I looked at the various tax forms that appeared this Tax Season. I received my “Interest Earned T4A” documents for a savings account. Tax will be paid on that “income”; however, I am not just not as far ahead. It looked like I am way behind, thanks to bank fees.
Net Growth = Interest Paid – Bank Fee – Tax on Interest
In this instance, it is Net Shrinkage (like my money was in a cold swimming pool (bad Seinfeld reference)). I lose income thanks to Income Tax on it. Thanks to Bank Fees, I am losing money by putting it in my bank due to low-interest rates (1.9%) and high bank fees ($14/month).
No, I am not espousing putting your money in your mattress (although sometimes I wonder), maybe find a lower fee (or no fee) model if you are not going to carry minimum balances in your accounts (where you usually get no fees charged if you leave $5000 as a minimum balance in your bank account). There are plenty of online banks and PC Financial that give that to you without having to threaten to leave.
Maybe taxes could be written off against Bank Fees? Don’t make it full credit if you don’t have any interest income to write it off against, but it does seem to be an ever-shrinking savings world.