts. I did some shopping for the savings account and though had a PC account, the Credit Union offered a better interest rate, no minimum, easier access for deposits and also no fee!
I feel like there are too many accounts in our name, but each of them serves a purpose that is unique. The Credit Union does not do everything and the bank is not convenient and costs more to do some of the things I need my account to do.
We did try to make our accounts are as inexpensive as possible, when I signed onto my husband’s account, he was regularly paying between 35 – 75 in bank fees every month. He just looked at his balance and never checked his bank statements. I talked him into changing to an unlimited transactions account so it’s just $12 every month. My accounts have been changed as my situation changes, but now that I have a good, solid hold on the bottom lines, I have an account that is unlimited transactions for no charge if the balance stays over $1000. That makes it that much easier to keep the balance saving that banking fee!
Its not as complicated as it sounds to save money on banking, often the bank you are already dealing with can offer something better!
January 2, 2009 at 12:02 pm
I pay TD Canada Trust $8.95 for up to 25 free transactions per month, but I don’t think I can reduce my transactions much beyond that. I pay all my bills online, make twice monthly transfers from a business account to my personal account, make transfers to ING once a month, and have to pay installment taxes on my sole prop every three months.
But I only withdraw money from a TD ATM once per month. What I have done in my budget is figure out what needs to be paid by credit card (then paid in full, no matter what, the next month), what has to be put aside for variable expenses like the dentist and the vet, and what I need for cash purchases, such as groceries, throughout the month. I then pull out what I need for cash purchases at the beginning of the month, and at the end of every month, I send to my ING account the installment amounts toward my variable expenses in the same transfer that I use for taxes and emergency savings.
I used to pay $3.00 a month for overdraft protection, because as a freelancer, my payments didn’t always come in quite on time. But I’ve built up a little padding in my account over the past few months, and have even more money in ING that I can get at within a day or two, so I’ve switched to the no-fee option where I pay $5 only if and when I go into overdraft. Now I work like the devil to keep my chequing account in the black, and I know that if worse comes to worst, I can pull some money from my line of credit which has a pretty darn low interest rate. But with padding and planning, I haven’t had to do that yet.
January 2, 2009 at 12:52 pm
I hear a lot of negative things about the “big banks”, but my bank does a pretty good job for me. My husband and I have the VIP package that is usually $30/month. We get unlimited debits, free Interac, free cheques, no NSF fees, free overdraft, no fee VISA with points, free safe deposit box etc. Usually, we get a multi product rebate because we have RRSPs, chequing, savings, and mortgage with them (so the charge is $22.50 per month). Recently, they offered new clients a reward for signing up for the same services we have. I took issue with the fact that new clients got the reward, but loyal clients did not. After many conversations with different people up the ladder, they have waived our fees for one year.
With the VISA with points included in our package with no fees(that we pay off every month), I was able to “buy” $1500 in gift certificates to put towards my mortgage in the fall. I was also able to get $200 in Future Shop gift certificates this Christmas.
They have also been very accomodating with our mortgage (I shopped around and they beat the lowest interest rate I could find AND ate the refinancing charge of approximately $1000 that we would have been charged if we went elsewhere because we were one year into a five year term).
What I really like is that I prefer my primary contact with them to be by email and they are willing to accomodate. When I do want to go in for a face to face, I can usually get an appointment within the same week.
So the big banks don’t have to be bad. You just have do be willing to advocate for yourself when needed.
January 2, 2009 at 12:55 pm
I bank with Coast Capital Savings and have no fees with the free chequing and debit account – my husband also has his own business and has his account with them also. I think credit unions are awesome and I would never bank with a bank now x
January 2, 2009 at 1:51 pm
I admit we do the same as Shayla. Td bank was charging us over 65.00 a month in fees. Everytime we went into the bak to pay bills it would cost us each bill a $1.00 on top of the set fee’s. On top of that the fees would come out of the bank on the first of the month BEFORE my mortgage came out and Bang! NSF fee for the mortgage as well, as we never knew how much the fees for the month would be. So we switched to PC banking. Great at first then they did the unthinkable as starting bouncing our mortgage as well.. I would put the money in the bank through the maching ( no tellers) say on Friday the 28th of the month, take the recipt which is dated the 28th as well and a week or so later our mortgage had bounced. They use NEXT DAY BANKING. Although the receipt showed the 28th the cash did not POST until the 1ST. So mortgage would come through first then they posted our deposit. Sneeky way to make money. Thankfully CIBC is affiliated with this bank and I went into the bank and blew my top. With recipt in hand I got all my fees back with a letter of apology from them. So now We deal with just CIBC and still have mortgage though PC on a automatic debit each month. We also have my father in law on the account as he is a senior to avoid any fees at all. This has worked very well for almost 2 years. No more fees or nsf’s.
January 2, 2009 at 3:01 pm
[...] Lower Your Bank Fees « gailvazoxlade.com [...]
January 2, 2009 at 3:34 pm
I am so glad that I am no longer paying bank fees. I can’t believe I did it for so long. The only reason I was hanging on to my former bank was because I had an account there since I was a little girl. Change seemed scary. But why pay fees when you don’t have to? It was easy to switch and I love avoiding fees while racking up points for free groceries!
January 2, 2009 at 4:03 pm
I am a former banker. Banks rely on human nature and two things specifically:
-you are more likely to bank at the institution where you had your first bank account and/or where your parents banked
-even if you decide to close all your credit card accounts, you are likely to keep the first credit card account that you ever had (one reason they try so hard to attract students)
Banking is a business decision. Hopefully you manage your finances on a for-profit basis! Go with the cheapest (preferably free) option and suck up the minor inconveniences that may go along with it.
Banking is competitive, there is no reason to pay bank fees at all for day to day banking.
January 2, 2009 at 5:08 pm
I’ve been with PC back for about 10 years, but don’t forget they do have their flaws as well. My parents are just finding that out the hard way. They are trying to settle the estate of a family member, and unfortunately PC financial has been nothing but problems and refused to speak with them, even though they have the will and are executors. The bank is even fighting with the lawyers who are probating the will. The biggest challenge is because there is no ‘physical’ bank it’s very difficult to talk to someone, and impossible to do so face-to-face.
I strongly suggest using PC bank for day-to-day, but if you have serious and potentially terminal health problems please switch!
January 2, 2009 at 6:24 pm
I used to bank with HSBC, it was the right account when I opened it, but shortly thereafter my circumstances changed and it became the WRONG account. Minimum balance fees, enclosure fees and the dreaded ABM/Debit fees regularly ran me up to $30-40 a month in bank fees.
It took my bank card being skimmed for me to give my head a shake and shake the bank off my wallet.
I’d had an account since I was a kid at my “ethnic closed bond” Credit Union, who don’t charge their members fees on their Canadian Dollar accounts (free cheques, free drafts, free online banking, free cheque images online…it’s intoxicating really!).
I’ve augmented this account with the usual suspects (at least to us frugal customers) PC Financial, Citizens Bank of Canada, ING Direct and Peoples Trust. Free FREE F-R-E-E!
I pride myself these days that my savings generate high interest, and (as it should be) my Financial Institutions pay me, not the other way around.
Yes, it takes some planning. I’m locked into the ‘Exchange” system with most of my accounts (credit unions and HSBC machines if you want the no-fee transactions), but with a little planning and a change in routine it becomes second nature.
I’m never going back to the big banks, you can’t make me!
January 2, 2009 at 6:46 pm
I just switched to Citizens Bank of Canada (owned by Vancity in Vancouver) – the global chequing account. No fees, no minimum, unlimited interac and transactions, no charge for ordering cheques and you don’t pay a fee if you go to an ATM overseas and withdraw (you will probably pay a fee to the overseas bank, but not to citizen’s bank – typical banks charge around $3-$5 per withdrawal).
I have to say I’m not loyal to banks. I’ve had bank of montreal as a kid, scotiabank and most recently CIBC. I usually switch b/c I hate the minimum amount. I switched from scotiabank years back when they upped the minimum to $2000. That’s $2000 not earning any interest and hard to keep up since I was just out of school! CIBC- I had their everyday chequing account, but even with withdrawing large amounts only twice a month, and basically not evening using my debit card I still couldn’t keep my transactions under 10 (rent cheque, credit card, phone bill, utilities, TTC, savings transfers etc). So I still ended up paying around $8-10 month. I finally decided to go with Citizens bank. It was a hassle changing my autotransfers and direct deposits, but I kept my old CIBC account open for several months after I switched just in case I missed a few auto transfers. While Citizen’s Bank doesn’t have a branch here I use the HSBC network ATMs so I don’t get charged. I spoken on the phone to their representatives who a very helpful and easy to get hold off. Besides, I haven’t stepped foot inside a bank to go to a teller in years…and usually that’s only to close an account!
January 2, 2009 at 8:32 pm
I pay $3.95/month in bank fees for my chequing account. I don’t know why it’s so low, but I’ll take it. I think I only get a smaller amount of transactions, but I rarely go over, and if I do it’s only by a couple transactions usually. I also pay $3.00 in overdraft protection, even though I never use it. I figure since it’s $42.50 a pop now for an NSF cheque…if the $3 saves me once every 14-15 months (which it seems to), then it’s worth it.
I transfer all of my income to my line of credit, and pay my bills from there. I don’t think I’ve seen a monthly fee on that since I’ve been using it (beyond interest charges), so I’m happy there.
As for my savings I chose ING Direct and in the long time I’ve been there, I can’t remember a single cent in banking fees.
January 3, 2009 at 12:38 am
I pay $4/month to HSBC for a chequing account with a 10 transaction per month limit, and I use my (free) savings account for (free) day-to-day debit transactions.
January 4, 2009 at 5:21 pm
One thing I noticed has just started here in my US state is the change in bank fees. Used to be when we would use the atm card to buy gasoline or something inside the gas station, there’d be a $1 refundable fee that would be credited back when they got their money.
Last month it became a $2 flat fee per transaction. Now I’ll have to drag the baby out of the car and go inside to pay with a check or cash to avoid the fee! What a pain in the neck. They probably believe most people would rather just pay the fee instead of having to walk to the building and pay another way.
Then I found a new type of $5 blanket bank fee. I still don’t know what that one is.
Times are tough and the banks are getting sneaky.
January 5, 2009 at 9:18 am
we do all our day to day banking with PC Financial. No fees and free cheques are awesome. we have our investments and a savings account and a LOC with the local credit union here. the savings account has no fees which is good, but i have discovered that our LOC has some service fees attached to it…which we need to get changed STAT.
i used to have an account at BMO and ScotiaBank. together i was paying well over 20 dollars a month in fees and my husband had an account at TD and he was paying about 8 dollars a month. 28 dollars a month (at the minimum–there were always occasions of having to use another kind of ATM and the dreaded extra charges) is a lot! 28 * 12 is $336 smackaroonies a year!!!! the switch was worth it.