A silent but deadly budget killer is starting to be reined in.
Driving the news: Starting this month, all of Canada’s Big Six banks will begin offering low-cost chequing accounts that will cost a max of $4 per month, a move to appease Ottawa’s push for lower banking fees.
As part of the initiative, students, seniors, and people with disabilities will all have access to free chequing accounts.
Banks will also be dropping their non-sufficient-funds penalty to $10 in March, a policy that’s expected to collectively save Canadians $600 million a year.
Why it matters: The average Canadian forks over an estimated $250 in banking fees every year just to access their money. Compared to other G7 countries, that’s a pretty raw deal.
One study found that a Canadian bank, on average, will make twice as much off of consumer fees as a U.K. bank with the same amount of deposits.
Zoom out: Digital-first banks like Wealthsimple and Questrade have pitched their services as low-cost alternatives to the fees charged by the Big Six, a message people are receptive to. One survey found that over half of Canadians have switched financial institutions because of increasingly high fees.
Bottom line: Account fees charged by Canadian banks hit $6 billion last quarter — up 267% from 30 years ago — and now make up a significant portion of lenders’ revenue. Even with some fees coming down, don’t expect to stop finding random charges in your monthly statement.—LA