How much are you paying in bank fees?
Have you ever looked at your monthly statement and wondered what all these transactions are at the end of the month? $5, $7, $10, and even sometimes $30. What are these fees and why are banks charging them? Why are you getting charged to keep your money safe?
Why bank fees are a growing concern
In today's financial landscape, bank fees are a hot topic. With rising costs and shrinking savings, many Canadians are increasingly frustrated with the fees charged by banks. These fees can eat away at your hard-earned money, prompting a shift towards FinTech solutions that offer more transparent and lower-cost alternatives.
The different bank fees you might be facing
Banks often generate revenue through a variety of fees. Here are some of the most common ones:
Annual Bank Fees: Some banks charge an annual or monthly fee simply for having an account.
Maintenance Fees: Regular charges for account upkeep, which can add up over time.
ATM Fees: Fees for using ATMs outside the bank’s network.
Overdraft Fees: Charges for spending more than you have in your account.
Foreign Transaction Fees: Costs associated with using your card abroad.
Other fees a bank might also be charging you could include: inactivity fees, Interac e-Transfer® fees, administration fees, non-sufficient funds (NSF) fees, and account closure fees. The list really does go on.
These fees can significantly impact your finances, especially if you're not keeping an eye on them.
How much could the average Canadian be spending on bank fees?
On average, Canadians could spend anywhere from $10 to $30 a month on various bank fees. Over a year, this adds up to $120 to $360—money that could be better spent or saved. By understanding these fees, you can make more informed choices about how to minimize or avoid them.
The Rise of FinTech companies
FinTech companies are revolutionizing the financial sector with innovative solutions that challenge traditional banking. These companies often provide lower fees, greater transparency, and more user-friendly services compared to banks.
What FinTechs offer vs. Traditional banks
Lower Fees: Many FinTechs have significantly lower fees or none at all. Being 100% digital comes with less overhead costs.
Enhanced Technology: User-friendly apps and online services that make money management more accessible and convenient.
Better Interest Rates: Some FinTechs offer higher interest rates on savings accounts and lower rates on loans.
Traditional banks, on the other hand, often have higher fees and less flexible technology solutions, making FinTechs an appealing alternative for many.
The cashback trend
A popular trend among FinTechs is offering higher cashback rewards. These programs provide a percentage of your spending back to you, which can help offset costs and increase savings. It's a way for FinTechs to attract customers while also adding value to their services.
How to switch to a FinTech
Making the move is simpler than you might think:
Research Options: Compare different FinTech services to find one that fits your needs.
Open an Account: Sign up online or through an app, which is usually quick and straightforward.
Transfer Funds: Move your money from your traditional bank to your new FinTech account.
Update Payment Information: Ensure your direct deposits and automatic payments are redirected to your new account.
Monitor Your New Account: Keep an eye on your transactions and benefits to ensure everything is working smoothly.
Choosing the right financial service provider
Don’t know where to start? Neo Financial offers different products that are designed to work together to bring you the most value. Not only are you saving for the future with no fees or minimum balances, but you're also able to earn more of your money back through cashback.
Maintaining a higher balance in your Neo Everyday account can boost your cashback on all purchases, including gas and groceries across your Neo cards. Not to mention, the cashback partner network, where you could earn additional cashback on top of the base. Explore Neo Financial today to find out if they are the perfect fit for you.
Saving on bank fees starts with understanding what you’re paying for and exploring alternatives like FinTech companies. By making an informed switch, you can reduce your expenses, enjoy better financial products, and ultimately, keep more of your money.
Ditch the fees today. It’s never too late.
This article provides information and is not intended to provide any personalized tax, investment, financial, or legal advice. You are encouraged to seek professional advice before making financial decisions.
As reported by The Canadian Press, it was first published March 7, 2024.
https://financialpost.com/fp-finance/banking/canadians-paying-billions-dollars-excess-bank-fees
https://www.ratehub.ca/blog/excess-bank-fees-how-to-avoid-them/
