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Thread: Bank Fees go up as major banks feel a Profit squeeze
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Wed, Apr 22nd, 2015, 01:05 AM #1
Yes, I'm afraid it's true folks. The poor banks have had a bit of a dip in their profits, so time for the public to ante up and make it up to them somehow. . . (article from Huffington Post)
Bank Fees In Canada On The Rise Amid Profit Margin Squeeze
Many of Canada’s big banks are raising fees for customers, adding millions to their bottom lines amid a slowdown in lending and a hit to revenues from the oil price shock.
Canada’s biggest bank, Royal Bank, will raise rates on a range of accounts and transactions starting June 1. Some of those changes include new charges for using Interac on some savings accounts, a fee for making a payment on a credit card and higher charges for cheque certifications.
RBC said it will also increase the age at which seniors are eligible for banking rebates, from 60 to 65, as of June 1, in order to “be more consistent with the age that most seniors’ benefits generally apply, including many government programs.”
Many of the other big banks have already implemented higher fees or will do so before RBC.
At the Bank of Montreal, new fees are set to take effect May 1. Customers will now pay $2 if they want to see their monthly statement on paper and their monthly bank plan fee will rise by at least one dollar, while debit transaction fees will rise to $1.25 from one dollar.
Scotiabank already made changes to an array of accounts and transactions at the beginning of this year, including increasing the minimum daily banking balance to waive the monthly fee and and raising the fee for use of a safety deposit box. But they also eliminated the paper fee for student and basic checking accounts.
At TD Bank, fee changes that kicked in March 31 include increasing the minimum balance to waive monthly and transaction fees, a 25-cent hike on transactions in a number of business banking accounts and increases to transfer fees on some savings accounts, while some other accounts will see them lowered.
Consumers are expected to bear the brunt of these changes even as the cost of living continues to rise amid higher food prices, property taxes and rising user fees on other services. The issue of rising bank fees got the attention of the federal government last year, which raised questions about competitiveness in the industry.
Low Interest Rates Put The Squeeze On Banks
The fee changes come at a time when Canadian banks’ profit margins are under pressure after years of runaway growth.
The banks are finding it harder to pay higher dividends to investors as consumer debt levels reach an all time high, Canada’s ever important oil companies rein in spending amid an oil price crash, and business investment remains stagnant.
Banks traditionally make their money from interest rate spreads -- the difference between the rate they pay to the Bank of Canada to borrow money and what they charge customers. But with interest rates at historical lows, the shrinking profit margins are eating into their profits.
User fee hikes are one of the most readily available tools at companies’ disposal and they occur frequently in other industries, such as telecommunications, as a way to boost revenue.
In addition to raising fees to boost revenue to offset some of these “headwinds,” the big banks are also focused on cost-cutting, including layoffs in the financial sector
For full article go to: http://www.huffingtonpost.ca/2015/04/20/bank-fees-rising-canada_n_7099356.htmlThis thread is currently associated with: N/ALast edited by MortgageQueen; Wed, Apr 22nd, 2015 at 01:08 AM.
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Thu, Apr 23rd, 2015, 01:27 PM #2
If they don't get their money one way they will get it another.
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PC Insiders please use my code LR1507 you get $25 and I get $10 in points
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Thu, Apr 23rd, 2015, 02:09 PM #3
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I'm loving my no fee coast capital even more right now
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Thu, Apr 23rd, 2015, 02:14 PM #4
This is why DH and I have made the decision to switch from RBC... such a pain to redo all those pre-authorized withdrawals but it will be well worth it for Tangerine with no fees. Considering I already manage everything myself on line. I think I've gone into the branch once or twice in the last 7 years.
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Thu, Apr 23rd, 2015, 04:35 PM #5
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Bonus of having a husband who is 10 years older than me, since he turned 60 we have no-fee everything at our credit union.
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Thu, Apr 30th, 2015, 12:36 AM #6
UPDATE
Another article with more details such as $1 to $5 fees where there were NONE before. That's some kind of massive profit!!
http://www.cbc.ca/news/canada/new-ba...mers-1.3052637
EXCERPTS
'Double-dipping'
"It looked like double-dipping when I saw that we could be paying on top of our interest a fee for making our mortgage payments," Gordon Murray says.
The fee increases may only be a dollar here and there, but he says any additional money being taken from customers is too much, especially from a bank that just announced a record $2.46-billion profit.
"You have a multinational corporation that makes billions of dollars … come to its clients and say, 'and we want more,'" Murray says.
Across the country in Penticton, B.C., Martin Weirich is also a longtime RBC customer.
"What caught my eye is a lot of the fees that are instituted were zero prior to this notice coming out, and now they are between $1 to $5 for regular payments. Payments like paying your mortgage or paying a loan."
"I think it's an outrageous fee increase for one. I think the bank has now made the cost of their loans and mortgages cost hundreds of dollars more without posting a rate increase, and I think that's very sneaky," Weirich says.
RBC says new fees 'cost of doing business'
Scott Hannah from Credit Councilling Society's advice is first, talk to your bank about reducing or eliminating certain fees.
If that doesn't work, he says, "It pays to shop around, and with all the information available online, we strongly encourage people to have a hard look to make sure you have the right banking package."
"Otherwise you may find yourself paying perhaps $100 or $200 extra fees each and every year."
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Mon, May 4th, 2015, 08:06 PM #7
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Mon, May 4th, 2015, 09:05 PM #8
as long as they request it.
i saw something on ?fifth estate? or similar program that was on bank fees. seniors' accounts aren't automatically converted to no fee accounts when they turn 65 years old unless they request the change. just one more way to nickle and dime clients.
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Mon, May 4th, 2015, 09:15 PM #9
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Tue, Jun 2nd, 2015, 11:17 AM #10
Yeah, banks will be banks. You should really check out the business banking fees if you truly want to be horrified.
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Tue, Jun 2nd, 2015, 12:48 PM #11
For those that can resist the temptation to use credit, a way to avoid fees is just use your Line of Credit account. There are no fees for withdrawals or deposits.
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Tue, Jun 2nd, 2015, 12:49 PM #12
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Tue, Jun 2nd, 2015, 02:19 PM #13
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Or bank with Tangerine and/or PC Financial. Free banking. And free cheques.
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Tue, Jun 2nd, 2015, 07:43 PM #14
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I am very careful about this and happily can report that I pay no bank fees outside of my mortgage interest. I read all the fine print, maintain my minimum balance and meet with the bank 2x a year to keep things this way...in fact one of the banks paid me 700 dollars minus 60 dollars in fees I had to incur for those cash benefits this year. I also received 400 dollars worth of points in terms of airmiles and another travel reward benefit I have yet to register for. The way to do this I find is to view personal finance as fun, make friends with your banker, shop around, and don't use your debt card for regular purchases instead withdraw cash on payday and use a points card. It's a hobby for me to make extra money.....get free vacations...and other perks. Bank fees are incurred because people are too busy to pay attention.
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Sun, Jul 12th, 2015, 07:00 PM #15
RBC just implemented a $5.95 charge on my bank account this week (actually $10.95 with a $5 rebate for multi products with them)... after conferring with an RBC rep/ complaining of the fee on the phone I was told "the times are changing"; I've been a loyal RBC customer for 27 years and apparently there was nothing they could do for me.
Switching all my investments/ mortgage / loans to PC Financial in the days to come; started the process yesterday. Sad that banks are willing to loose customers over their desire to increase profit margins... I'm taking about a quarter million dollars total business elsewhere, maybe that'll get their attention but by then it'll be too late.
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