Yearly Banking Fees of $1000 Seniors Could Have Avoided : Net Worth Update 2018 March (+0.51%)

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MONEY OUT THE WINDOW OR MONEY WELL SPENT- THE CHOICE IS YOURS!

 

You might be paying banking fees for every bank account you own whether it’s with the same financial institution or not. I know plenty of people who bank with several Big 5 banks and I’m not sure if they understand the costs of monthly banking fees and how it may be affecting their overall yearly savings power.

Banking in Canada seemed fairly straight-forward to me when I arrived as a permanent resident. I was fortunate to set up my bank account at the time through President’s Choice Financial since my wife banked there but before I moved to Canada. It made life far easier for me especially when I needed to transfer money from my UK bank account to my Canadian bank account.

What I loved about PC Financial what is now known as Simplii Financial Canada was that there were no banking fees. We didn’t have to pay for cheques either. If we had any issues we could make a phone call or visit any Canadian Imperial Bank of Canada (CIBC) for help.

In total since I moved to Canada over 10 years ago now we’ve went into CIBC the grande total of 4 times. The only reason we had to go into the bank was to get a bank draft for our mortgage, roof installation, vehicle purchase and on occasion to use the bank machine if the drive-thru was unavailable.

I’ve had no complaints thus far about PC Financial or now Simplii Financial since changing over. We bank as usual and have no other basic bank fees to worry about unless of course we need a bank draft etc.

 

Compare banks and banking fees

 

Who are the Big 5 Banks in Canada?

  • Royal Bank of Canada $14.95 a month RBC Signature No Limit Banking
  • Canadian Imperial Bank of Canada Flex account capped at $14.95 starts at $4.95 for 12 transactions
  • TD Canada Trust $10.95 a month for TD Everyday Chequing Account plus a minimum monthly balance of $3000 to waive the fee.
  • Scotia Bank Canada $10.95 a month for Basic Banking Plan plus $4000 a month daily closing balance to waive fee.
  • Bank of Montreal $10.95 for Plus Banking account minimum $3000 balance to waive the fee. A  low-cost option for limited banking needs $4.00 but minimum $2000 balance to waive the fee.

They are all the banks that will charge you banking fees but are what I like to say, name brand. You get what you pay for and then some. For us we get what we pay for minus the basic banking fees that the name brand banks charge for unless you hold a minimum balance.

I know opinions will differ on this topic of banking fees and the services provided by Canadian banks however we must question how often we use the services and whether you are willing to pay for them. There is no right or wrong answer when it comes to banking. It’s important you choose what is right for you whether you pay for banking fees or not.

 

Banking fees for everything

 

Just after my father-in-law passed away earlier this year we took over paying the finances for the estate and boy have I learned lots about banks in Canada. We’ve had the opportunity to experience what it’s like to deal one on one with one of the Big 5 Banks in Canada and honestly, it felt more like a production line than it was a service.

While completing the estate portion of the banking for my father-in-law we found out that if your spouse is not named on the bank account the account is frozen. This means that you get no money until we get through the red tape and apparently this could take months depending on where you are in the stack of deaths.

We still haven’t heard BOO from the bank in over 2 months. This could be shocking to anyone needing money after a partner passes away and they have no access. Now, Mrs. CBB has to make an appointment with the bank to sit with them again and go through everything to see where they are at in the process. Anyhow, I’ve covered all of that in my recent post, “How to Avoid a Frozen Bank Account“, as part of my Ultimate Guide to Estate Planning.

Finance is complicated but only as complicated as we make it.

Banking fees in Canada are high, very high in my opinion. Unless you have a budget and write down all of your expenses including banking fees and other fees every month you don’t have a clue how much they are all costing you.

While reviewing banking statements from my father-in-laws bank account including their joint account they were spending on average $50-$75 a month on banking fees. We even had to make changes to my mother-in-laws personal account at another Big 5 Bank that offered her five free debit transactions and she was making around 30-40 a month at $1 each. She does not own a credit card nor does she do online banking.

Now she pays $13.95/month just to lower that fee which then offers her unlimited debit transactions. Personally we’d like to see her move from that bank completely into Simplii which would be suitable for her current banking needs $0.

One thing to remember is that my in-laws are the type of people who trust too much which means that they put their finances into the hands of others whom they think have their best interests as top priority. Perhaps you’re reading this and find you trust too much then I’d suggest finding out where all your banking fees are going.

 

The Best Banking Experiences

 

What do you expect as a customer? You want top-notch service especially if you are paying for a service. These days employees around the globe are either overworked or too busy to care in any role imaginable. There are employees who follow standardized procedures when it comes to customer service needs or a lazy version of it. You might even get lucky and get a proper hello and good-bye.

Not all employees go the extra mile is what I’m getting at. “Oh, sir I see you are senior on disability perhaps we could offer you a better banking option,” Really this is just about everywhere we go these days. Even my employer has employees who go above and beyond and those that just cruise and get paid.

When you are chronically ill like my father-in-law was and having a mother-in-law that is also suffers from a condition not yet diagnosed it makes for a financial whirlwind or simply put, disaster. In many ways we wish we would have stepped in earlier to take a better look at what was going on.

Sometimes it’s easier to turn a blind eye though and that’s what we did until things started to get worse. As long as the bills were being paid that’s all that mattered, but they really needed our help.

Up until recently she was STILL sending cheques to the bank to pay for bills which meant she was paying for;

  • Envelopes
  • Canadian Stamps
  • Cheques from the bank
  • Gas and time to buy the stamps and envelopes

Not all seniors are or ever will be ready for technology advancement in Canada so they choose to bank the traditional way by visiting a bank, using cheques or going right to the utility company to pay for bills at customer service.

The above describes the way my in-laws banked to a T and then some.

Banking fees were not only eating into their monthly expenses but it was money they needed badly. Even though they were given a seniors banking discount it became the norm for them. It was just another lot of banking fees that they had to pay for because the bank said so.

After speaking with the financial advisor at the bank we learned that banking fees would be waived IF they didn’t going under $3000 a month in their chequing account. What a convenient way to keep using our money by bribing customers with a perk like that.

They had no idea nor did they have the money to keep that amount in their chequing account at all times. Not many people do but left stuck paying high banking fees because the banks can charge what they want for the services they provide. What you have is choice and the choice to swap banks if you feel these banking fees are too heavy for your monthly budget.

 

Pay For What You Use

 

Upon more inspection over the past month as we track their finances through online banking we noticed the account was charged banking fees for holding an overdraft of $2000. We have never paid for holding overdraft before so this was new to us. I called the bank and what they explained to me is that they are paying banking fees for that overdraft every month whether they use it or not.

Another perk I guess. Not Really.

If they aren’t using it why are they being charged for it. Fair enough if they use it but come on now? They know they are seniors with clearly a limited disability income and they couldn’t allow them the access to overdraft without banking fees?

When I spoke to the bank on the phone the woman said they could remove the monthly charge to use the overdraft protection and will only get billed if they use it. Well ya, that’s the way it should be.

Why on earth are you charging customers if you can easily go the other route? Seems like a plan to get money from those who are unsuspecting of other options that may only be presented IF you ask. You know the Scanning Code of Practice in Canada, if you don’t ask you likely won’t get it.

Anyhow they no longer have that fee on their bank account which saves them $5.00 a month. We also keep $3000 in the bank account to waive the $11.00 in banking fees only because of available pensions.

One of the banking fees that hit the hardest was paying $2.95 a month to have a passbook. That’s another fee we ditched because it’s just not needed with online technology today. Most likely seniors are still using a passbook and although they may be getting a seniors discount for using the bank account they take that money back with the passbook banking fees.

Take, Give, Take, Give until finally you have nothing more to give but you still have to pay for taking. “The Best Account is The One That Rewards You”- Scotia Bank. If the give is not higher than the take then are you really getting rewarded?

Another thing we stopped was using any cheques to pay bills and now have everything set up online. Although my mother-in-law is not dealing with any finances we are working to make sure she saves money and invests what she can to live the rest of her life comfortable and free of financial worry.

 

Go the extra mile with your money

 

What bothers us the most is that they could have saved so much money in their life-time but simply trusted too much. We’re uncovering credit card statements with interest rates through the roof only making minimum payments and larger chunks when cash became available. Not everyone understands the consequences of holding a balance on a credit card. Read that fine print carefully on your credit card statement. It may just shock the hell out of you.

Finance is a sales operation and brick and mortar services WILL charge you more for the pleasure of stepping foot into the bank.

  • Be Cautious Always
  • Read the fine print
  • Always ask questions
  • Shop around for banks
  • Help seniors in your life if they ask or need it.

The answer we get when we ask my mother-in-law about the banking fees is, “I don’t know they do whatever they do” and although that sounds daft she’s not alone in Canada. Too many people just trust others with their money not knowing what they are paying for. Finance must be taught in schools from a young age to break this financial trust so that people take a proactive approach with their money.

This actually reminds me of a conversation I was having with fellow blogger Mark Seed from My Own Advisor about management fees that we pay to our financial advisor, also known as MER fees. Mark does his own investing but it takes a special confidence to do what he does and I lack that at the moment.

Although it irks us to pay these fees we are not confident with investing so at the moment it becomes a service we pay for. This is far more complex than basic banking needs. Most people in Canada unless they know how to invest for their future retirement needs including mutual funds, disability pension, work pension, Tax Free Savings Account (TFSA) and Registered Retirement Savings Plan (RRSP) and so on are likely paying fees.

Fees for everything in this world. I’ll never get that out of my head.

I once said that it’s all the little expenses that add up that cost Canadians the most money. I still push that and will continue to do so because until we all recognize how tiny expenses impact our budget we will be letting money slip through our fingers on a daily basis.

We’ve transitioned into a society where things that used to be free are no longer free. It’s that snowball effect of fees that becomes a part of everyone’s budget. Once one person charges for something others follow suit. You only have to look at gas prices and how they all hang on to each others hands in the parade of money grabbing while other gas stations offer it cheaper. Banks, government investing firms and other resources do the same thing.

Who’s getting screwed here? The customer who goes to the place where they are paying more for the same type of service they can get free somewhere else. Sometimes it’s unavoidable so we reach into our pockets every month and pay a fee for life. At least it seems that way.

Comparing investment fees with banking fees draws a fine line for us because one is far easier than the other at least for us. It may differ for you. Perhaps you’re saving more money than the next person because you can do this which is great. I envy your skills.

However, I err on the side of caution with my investing skill level because one wrong move and I can wave bye-bye to my investments. Key components of investing success includes research, a clear understanding of the markets along with strong investment strategies.

You could just as easily lose money with a financial advisor but if that’s their expertise and not yours what other options do you have? Sometimes you just have to call in the professionals to do the job and for that service we will pay fees.

I suppose you could stash cash at home which I know many people do but it’s not always the smartest way to invest money or increase your savings power. If you do, by goodness keep it in a fireproof safe and not under your mattress.

Now that we’ve lowered my mother-in-laws banking fees she will be saving about $814.20 a year in banking fees. If we add in the cheque books she had to pay for that amount would around the $900 mark possibly closer to $1000 with multiple bank accounts.

Discussion: What would you do with an extra $1000 a year? I can think of many things.

Have a great day everyone.

Mr.CBB

 

Our Net Worth March 2018

 

March 2018 Net Worth Losses and Gains

Where all the money went:

We are very close to achieving our goal of one million dollars of net worth which essentially happened a while back when the house prices went up but we haven’t increased our principal residence update in years. We chose to leave it where it just in case of a correction.

Ideally we would love to sell high and buy something smaller when the time comes. Although adding your residence into the calculation is great always remember that to financially liquefy your house you need to sell it. You will always need somewhere to live.

The investments this month didn’t see much movement but we are optimistic. Every little bit helps.

Mr.CBB

 

Understanding Net Worth

 

What Does Individual Net Worth Mean?

Net Worth is a snap shot of your financial health sort of like a picture or debt to net assets. In simple terms it’s a total of the value of your assets minus your liabilities.

We credit the growth of our net worth due to patience, perseverance, using a monthly budget and not giving up. Your numbers may go up and down but don’t let the numbers scare you rather understand why and move on.

Canadian Budget Binder Budget Spreadsheet - money problems

If you would like to use our budget I offer a FREE downloadable budget which I created and that you can use at home just like we do. I don’t charge for it because I want you to save money not spend more!

There are tonnes of other free printable lists offered at Canadian Budget Binder to help you achieve some of those financial goals and build your net worth.

 

Determining net worth

 

Figuring out net worth is fairly easy as long as you know your personal numbers or monthly finances which means you need to do your homework. Net Worth is simply adding up all your assets (what you own) then taking away your liabilities (what you owe) which will give you a net worth number.

Understanding your net worth will help you determine if you are on track to meeting or beating your personal financial goals. It doesn’t get any easier than that.

How to Determine Net Worth?

Net Worth = Assets – Liabilities

 

Calculate net worth

 

Do you know how to calculate your own Net Worth? We like to calculate our net worth every month so we know if we are still on track. Some people calculate it yearly or quarterly but it’s up to you and how informed you want to stay when it comes to your financial health.

Net Worth is only an estimate and not everyone uses the same type of figures to tally it up. Some of you may not include vehicles like we do or leave out assets inside the home like we have. You might be that person that believes that your house should be excluded. It depends on what you want to calculate or what you can sell today and make money on for tomorrow.

Why not go ahead and calculate your own using our Free Money saving Tool Net worth Calculator (Canadian Budget Binder 2012)

 

Why you should set financial goals

 

Below is our progression chart towards our goal of a million dollars net worth which should happen according to our net worth calculations by Mid August 2017 (this year). Note: Since we went on holidays and spent money buying a new truck in 2017 this goal has now changed and will likely take us into 2018. I will have a more accurate update shortly.

2016 Progression towards the Million Mark - money problems

Setting goals are the only way we work towards achieving what we want to get done as a couple around the house and in our financial life. I know that without them we would be flying by the seat of our pants which wouldn’t work for us.

 

Our financial numbers

 

March 2018 Preceding 12 Months Net Worth

 

When budgeting anything is possible, we are proof of that although we still have a long way to go in our journey. These are our numbers and our goals, not a means of comparison towards your own goals to others target goals.

We don’t care how much money others make or if they have a high net worth or if it is lower than ours as it’s not a competition. I hope our experiences perhaps will help guide you along your financial path working towards debt freedom.

 

Different financial paths

 

Not everyone has the same path in life. Some of you may have had to start over like I did or go to school a second time and now have OSAP loans to pay back.

Others may have divorced, lost money in the stock market or other investments, suffered job loss, fell ill or injured on the job etc. but you can’t let that stop you from achieving your financial goals.

Some of you may have been given trust funds, paid-for homes, paid educations or perks in life that give you a financial kick-start and that’s OK too. Remember what I said, “It’s not about how much money you make, it’s how you save it”.

No one cares about your money as much as you do so don’t waste your energy trying.

The only reason people accumulate wealth is because they know how to save or invest it wisely even if they did inherit money or win the lottery. The smallest improvements should mean big strides in working towards reaching your goals.

Sometimes we have to fail in order to learn and we’ve all been there. Money can be an evil force for some people especially those who have a negative attitude towards their own financial situation.

I urge you to be optimistic and little by little with determination you too should see improvements, if you want that to happen.

 

Net worth updates 2018

 

Click the links below to read 2017 net worth updates to see how we made out following our own budgeting and investing rules.

That’s all for this months net worth update but please check in at the beginning of May 2018 to see how we made out in April 2018 with our financial portfolio.

~Mr.CBB

It’s Not About How Much Money You Make It’s How You Save It

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Mr. CBB
Mr. CBB who was born and raised in the United Kingdom, moved to Canada where he is now a permanent resident. He is also a father to a very active 3 year old boy which keeps him young at heart. He bought his first house at the age of 21 in the UK after graduating University and his second at age 24. Mrs. CBB bought her first house at the age of 30. Both Mr.CBB and his wife are 40-ish year-old finance lovers who accomplished debt freedom before the age of 40. Canadian Budget Binder is a fun, family-friendly place where he shares their financial journey with his readers and hopes to learn about theirs. No silver-spoon just hard work and perseverance. Welcome to Canadian Budget Binder! You've got this!
Mr. CBB
Mr. CBB

Comments

  1. I’m lucky in that all my accounts with RBC were originally Royal Trust accounts. RBC bought Royal Trust about 30 years ago, but the Royal Trust accounts are grandfathered and there are no fees at all. I definitely will keep these accounts active and not close them!

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