Random Rant: Bank Fees

I hate paying bank fees. I understand that banks need to make money, and I have benefited through investments when certain banks to make money, but do they really have to charge me for storing my money in their institution? I don’t see why I should pay $12/month for a chequing account that never goes in to the negative, if I happen to not keep the required $2500 balance every day of the month…

If I can take that $2500 and make over 6.25% on it, that would make the bank fees come out in the wash (someone may want to check my math on that one…), but if I keep $2500 in the chequing account, that money is doing nothing for me. Sure, my net worth is $2500 higher than if that was $0, but that $2500 of net worth is not working for me. And I want my money to work for me… not just make money for a bank…

Okay, end rant… I could go on for hours, but probably best to just move on…

Because of this hatred of paying fees, and perhaps because of the awful customer service I received from my bank last year when I was working through the purchase of our house, I’m looking around at various banks for options. I have a savings account at Tangerine, which is great because there are no fees, and may move my chequing there as well, but part of me doesn’t want all my money in one basket. Maybe I’m paranoid, or old fashioned, or something…

The unfortunate thing about the results of my research is that my $12/month fee with the fee waived at a minimum balance of $2500 is looking pretty good compared to a lot of other big bank options.

Some local credit unions have some decent options, and some have the same options as the bigger banks, and I’d feel like I was supporting the local people and economy better if my fees go to a local credit union.  So maybe that’s where I should go.  Does that even make sense?

I guess I could count that $2500 as a built-in emergency fund… but it would be great if it could make a little interest while sitting there.

This all ties in to my financial goal of budgeting because I am trying to figure out the best way for my fiance and I to combine our finances so that we can keep a budget and share expenses, and also so that I can support him while he goes to school.

Does anyone have any advice they can offer on bank accounts and bank fees?  Is there a way around paying stupid bank fees and still get all the functionality of online banking?

P.S. Has anyone noticed how much I love using ellipses in my posts? It’s like I can’t finish my sentences properly and must leave room for a potential after thought… I never claimed to be a good writer or have any proper grammar skills…

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4 thoughts on “Random Rant: Bank Fees

  1. I’ve moved all my banking to PCFinancial and Tangerine. PC for day-to-day and short term planned spending, Tangerine for longer term savings and my emergency fund. I used to have accounts with BMO and was thankfully covered under student banking, but I knew that would end so I moved my money around before I would start being charged fees.

    I think it’s pretty absurd considering they’re making money off your money. Maybe when interest rates go up again they’d be more apt to give free banking like 20 years ago, but truthfully I don’t see it changing back. It’s likely here for good.

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    • Yeah, now that everyone is used to paying bank fees, it isn’t likely that they will move away from it…
      My frustration with the online type banks is that, while I do most of my banking online (paying bills, transferring money to my friends, etc.), I do sometimes have cash to deposit or want to get some cash out and they don’t seem to have too many locations near me to do that. But maybe the zero fees makes up for having to travel a bit further occasionally…

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  2. Some people would take their $2,500 and trade that money for ownership of the bank they use. This allows them to be a shareholder of the bank and entitles them to all dividends and future profits. For example Royal Bank currently has a dividend of 4%. This means buying $2,500 worth of Royal Bank shares would earn the client $100 a year in dividends, which they can use to pay help pay their $12/month bank fee.

    Furthermore all the big Canadian banks have been increasing their dividends every year for the past couple of decades or so. At the current pace, it won’t be long before Royal Bank pays out $120 of dividends per year for the same amount of shares. When that happens, 100% of the banking fees would essentially be covered and the client wouldn’t pay anything out of pocket to continue using their bank account. The dividends have to paid to shareholders as a part of the bank’s earnings. So the only thing the client has to do is be patient while the bank gradually makes more and more profits from its customers over time. 🙂

    Additionally Canadian banks are viewed as some of the safest financial institutions in the world with superb credit ratings, and high levels of capital reserves. I’m not an expert or anything but I have a feeling that Canadian banks are pretty solid long term investments. On average CIBC, BMO, TD, and Royal stocks have returned 10% per year for their shareholders since 2004, despite the big recession in the middle. But I think you know all this already because you appear to be invested in this space, but perhaps just not directly in the bank that you’re using. 😉

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    • Thanks Liquid. I guess I didn’t think about it that way before. I was just generally angry. LOL. There is something to that, if I invest that money in the bank, then paying that $12/month fee is really going to come back to me with the investment. Thank you for helping me to see things in a different way. I will need to re-evaluate the options with that in mind…
      And no, I currently am not invested in the bank that I have my day to day banking at, but maybe I will…

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