Stop Bank Fees From Eroding Your Savings: Tips to Avoid Common Charges

You likely know when your paycheck arrives and approximately how much your monthly cell phone charges amount to, but answering a basic question regarding your bank account could prove more challenging: how much do you actually spend on fees each year?

Pretty much every bank provides a range of checking accounts, each with distinct features, charges, and transaction caps. Selecting the appropriate account can assist in minimizing these costs.

Natasha Macmillan, who leads everyday banking at Ratehub.ca, stated, "The most effective approach to handling bank fees is to comprehend their purpose and determine which essential features you require."

Ultimately, it relies on the type of purpose and usage of the checking account you require.

Canadians with restrictions on various transactions through their accounts might end up paying extra fees unknowingly—like facing additional charges each time they perform an e-Transfer or use an out-of-network ATM, according to Macmillan. These costs can range from approximately $1.25 to $2 for each transaction.

According to a 2024 report from the Calgary-based consulting company North Economics, Canadian Big Five banks impose fees ranging from $1 to $5 on non-customers who withdraw cash from their ATMs. Additionally, customers might face charges of $2 to $3 per transaction when they use an ATM operated by another bank.

The report indicated that Canadians are paying over $7.7 billion annually in excess for banking charges. The study contrasted these fees from Canada’s major five banks against those faced by customers in the United Kingdom and Australia.

The Canadian Bankers Association stated that the nation's competitive banking sector offers "excellent value, easy accessibility, and a broad selection for both consumers and enterprises."

"Canadian individuals have the option to select an account that precisely matches their requirements and provides superior value, which could include savings, checking, low-fee, student, or senior accounts. Given that there are more than 100 different package offerings within the market, there is a broad spectrum of choices designed to address the varied monetary needs of Canadians," according to the association.

Although numerous banking fees are quite apparent, some expenses may slip under your radar.

Macmillan mentioned that foreign transaction fees are typically the type that people tend not to notice. This occurs particularly when individuals make online buys from websites based outside their country or when they travel internationally.

Macmillan explained that not only would you incur a foreign transaction fee, but you could also be subject to a currency conversion charge. He noted that these additional costs are often considered hidden expenses since they usually become apparent only when you review your final statement.

Other expenses like transaction fees, non-sufficient funds fees, or overdraft fees may also appear frequently on bank statements, according to Macmillan. The fee for insufficient funds could potentially reach up to $50.

Macmillan noted that funds transferred to business accounts often include extra fees that may slip under the radar.

At times, individuals believe something is free when it doesn’t come without a price.

Exceeding the predefined transaction limits in your bank account can be costly.

If individuals frequently exceed these boundaries—using their debit card extensively or making numerous e-transfers assuming they're cost-free—the bank has the authority to impose extra fees, according to financial educator Kelley Keehn.

Keehn suggested that individuals should dedicate time annually to review their bank account cash flow and look for more advantageous offers.

She mentioned that understanding your spending habits can assist you in selecting a checking account that fits your requirements perfectly. This involves evaluating aspects like the frequency of your debit card usage, withdrawing money from another bank’s ATM, issuing checks, and how often you go to a physical bank branch.

Keehn mentioned that many banking fees can often be reduced through negotiation if the client maintains a good financial standing or holds several products with the lending institution.

"If you have several financial products with your bank—such as a credit card, mortgage, line of credit, or an RRSP—reach out to them and ask if they can either eliminate the fees or reduce them," she advised.

Certain banks will eliminate the monthly account fee if customers keep a particular minimum balance.

For example, Scotiabank does not charge account fees when a customer keeps a daily ending balance of $6,000 throughout the whole month.

Macmillan emphasizes that whenever your bank charges you a fee, ensure you understand the reason behind it.

"Should you be examining a particular charge you’ve incurred, I find it beneficial to contact the bank directly so they can clarify these fees for you," Macmillan stated.

The report from The Canadian Press was initially released on December 3, 2024.

Ritika Dubey from The Canadian Press