Banking Service Fees
- 30 per cent of Canadians say they pay no service fees at all while another 45 per cent pay between $1 and $15 per month.
- Basic accounts are available at major banks for $4 or less.
- 79 per cent of Canadians say they get good value for the service fees they pay.
The bottom line
With a great deal of competition, bank customers get good value and convenience in their banking services.
Consumers have tremendous choice when it comes to banking with over 40 banks offering financial products and services to retail customers, in addition to hundreds of other financial services providers.
This high degree of competition puts the consumer in the driver’s seat and allows them to shop around for the banking and financial services that best meet their needs and their budget. And Canadians understand that they have a great deal of control over their banking packages and the service fees they pay:
- 88 per cent of Canadians think there is enough choice in banking
- 17 per cent of Canadians have switched from one financial institution to another in the past three years1
- Of those who have switched, 79 per cent said it was easy to do
- 30 per cent of Canadians report paying no banking service fees at all because they take advantage of no-fee service packages for seniors, students, youth, newcomers to Canada or Registered Disability Savings Plan (RDSP) beneficiaries; maintain a minimum monthly account balance; or choose a no-fee electronic banking package. Another 45 per cent of Canadians say they pay between $1 and $15 for monthly service fees.
- A report from the Financial Consumer Agency of Canada found that monthly bank account fees have not increased as much as inflation and the number of transactions allowed in many bank account packages has gone up. When looked at on a per-transaction basis, monthly service fees actually decreased by 19 per cent from 2005 to 2013.2
- Banks in Canada are committed to ensuring that Canadians can access banking services, offering low-fee account packages for just pennies a day. For example, the monthly fee for low-fee accounts is $4 or less and includes at least 12 transactions per month (including at least two in-branch transactions if available), cheque writing privileges, free monthly printed statements, and cheque image return or online cheque image.
Service fees help pay for the convenient and reliable banking services that Canadians have come to rely on, including:
- A national network of more than 6,000 branches
- Nearly 19,000 bank-owned ABMs
- Debit payment services at more than 500,000 retailers in Canada
- Internet, mobile and telephone banking
Many branches are open evenings and weekends so that customers can do their banking when it’s convenient for them. And with Internet and mobile banking, Canadians can do their banking from virtually anywhere in the world.
From 2005 to 2014, the six largest banks have invested $64.9 billion in technology to ensure a convenient and secure banking system.
The vast majority of Canadians (79 per cent) say that they get good value from the service fees they pay. When asked what specifically they valued about their banks, Canadians pointed to the following:
- Peace of mind: 87 per cent of Canadians believe our banks are stable and secure
- Protecting privacy: 80 per cent of those surveyed appreciate that banks protect the privacy of their personal information and transactions
- Innovation: 75 per cent of Canadians value the new technologies that improve the convenience of banking
- Trust: 70 per cent say that banks are honest and trustworthy in their dealings with customers
Canadians have a great deal of choice over the service fees that they pay. Here are some tips for reducing service fees and finding the best account package:
- Sign up for a low or no-fee account: Sign up for a low or no-fee account if you only have a few transactions each month. Use the FCAC’s online Account Selector Tool to see if one of these accounts might meet your needs.
- Maintain a minimum balance: It’s possible to avoid monthly service fees if your bank waives these fees when you maintain a minimum monthly account balance. If you have additional products with that bank (e.g., a mortgage or credit card), ask if your bank offers rebates on service fees.
- Ask for senior’s discounts if you qualify: Many banks offer free or discounted banking to those who are over 60. Check with your bank to see if you qualify. Seniors receiving the Guaranteed Income Supplement are entitled to a basic bank account at no cost.
- Ask for youth or student discounts if you qualify: Banks offer basic bank accounts with no monthly fees for younger customers and students. Check with your bank to see what accounts it offers.
- Ask for a discount if you are a newcomer to Canada: Many banks offer free or discounted banking for newcomers to Canada. Check with your bank to see if you qualify.
- Use cheaper online banking services: There are accounts available that offer discounts or even free banking if you use only online services.
- Take advantage of cash back: Pay for your purchases with debit and get cash back from the retailer to avoid extra bank transactions.
- Avoid ABM convenience fees: Use only your own institution’s bank machines. You’ll save on fees that the other bank machine owners charge to use their machines. In fact, 75 per cent of ABM cash withdrawals are done by customers at their own bank so no convenience fees are charged.
- Consider overdraft protection: Do you frequently write cheques that bounce and pay NSF (i.e. insufficient funds) charges? If so, you might want to consider applying for overdraft protection. The small monthly charge might turn out to be less than you are paying in NSF charges. And some financial institutions levy the overdraft charge only in months when you actually use the overdraft, so there could be additional savings there.