When opening a bank account in Canada, many people look at the monthly fee first.

But a monthly fee is not the only banking cost you may come across.

Using the wrong ATM, not having enough money in your account when an automatic payment goes through, or exceeding your account’s transaction limit can all lead to additional charges.

The good news is that many common banking fees can be reduced or avoided when you understand how your account works.

Here are five banking fees worth knowing about.

01. Monthly Account Fee

Many chequing accounts in Canada charge a monthly account fee.

Depending on the account, this fee may be reduced or waived if you meet certain requirements.

Some financial institutions also offer accounts specifically for students, newcomers or other eligible customers, which may have lower or no monthly fees for a certain period.

Instead of opening an account and forgetting about it, check:

How much am I paying for this account every month?

Is there a way to have the monthly fee waived?

Am I eligible for a student, newcomer or another type of account with lower fees?

A small monthly charge may not seem significant, but it can add up when you pay it month after month.

02. NSF Fee – When There Is Not Enough Money in Your Account

An NSF (Non-Sufficient Funds) fee may become relevant when you have pre-authorized or automatic payments connected to your bank account.

For example, imagine your phone bill is automatically withdrawn from your chequing account on the 5th of every month.

If there is not enough money in the account when the payment is processed, the payment may not go through. Depending on your account and the circumstances, an NSF fee may apply. The company receiving the payment may also have its own policy for unsuccessful payments.

One simple way to reduce this risk is to know when your automatic payments are scheduled and make sure enough money is available beforehand.

If you have several automatic payments, keeping the payment dates in your calendar can also make your cash flow easier to manage.

03. ATM Fees – Not Every ATM Is the Same

You have a debit card from Bank A, but you withdraw cash from an ATM operated by Bank B.

The withdrawal may still work, but additional fees may apply.

Depending on the ATM and your account, there may be a fee from your financial institution and/or a surcharge from the ATM operator.

Independent ATMs found in convenience stores, entertainment venues or tourist areas may also charge their own fees.

Before pressing Confirm, check the ATM screen for any additional charges.

When possible, using an ATM that is part of your bank or account’s supported network can be a simple way to avoid unnecessary fees.

04. Transaction Fees – When You Exceed Your Account Limit

Not every chequing account includes unlimited transactions.

Some accounts include only a certain number of transactions in the monthly plan. If you exceed that limit, additional transaction fees may apply depending on your account terms.

This is why an account with a lower monthly fee is not necessarily the cheapest account for you.

For example, if you frequently use your debit card, pay bills and make transfers throughout the month, an account with a low transaction limit may not match the way you bank.

When comparing bank accounts, do not ask only:

“How much is the monthly fee?”

Also ask:

“How many transactions are included in that fee?”

05. Foreign Transaction Fees – Spending in Another Currency

Travelling or shopping on an international website with a Canadian credit card?

The price you see at checkout and the final amount on your statement may not be exactly the same.

Depending on your card, purchases in another currency may involve currency conversion and foreign transaction fees.

For example, if you purchase something in USD, the transaction will generally need to be converted to CAD according to the terms that apply to your card. A foreign transaction fee may also apply depending on the card agreement.

If you regularly travel or make purchases in foreign currencies, check your card’s foreign transaction fee before using it, rather than discovering the cost when your statement arrives.

06. A “Free” Account Is Not Always Completely Free

When choosing a bank account or credit card, do not look only at advertisements such as “$0 monthly fee” or an introductory offer.

Think about how you actually use the account.

Do you withdraw cash frequently? Do you have several automatic payments? Does your account have a transaction limit? Do you regularly make purchases in USD or other currencies?

An account that works well for someone else may not necessarily be the best fit for the way you manage your money.

07. The Bottom Line

Banking fees may only be a few dollars at a time, which makes them easy to overlook.

But when the same fees appear repeatedly throughout the year, they can add up to more than you might expect.

Before opening or using an account, take a moment to understand the monthly fee, transaction limits, ATM fees, NSF rules and foreign transaction fees.

Most importantly, do not ask your bank only:

“How much does this account cost per month?”

Also ask:

“Based on how I use this account, what other fees could I be charged?”

This article is for general financial education purposes only. Fees, fee waivers and account policies vary by financial institution, product and time. Always review the current fee schedule and account agreement provided by your financial institution before making a decision.

Kim Ngan Nguyen
Financial Coach | YYC Finance

 

When opening a bank account in Canada, many people look at the monthly fee first. But a monthly fee is not the only banking cost you may come across. Using the wrong ATM, not having enough money in your account when an automatic payment goes through, or exceeding your account’s transaction limit can all lead…