Adam Mayers of the Toronto Star wrote about bank fees going up again. When he asked readers how they felt, 88 per cent said their bank fees were too high.
He suggested five ways to reduce them:
Go into your branch and ask. It’s the best way to figure out if you’re paying too much based on how you bank. The more business you have with the bank, the better the deal should be.
If you’re a student or your kids are students, a no-fee deal should be available.
Those over 60 should expect discounts, but not freebies. There are too many people in the demographic now to expect something for nothing. TD’s basic discount, for example, is 25 per cent for this group.
Many fee-free options relate to minimum balances in your account. If you keep a large sum in a savings account that is earning next to nothing, consider moving that cash to a chequing account. The fee savings may more than offset the interest earned.
Branch out. A credit union or low-fee option like PC Financial, Tangerine and EQ Bank can work for some of your needs.
Michael, a Toronto Star reader, grew tired of facing increases in TD’s minimum balance required to avoid fees. So, he moved to online bank Tangerine. Here is his story.
My wife and I were frustrated with TD’s ever-increasing minimum balances. We made a few attempts to argue that our $100+ a week mortgage interest outweighed the $11 a month service fee we were paying on our chequing account (since we were challenged to maintain the new $3,000 minimum).
Since we didn’t get anywhere, we made the bold leap to Tangerine Bank. There were two reasons for the switch:
1. The large majority of our banking is done online. We make infrequent branch visits (generally, to renegotiate the mortgage or to buy U.S. cash for bi-yearly trips south) and we did not believe we should be paying $11 for what was perceived as a subsidy for branch staffing.
2. Tying up $3,000 as a cost-avoidance method made no financial sense to us.
While our experience in changing banks was fairly smooth, it did have some moments of frustration.
· With Tangerine being an online-focused service, working through the mortgage transfer involved a few ‘real’ people. Communication between these people was not always great and we had a couple of moments wondering if the transaction was processing properly.
· Tellers at TD could not perform some of the transactions (mostly to do with transferring and closing our trading accounts), which meant we had to revert back to online and over-the-phone transactions.
· Transferring preauthorized payments began smoothly. Tangerine has a robust ‘switch assistant’ and a couple went without hitch (utilities mostly). Others involved going directly to the payee and updating the database personally.
We were thrilled when it was all complete and we were actually paid interest ($0.26!) at the end of the first month. This was a novel concept with a chequing account, but a satisfying one!
If you feel the increasing fees and minimum balances are outrageous, I urge you to investigate moving to one of the growing number of alternative banking solutions.
The big banks should all be taking notice, as I am sure more Canadians will be choosing these online options (with in-branch affiliations), especially given our penchant to embrace online and mobile tools.