Canadians have had it with outrageous bank fees and credit card fees.
The eight largest banks in Canada are obliged to provide a basic monthly banking package for $4 or less. These accounts don’t offer much — 10 or so free transactions per month — and they’re not heavily promoted because they aren’t very profitable for the banks.
Brian Shumak, a Toronto certified financial planner, said he doesn’t understand what the banks are doing to justify the bank fees, many of which have become automated and should cost the banks less to administer.
“Banking has become very costly for consumers and yet the service and what you pay for has not changed one iota,” he said.
Here are four bank fees that should be eliminated.
Paper statement fees: RBC is the only Big 5 bank that does not charge for paper statements. TD, BMO, Scotiabank and CIBC charge customers up to $2 per month to receive statements by mail. You’d think going paperless saves the banks a bundle, from paper to printing to postage, but those savings haven’t been passed on to customers.
Banks claim the escalating costs of providing paper statements have forced them to charge a fee, something Susan Eng, vice president of advocacy at CARP, a seniors’ lobby group, doesn’t buy.
“It’s outrageous and they’ve made no allowances for people who don’t have a computer or access to the Internet,” Eng said in an interview.
Seniors are the most vulnerable to fee grabs like this one, says Eng. That’s because many of them live on a fixed budget and can’t afford excessive charges, even if it’s just a few dollars per month.
Electronic transfer fees: Interac’s e-Transfer allows you to send and receive money by email. It is easy, which is why these transfers are growing in popularity. The banks have found these transactions a good way to boost fee revenue.
Most charge $1 or $1.50 to send money by email, even if you have a so-called unlimited account package. For example, TD’s unlimited account costs $14.95 per month, but email transfers are not included.
“As far as I am concerned, it would cost the bank a lot more if I came into the branch to transfer money or if I wrote a cheque to the other party,” said Shumak.
ATM fees: Bank machines were introduced to make it easier for people to bank and for banks to cut costs by reducing the number of tellers in branches. But when you get charged twice to use another financial institution’s ATM, once at the bank machine and then again from your own bank, it can seem cheaper to bank in person.
Cash machines in convenience stores, bars and plazas, are even worse. Expect to be charged $2 to $3 at the machine and another levy by your own bank for a total of up to $4.50 a transaction.
An ad campaign that ran this summer urged Canadians to avoid these ATM surcharges by switching to a credit union and sharing in a national network of “ding-free” bank machines. Credit union members don’t pay a surcharge for withdrawals, deposits and balance inquiries at credit union and other participating ATMs across Canada.
Monthly account fee and minimum daily balance fee: You can avoid the irritation of individual transaction charges by opting for a monthly package, but expect to pay between $8.95 and $29.95 per month unless you carry a high balance.
A basic chequing account with TD, CIBC or BMO might cost nothing if you limit yourself to 10 transactions per month and maintain a $1,000 daily balance ($1,500 at TD). The $4 fee for RBC’s basic banking package is waived if you have an investment account and a credit card. Scotia charges $3.95 for its basic banking package.
The banks fight hard to gain new customers but tend not to reward loyal clients until they insist or threaten to leave. If your loyalty won’t buy you a freebie or two from your bank, consider spreading your business around to find a better deal.
Merchants fighting back, too
And merchants are fighting back too and are pressing the federal government to force credit-card companies and banks to accept lower transaction fees paid by merchants.
Canadian companies already pay the highest credit card processing fees in the industrialized world.
The federal government, which flagged the issue in its 2014 budget, wants MasterCard Inc. and Visa Inc. to voluntarily curb fees by about 10 percent. The fees are set by the payment networks though the bulk of the revenue is passed on to Canadian banks.
The cuts would lead to lower costs for retailers but would erode revenue for credit-card firms and banks. Banks say any efforts to cut transaction fees may force them to reduce card-holder benefits or eliminate cards.
The banks’ and credit card company’s reaction to the potential fee reduction has taken the usual threatening tone.
“The tools that we have are to reduce benefits to consumers, to remove cards from the marketplace because they’re no longer profitable,” Royal Bank Chief Executive Officer David McKay said Thursday at a banking conference. “Every bank is going to have a lot of unhappy customers.”
Retail groups have been the biggest advocates for government action on merchant fees. Joyce Reynolds, executive vice president with Restaurants Canada, an industry advocacy group, said she’s hoping for a regulated solution that will lead to more dramatic cuts.
A non-binding deal, expected to be unveiled by the Harper government as early as next week, might see merchant fees cutfor accepting credit card payments likely won’t save consumers money, say opposition critics.
NDP consumer critic Glenn Thibeault says the reduction in processing fees is so slight that consumers probably won’t feel the impact.
“We still have the highest (interchange) fees in the world,” and likely will even after the cuts are announced, Thibeault said, renewing his call for mandatory regulations.
“The only way the businesses can recoup the costs from these high fees is by increasing the price on goods,” he said.
Supreme Court sides with consumers
And there may be a glimmer of hope on the horizon for individuals, as well.
On September 9, 2014, the Supreme Court of Canada restored a trial decision, reached in 2006, that says Amex Bank of Canada, Bank of Montreal, Citibank Canada, National Bank of Canada and Toronto-Dominion Bank must pay damages because they failed to comply with a Quebec consumer protection law requiring them to disclose foreign exchange conversion charges on credit cards.
The banks have been fighting the case for years, arguing all the way up to the Supreme Court that the Quebec law shouldn’t apply to them because Canada’s constitution gives the federal level of government exclusive power to regulate banks.
Lawrence Thacker, a lawyer with Lenczner Slaght Royce Smith Griffin LLP in Toronto says the case gives provinces more scope in consumer protection.
Government must act now
News for Ontario’s 99% believes that the federal and Ontario governments must step in and protect ordinary Ontarians from exorbitant fees charged by greedy banks and credit card companies.
Ontarians are getting tired of getting nickel and dimed to death by the fees charged by these big banks and credit card companies.
It’s time for our governments to show which side they are on: the banks and credit card companies or the people who voted them in.