Canadians are bleeding cash through their chequing accounts, according to a new report by financial comparisons site Ratehub.ca.
The company used a survey of more than 1,100 Canadians to estimate how much consumers are paying in fees for their day-to-day banking – and the numbers are staggering.
The average millennial has so far shelled out $760 in banking fees over her or his lifetime. For boomers, that number grows to $2,200. But it’s gen-Xers who top the ranking, with a whopping $2,800 paid in banking fees on average so far.
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Canadians “are not paying attention, and it’s costing them,” said Alex Conde, director of content marketing at Ratehub.
Millennial and boomer survey respondents reported paying around $8 per month in fees, which works out to just under $100 per year. Gen-Xers said they were paying $13 on average, or nearly $160 a year. Ratehub assumed each generation has held a chequing account for a third of their lives in order to arrive at lifespan cost estimates, Conde said.
Millennials are likely more aware of online banking options, while boomers are probably enjoying bank-fee waivers due to higher account balances or having multiple financial products with the same institutions, Conde said.
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Still, the survey found that a sizable chunk of Canadians, including millennials, tend to stick with the same primary bank account for a long period of time. Those aged 24 to 38, have held the same chequing account for an average of eight years. For gen-Xers (ages 39-53) the average is 18 years, while boomers (ages 54-74) have held on to the same bank account for 23 years on average.
The issue is that Canadians tend to choose their primary bank based on what their parents, grandparents or close friends do, the report suggests.
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Consumers tend to do a bit more research when it comes to savings accounts for longer-term investments, Conde said. What happens in chequing accounts, though, remains a costly blind spot.
Paying $100 a year in fees may not sound like much, but that’s more than many high-interest savings accounts would earn in interest every year on a $10,000 balance, according to data from savings-account comparison search on Ratehub. And while Canadians pay their bank fees with after-tax dollars, they have to pay taxes on interest earned outside so-called registered accounts like Tax-Free Savings Accounts (TFSAs) or Registered Retirement Savings Plans (RRSPs).
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Conde’s advice is to shop around for a better bank account every year.
These days, Canadians can not only get unlimited transactions for zero monthly fees but even earn a little interest on whatever balance sits in their chequing accounts.
That’s the deal on offer at Alterna Bank, Tangerine and Simplii, the online banks owned by Alterna Savings credit union, Scotiabank and CIBC, respectively.
But Canadians might not even need to change their bank to lower their monthly fees, Conde said. Often, people get stuck with legacy accounts that charge more than other types of chequing accounts within the same financial institution.
And “switching internally is seamless,” Conde said. It’s just a matter of asking.
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