3 ways to avoid paying bank fees

Combat rising fees with these tips



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Whenever banks raise fees—and really, how often do you read news of a bank lowering its fees?—Canadians get upset. Understandably so. The Big Six banks rake in a lot of cash in this country.

So when the media recently reported that nearly all of the big banks had raised personal banking fees in the past year, despite raking in record profits, well you can imagine how many of the comments were positive. (“You go, TD!” said no one.)

Some of the recent fee hikes included:

TD: Fees for non-TD ATMs rose 50 cents to $2 on March 1; introduced a fee of $75 to transfer a tax-free savings account to another bank.

CIBC: Raised the minimum balance to qualify for no-fee banking from $1,000 to $2,000 on April 1; also raised transaction fees for its Everyday Chequing Account.

National Bank: In June, it raised some banking service fees by 25 cents.

RBC: In mid-2015, it proposed a new fee structure that would potentially apply a transactional charge to customers who paid their credit card bills and mortgages through the bank. (They scrapped the fee before it began, after public backlash.)

Considering that TD announced it had made a second-quarter profit of $2.05 billion last month, up from $1.86 billion for the same quarter last year, well, sure, go ahead and get angry. After all, many Canadians are already paying anywhere from $10 to $30 a month in banking fees, which can be as much as $360 a year. Is there anything you can do about it?

Yeah there is! Here are three classic MoneySense tips (none of which require a mattress) to help you lower your banking costs:

1. Install a false bottom on your account

Some chequing accounts give you all your transactions for free when you maintain a minimum monthly balance. A $1,000 minimum used to be common, but many banks have raised the qualifying minimum to $2,000 or more. Find out what your bank requires and take that balance from your emergency fund and stick it in your chequing account where it can do double duty: It’ll be there when crap hits the fan and, as long as you leave it alone, it’ll help you to save on bank fees. The trick, of course, is to convince yourself that this monthly minimum float doesn’t exist. If you aren’t disciplined enough to not spend that money, don’t use this strategy.

Use your savings to avoid bank fees »

2. Book a meeting at your local branch

Bank staff often has some discretion to waive or lower fees, for great clients of course. Book an appointment and begin by letting them know you’re considering moving your business to lower your fees. They’ll have your transaction data on hand, so ask them to review your activity and suggest alternatives that could save you money. MoneySense contributor Bruce Sellery did this. While they weren’t able to waive his monthly bank fee, they did lower the rate on his line of credit and waived the annual fee on his brokerage account.

Avoid the fee squeeze »

3. Put a price on convenience

A big part of what you’re paying for with those banking fees is convenience: the ease of withdrawing money from the bank’s vast network of ATMs or just having all your accounts under one roof. You can find no-fee chequing accounts with no minimum limits at places like PC Financial, Tangerine and some credit unions, including FirstOntario and Coast Capital. Just be mindful of any extra fees you might be in for. Case in point: Tangerine’s free chequing account has fees for Interac e-Transfers ($1 per transaction) and overdraft protection—$5 per use with 19% interest on the negative balance.
All this is to say, banks raise fees. It’s what they do. With a bit of planning you may not have to pay them.


5 comments on “3 ways to avoid paying bank fees

  1. Ridiculous how fee-crazy banks are in Canada. In the US the banks are grateful for your cash and don’t charge you for having and using accounts. There are some fees but they aren’t regular are scammy. I therefore minimize my assets in Canadian banks.


  2. We have a secured line of credit which we use as our primary chequing account. No fees for unlimited transactions and free printing of cheques. Keep a balance in your account and there is no interest fee charged. No mimimum balance.


    • The problem there was, before my switch to Tangerine, that my bank required a minimum of $5000 for no fee banking. I don’t know about you, but $5000 is a lot of money to have sitting in an account that could be garnering interest in a savings account or being invested in a TFSA or other form of investment. So while that money is in the bank, and I can’t touch it, the bank doesn’t have any regulations about not investing my money in their hedge funds, but I can’t touch it without paying a $30 monthly service fee, not including a service fee for daily transactions. No thank you.


      • Note: Your comment has nothing to do with my comment…


  3. You failed to mention switching banks. At the end of the day, it isn’t really that difficult and doesn’t take that much effort to switch to a bank that doesn’t charge fees – like Tangerine. The process was actually painless. I pay $0 in fees on my chequing account, they sent me 50 personal cheques for free (and let’s face it, they will probably won’t all get used in my lifetime) and I can use any Scotiabank atm and will not occur fees. I did not have to leave the comfort of my home to open the account, and once my identity was verified (I e-deposited a check from the bank I abandoned using Tangerine’s app on my phone), I could go ahead and close my accounts with my big expensive bank. I’m not saying use Tangerine, but as FinTech becomes more available, we as consumers need to adopt this new technology. The Big Banks raise fees because they know that most people will not make the effort to switch. At the end of the day, nobody should have to make the effort to physically go to a bank and negotiate bank rates anymore. Big Banks WILL stop raising fees when they lose their business to the competition – and that has already started, as the number of people who apply for loans through FinTech, instead of going to a big bank, is increasing year over year.

    If anyone who reads my comment is convinced, here is my orange key for Tangerine: 44772657S1 – if you use it to sign up, we both get $50 – another perk the big banks don’t offer for no-fee everyday banking. Once you have an account – tell all your friends and get them to use your Orange Key. Isn’t that better than just getting hit up with banking fees?


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