Common Bank Fees and Charges in Canada
Having a bank account, at least for the Canadians, usually means a never-ending stream of fees. Doesn’t matter if you’re with the Bank of Canada or some other financial institution, chances are your bank fees are high.
So what are the banks charging you each month and how can you potentially avoid those fees? Keep reading to find out, as we explain all the individual fees in Canadian banks and provide you with a handy guide on managing your finances like a pro.
Typical Canadian Bank Fees
Banks are businesses, first and foremost. They wouldn’t be in the business if they were not making profit. While you might not get charged for opening a banking account, you’ll most definitely face some fees when using banking services. Here are some of the most common fees you’ll encounter at Canadian banks:
Monthly fee - The most common fee any bank charges its customers, also called the maintenance fee, is a monthly fee. It is usually charged for just having a bank account. Some banks waive their monthly account fees under certain conditions like staying within the minimum monthly balance, or having no transactions within a month.
Transaction fees - Unlike your bank account monthly fee, transaction fee is charged with each transaction you make, meaning with every withdrawal from your account. Usually, you get a certain number of free withdrawals each month before the fees kick in.
ATM fees - Withdrawing funds from your financial institution’s ATMs is always free. But, if you’re using ATMs of another bank to withdraw cash, you’ll be charged a fee for that transaction.
Bank statement fee - Banks usually won’t charge you to check your balance or get a digital monthly statement. What they will charge is requesting physical statements. This fee is nominal, typically only a few dollars. Still, it’s better to check whether your financial institution offers e-statements to save money.
Non-sufficient funds (NSF) fee - One of the most dreaded banking charges, NSF happens when you try to charge one of your bank accounts for the transaction, but that account has insufficient funds.
Overdraft protection fees - This optional, yet very important fee if you’re eager to avoid the possibility of NSF. Overdraft fees usually aren’t very high and they can save you from much higher fees.
INTERAC e-Transfer fee - Just like with regular transfer fees, INTERAC e-Transfers don’t always have to be free. Most banks have this fee waived up to a certain number of transactions per month, after which they’ll start charging you per each transfer.
Lost card fees - Losing your credit card can become a costly expense, not just due to the risk of someone misusing it. Reissuing lost credit cards comes with one of the highest banking fees in Canada, simply because it’s a consequence of customer’s irresponsibility.
Foreign transaction fees - Traveling abroad can lead to some undesired charges on your bank account. For example, if you use your debit card for purchases while in another country, you might get charged a transaction fee on each purchase. Banks typically charge up to 3% on those transactions, but you may find banks that waive these fees altogether.
Cheque and payment processing fees - Concluding our list of the most common banking fees is the cheque processing. Usually, if you’re trying to cash in cheques in the same bank they’re issued at, you’ll barely lose any money. The fee grows when processing a cheque from another financial institution, or international cheques.
Avoiding The Bank Fees and Charges
Canadians don’t always have to pay exorbitant fees to financial institutions. In fact, there are several ways to avoid fees if you have a bank account in Canada, and many practices you can implement to keep your fees at minimum.
Let’s take a look at some of the methods to keeping your personal finances in check and your annual spending as low as possible.
Open an Online Banking Account
More and more banks in Canada are offering online-only accounts. Some banks are even completely online, giving many Canadians the opportunity to have an account free of monthly fees.
With an online bank account, monthly fees are usually completely waived, or kept at a bare minimum. On top of that, you likely won’t have to keep a minimum balance on your account and will have no fees for e-transfers, plus unlimited transactions.
The downside? Some service fees might be higher at online banks and, since there are no physical locations, it takes longer for these banks to complete usually quick services like issuing cheques.
Keep Minimum Account Balance
There are ways to avoid fees even with traditional banks. If you have a checking account, try to maintain a minimum daily closing balance in your account. Since banks monitor the accounts on a daily basis and calculate the fees accordingly, staying at or above the daily minimum is a surefire way to save up some money.
Avoid Going Over Transaction Limits
Certain bank account fees only kick in once you’ve made a certain number of transactions per month. Account holders should make fewer transactions if possible, or seek a bank with a higher transaction limit.
Depending on the bank you’re with, there might be an option to upgrade your account and increase the transaction limit.
Bundle Up Your Banking Services
Since we’re already on the topic of account upgrades, another way to avoid fees, or at least drastically reduce them, is to choose an account that has multiple services included. When you combine your debit and savings accounts into a single package, you’ll only have one bank fee to pay maintenance for.
Learn About the Fees Before Opening an Account
This should go without saying, but reading the fine print and all the terms and conditions can save you from trouble and protect your balance from high fees.
When you’re already familiar with what the bank offers and what kind of fees to expect, you can easily make a decision about whether that particular bank or service is for you. Just because you’re offered a savings account without tax fees doesn’t mean you won’t have to pay exorbitant sum for something else.
Consider Joining a Credit Union
The option to join a credit union is another way for Canadians to save money on bank account fees. Members of such unions usually get better terms when opening accounts with Canadian banks and can even share certain perks, of course, depending on the union and its practices.
Use Multi-Product Rebates
Cashback offers are some of the most popular incentives that banks and credit card companies have today. In short, you get a reward just for using a certain product, like a credit card or debit card, or for doing certain things that make you eligible for an offer.
There are many different bank fees in Canada, but not all of them have to apply to you or your accounts. Browsing through banks’ offers and comparing fees is an important part of the process when searching for the most favourable bank.
The other essential step you can take is to find a way around those fees, so you can maximize your savings. Avoiding transactions from your linked savings account, switching to online banking, or finding banking packages that come with certain perks are all thrifty ways Canadians can use to reduce their monthly expenses.
Do all banks charge fees?
Some banks do not have monthly fees for account maintenance. These are mostly banks that work online, and their fee structure is geared towards other services where they can still earn profit.
Online banks could have higher wire transfer fees, charge more if you lose your credit card, or not offer overdraft coverage.
Which bank in Canada has the lowest fees?
Why are there bank fees?
The main reason any bank would impose fees on its customers is to generate profit. Banks have maintenance costs, have to pay their staff, and ultimately are businesses just like any other company. That’s why you’re charged a monthly fee on your account or through transactions.
I have always thought of myself as a writer, but I began my career as a data operator with a large fintech firm. This position proved invaluable for learning how banks and other financial institutions operate. Daily correspondence with banking experts gave me insight into the systems and policies that power the economy. When I got the chance to translate my experience into words, I gladly joined the smart, enthusiastic Fortunly team.
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