Do you even wonder how big banks make billions of dollars, even in the most difficult economic times?
While they have made millions in interest from various personal financing tools (i.e., credit cards, loans and mortgages), investing in the markets and holding assets in the form of real estate properties, they easily generate massive profits thanks to bank fees. From debit purchases to overdrafts, banks attach fees to various products and services with the objective of making more money annually. Unfortunately, some clients are not aware of the fees that continue to drain their bank accounts.
Below are eight tips that will allow you to reduce the amount of bank fees that are debited to your account and will permit you to save more money on a monthly basis.
1. Find a better account
If you discover that you cannot afford to pay the fees that come along with your current account, then it is time to find another account and/ or bank. There are banks that offer low or “no-fee” accounts depending on what your needs are and the amount of money you have to deposit. Once you have assessed your needs (in terms of the amount of transactions and savings goal), you can consult the Financial Consumer Agency of Canada’s website where there’s an account selection tool. This tool lists the various accounts that you may want to switch to in the hopes of paying less in fees.
2. Reduce the number of transactions
Most banks attach fees to the number of the transactions they perform for clients. If you regularly use your debit card for everyday purchases, maybe you should consider going back to using cash. Even though the fees are minimal, they can add up. According to recent reports, all Canadian banks are expected to increase their fees on debit purchases made by clients.
3. Reduce trips to bank machines associated with other banks
Banks are well known for their “convenience fee” which individuals are charged for using a bank machine of another bank. Although it is easier and less time consuming to use any bank with an automatic banking machine, it can be costly. The best way to avoid such costs is to withdraw enough money until you have the chance to get to your own bank. Another option is to open an account at a nearby bank where the fees are affordable.
4. Keep a minimum balance
Not knowing how much money you have in an account can cost you. Some banks can insist that you keep a minimum balance in an account or be faced with paying fees each month. As a result, you have to keep track of the amount of money in that particular bank or transfer it to a “no-fee” account.
5. Ask for senior accounts
Turning 60 soon? Some banks offer specific accounts that are free or available at a reduced fee. These accounts are available; however, you have to ask for them at your bank. Be prepared to prove that you are, or are turning, 60, to be eligible for the accounts.
6. Obtain overdraft protection
Thinking about “non-sufficient funds” (NSF) charges every time that you write a cheque? NSF charges can significantly drain the amount of cash that you have in an account (checking for example) on a monthly basis. In order to avoid the heavy fee, consider obtaining overdraft protection; it is a form of insurance that will allow you to pay a small fee in advance to avoid paying a larger NSF charge. Some financial institutions will apply the overdraft charge only in months when you actually use the overdraft protection that you have invested in.
7. Go online
If you’re able to go online via a laptop, tablet or smartphone, then do your banking online. Instead of going to a bank, why not conduct transactions by yourself.
8. Read your monthly statement
Are you aware of the fees that you pay per month? It is recommended that you examine the statement to see if you have been charged any extra fees and how much. In addition, be vigilant in terms of any new fees that you may be able to contest or ask to be waived.