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.
I’m puzzled by why don’t more people switch to PC Financial or ING Direct. I’ve opened a checking account with ING Direct as soon as they began offering it and closed one I had with one of the Big Five banks. The decision was made even easier by the Big bank increasing the minimum balance requirement for waiving account fees at about the same time and after I’ve banked with them for several years. Besides, having to maintain a minimum balance costs in forgone interest.
I’ve never looked back. The switch was quite painless really and there hasn’t been a situation where I missed a brick and mortar branch. I’ve had savings accounts with ING for years now.
I think it is a fear of not seeing the “mortar and brick” face of a bank branch? I have a PC Financial account and my oldest daughter does as well, not sure of the fear of “cheap” banks comes from, but hopefully folks can get over it (soon).
I don’t mind paying a fee for service as long as the fee is reasonable and the service is worth it. That being said I absolutely HATE paying bank fees because they aren’t worth it . I was a bank employee for 15 years and now that I have moved on in my career I am subject to paying monthly fees. I have to keep minimum balances in the my accounts and have multiple products to avoid bank fees. I hate it but I do it because I hate paying bank fees more. I will walk 10 blocks in the rain to find my bank’s ABM before withdrawing money from another bank’s ABM and being charged a fee. I really hate being out in the rain but again I hate paying bank fees more.