2.2.5 Transaction and service fees

From: Financial Consumer Agency of Canada

Your account statement will list any fees your financial institution has charged, including account fees that cover a basic package of services over a month, or transaction fees that are charged each time you use a service. Often, for example, your account will include a number of free withdrawals or other transactions, but it may not include services such as using a banking machine from another institution or sending a payment from your account. Fees for these services can add up to a significant amount.

Case study: Banking service fees add up

Daniel discusses an account statement on the phone.

Daniel didn't usually read his account statement. It seemed to be okay when he looked at the first one, so he thought, "Why bother?" It was just one more piece of junk mail. But today he opened it as he was waiting for a phone call.

"What's that?" he thought, as his eye ran down the items on the page. "Monthly fee, $6.95. Network fee, $2.95. Twice! Non-system machine fee, $3.49. Bill payment fee, $1.25. What is all this?"

He called his branch to find out, and the service rep explained: his account charged a monthly fee of $6.95, but it included only certain transactions. Daniel had used a banking machine at another bank twice, and the network, which links financial institutions to each other, charged a fee for each transaction. One of the transactions was at a privately owned cash machine that charged an additional fee of $3.49. And bill payments were not included in Daniel's account package, so there was an additional fee of $1.25. The total was $17.59.

The branch representative said that Daniel could switch to another account that included free network charges and bill payments. That account charged a service fee of $17.95 a month. Daniel decided to keep track of his transactions for the next few months to see if the new plan would save money for him.

Lessons Daniel learned:

  • Find out what your transaction fees will be when you open an account.
  • Check your account statement regularly.
  • Ask about items on your statement you don't understand.
  • Monitor your transactions to make sure you have the best plan for your needs.
  • Avoid transactions with higher fees, such as those from automated teller machines (ATMs) that are not affiliated with your financial institution.
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