Canadians pay too much in bank fees every year, compared to other countries, according to a recent report. Understanding bank fees has become more than important as it can significantly impact your finances, especially those in debt or at risk of going into debt. Undesired and unmanaged bank fees can quickly add up. To be able to combat the debt, it is important first to understand how the bank charges fees and how it can contribute to debt accumulation. Here’s a general breakdown.
Monthly account Fees
In Canada, monthly account fees are very common. These fees are charged by banks for maintaining your account, ranging from $4 to $30, depending on the type of account you hold and with which bank. Your overall banking cost increases if you fail to pay the monthly account fees on time. Â
Non-Sufficient Funds (NSF) Fees
When you make transactions that are more than your account balance, your transaction will be declined due to insufficient funds. Banks usually charge NSF fees, which can range from $25 to $50. NSF fees can quickly add up if you make multiple transactions with an insufficient account balance.Â
Overdraft Fees
Overdraft fees are a kind of loan that the bank provides to cover your bills and other expenses when your account reaches zero. In combination with daily interest charges, overdraft fees can easily increase your debt amount.
ATM Withdrawal Fees
Whenever you withdraw money or make balance inquiries from an ATM (Automated Teller Machine) that your bank doesn't own or operate, the bank charges you an ATM withdrawal fee, which can vary from $2 to $5. In addition to the ATM operator fee, your own bank may charge an out-of-network fee for using a non-affiliated ATM. This fee is typically in the range of $1.50 to $3.00 per transaction.Â
The Impact of Bank Fees on Debt
The impact of bank fees on debt can be significant, especially for individuals already struggling with financial challenges. Not being able to pay bank fees on time can lead to debt accumulation due to additional charges imposed by the banks.Â
For those individuals who are already in debt, paying excessive bank fees can reduce their available financial resources, which can increase financial stress and anxiety, eventually impacting their physical and mental well-being. All this highlights the importance of managing bank fees to avoid worsening debt situations and associated stress.Â
How can you minimize bank fees?
Fortunately, there are some simple steps that you can take to minimize the impact of bank fees on your wallet.
Choose a fee-friendly account
Larger banks offering more services charge more. Opt for banks or financial institutions that offer accounts with low or no monthly fees, available to groups such as young people, students, and seniors. You can also opt for online banks with typically lower fees than brick-and-mortar branches.
Choose the right bank account
Many banks offer different types of accounts, each with its own fees and features. Choose an account that fits your spending habits and financial requirements.
Monitor your account activity closely
Most banks in Canada offer online banking and mobile apps to help customers monitor their activity in real time. Use this to keep an eye on your transactions and maintain a healthy balance to avoid NSF and overdraft fees.
Be mindful of ATM usage
Plan your withdrawals and minimize using ATMs outside your bank network.
Utilize Interac ServicesÂ
Interac e-transfer services provide a convenient and cost-effective way to transfer money electronically, which helps reduce bank fees. Such e-transfers are typically faster and cheaper than wire transfers or money orders. Â
Bottom Line When It Comes to Bank Fees and Your Finances
Understand that banks often have some wiggle room to waive or reduce your fees. If you have been a loyal customer don’t be afraid to call your bank and request that the fee be eliminated or reduced. If you’re struggling with debt contact D. Thode & Associates Inc., Licensed Insolvency Trustees, for your FREE debt consultation and we’ll help you understand your options. We want to help you become Debt Free!
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