Bank fees make me angry and sad. I try to avoid them where I can but, sometimes, you've gotta buy a car.
I went for it - I bought the The Beetle. (Weirdly, the new beetle is technically called a The Beetle so that's not a typo.)
Actually, saying “I went for it” is not really correct — it was pretty much the cheapest of the lot at around $15k.
So while I didn’t have to walk into a dealership with a cheque for $25,000, I did have to hand over a pretty big amount of money. And you can’t do that in cash so the SOP is to get a bank draft, the Canadian version of a cashier's cheque. No problem, except it cost me $7.50! Over seven dollars to spend my own money??
Ouch! $7.50 is my bank fee budget for like 10 years. The total I spent in bank fees in the last 12 months: $1.50. And this 12-month total should be $0 but a walking-around-with-no-cash slip-up and a late-night poutine at a cash-only place caught me out.
There’s no good reason to pay anything for your daily banking needs. Banks make plenty of money from just holding your money so they don’t need to nickel and dime you with fees on everything. If you're still paying them, here’s how you get rid of your banking fees.
And apologies ahead of time because, like your mother before she settled down, this one takes a few odd sexual turns here and there.
Let’s forget the small banks
The first piece of advice you’ll hear is to switch to a no-fee bank account like PC Financial or Tangerine. And if you want to do that, great. But I feel like if you wanted to do that already you would have.
So if you want to do that, go for it. They don’t have fees. (Bank drafts will still cost ya though.)
That out of the way, I’m assuming at this point you’re with a big bank for a reason. Maybe you feel more secure at BMO, maybe you’re too lazy to move away from CIBC because you’ve been there since they processed your student loan and your accounts have 16 different direct deposits and pre-auth'd payments hooked to them. I’ve been with RBC for 20 years because I like dark blue.
It doesn’t matter why, mosts people are with big banks and that means fees. So let’s skirt those.
Step 1. Get your daily bank account for free
Every bank has some sort of deal if you get a bunch of their “products”. (I still find it weird that they call a bank account a product.) With RBC, you get a free basic account if you have a credit card and an investment account. You get a free better account if you also have a mortgage. Here's RBC's breakdown of account discounts.
(Interesting point for the banking nerds: a $0-owing HELOC still counts as a mortgage product.)
So, get those things.
You can toss $500 into an RRSP and never use your credit card. That’s how I started.
At other banks, it might mean keeping a minimum balance. That might take some saving but you can do that. Saving is good for the soul.
BUT, you say, you don’t have a house and a free basic account doesn’t give you enough debits / transactions / hand jobs. Well I can’t help you with the HJs, but stop using your debit card. Real men don’t deal in anything as pedestrian as money. Interac is for losers, dude.
Step 2. Use a credit card for everything you buy ever
Get a FREE credit card. There are lots. Get the one you like. I personally abhor any kind of rewards points, so cash back all the way for me. I get 1.5% with no annual fee. If you buy in foreign currencies a lot, look for one with no foreign exchange (Forex) fee — the amazon.ca card is only one I know off-hand.
Now use your credit card to buy stuff, pay it off with your limited transaction bank account every single week (yes, every week) and you’re done.
God, this is getting dull. Here’s a picture of an egret who's not speaking to his wife at the moment, maybe because she spends all of his money:
[caption id="attachment_544" align="alignnone" width="660"] Snowy Egrets hold a grudge. [/caption]
Step 3. Control the spending demons in your mind
Obviously with a credit card you’ll be inclined to be more spendy, so you’ll fight your inner consumerist whore for a while. Don’t let him win. Don’t do it. He’s a dirty dirty monster implanted in your mind by Pepsi, Apple et al.
So keep an eye on your spending and your budgets. You won’t feel the expense as much as with a debit card, so this part takes self-control. You can do it.
Tip: If you’re feeling down, instead of buying something to feel better, find someone to have sex with. It’s free if you do it right (and, well, really expensive if you fuck up.) Don’t have a willing participant? Tinder is free.
Tip 2: Having the other person supply the condom will save yourself a small expense, but if you don’t know how that condom has been treated, you increase the risk of a much bigger expense later on.
Tip 3: Just the tip, just for a minute, just to see how it feels.
Step 4. The in-closet ATM
The next problem is ATM fees. DO NOT cheat on your bank. Always use your own bank’s ATMs. And never, ever stick your card in one of those no-name ATMs at bars. It might seem like fun at the time but that’s how you get a disease. Well, identity theft anyway. It's the STD of the financial world.
So what you need to do is always keep cash in your wallet. A couple 20s, maybe a couple 5s. Rarely is anything over $50 cash-only, and if it is, the walk to your own bank’s ATM is a good chance to re-consider if you really need that piece of “art” from a roadside vendor.
Now the important part: each time you get home, if you’ve used any of the cash in your wallet, replenish it from your closet cash. Keep a couple hundred in your closet and replenish that as needed when you get groceries each week. (This is where I fucked up and cost myself $1.50 that I should never have had to pay - I forgot to replenish.)
Cash is financial protection. Always carry a condom; always carry cash. Simple.
In practice, I use almost no cash. I sold a table on Kijiji last winter and I’m still using the cash I got from that as my closet cash. If you’re a frequent bar visitor, you may need to keep more around. (To criminals: it was a pretty cheap IKEA table that I sold so I don’t actually have many dollars in my closet. You’d be better off robbing my lady neighbour, who has a fair amount of nice jewelry. Bedroom, top left drawer.)
Step 5. Nail the habit
It requires some forethought and some new habits to skirt bank fees obviously but you get accustomed to it quickly. The reason banks put up massive profits? Because most people won’t. Banks make a nice profit from the lazy.
Paying no bank fees ever AND getting 1.5% cash back on everything you buy adds up to a nice little bump in your disposable income. We’re talking hundreds of dollars per year for sure.
Think of all the non-expired pinhole-free condoms you can buy with that.
When fees might be alright
Sometimes you can’t avoid fees. And that’s okay. (If you know how to avoid some of these, I would love to know!)
For example, if you need a safe deposit box then paying a fee could make sense. I consider that more like renting real estate though; it’s just renting a tiny room for your paper and diamond children.
If you rarely use cheques it’s cheaper to pay the ~$2 fee to get just a single cheque, rather than a whole book, assuming there is absolutely no other way to pay someone. Emailing money is free now at RBC at least so I haven’t used a cheque in many many moons.
Bonus tip: if you have a credit card or credit line, they’ll often mail you cheques. Read the fine print, but often they can be used for free. If so, keep ‘em for a rainy fee-free cheque-needing day.
And that leads us back to the bank draft. The $7.50 fee for bank drafts annoys me but I don’t know what to do about it. I’m not going to buy a car with actual cash. This was my first bank draft in 6 years, so it’s still a small expense, though I think I yelled at the teller a little when I found out the fee went up from the $5 I remembered. In any event, it should be rare and if it’s not, what kind of life are you living?
All this to say that if you pay a fee it should be for a physical space or a one-off thing. No monthly fees, no ATM fees, no fees for anything you do regularly. Just say no.
Your daily banking, like your daily self-molestation, should be 100% free.
(Kleenex not included.)
If you found any of this helpful, spread the word. Share it on facebook because you might save someone some money.
This is not an advertisement for RBC, it's just the only system I have experience abusing.