The best of Sam C: The Cost of Convenience

During the upheaval of selling and emptying my house, and moving to Thunder Bay and starting Teacher's College, I thought perhaps I'd fall back on the old stand-by and re-run a few columns. Setting any modesty aside, I'll call this "The Best of Sam C"


Originally published 2 January 2007
(This was the first as a resident editorialist.)

Recently Jack Layton condemned the country’s major banks, saying that "…hard working Canadians should not be charged by banks when they deposit, withdraw or transfer their own money using an ATM." He went on to state that his party intends to table amendments to the Bank Act to eliminate fees for using ATMs.

Hopefully, he’ll turn the NDP’s attention to food delivery services next. Imagine having to pay to have a pizza and a bucket of wings delivered to your home! Outrageous!

Okay, I’ll admit that having the banks report multi-billion dollar profits each year does suggest that the banks aren’t struggling to survive. The fact is, however, that banks only derive about 5% of their revenue from ATM fees.

This leads to a double-edged argument: that eliminating the fees would not result in any significant loss to the banks on the one hand, or that the fees are not all that onerous a burden to customers on the other.

So what is wrong with the banks charging fees? They are, after all, a business. Banks don’t exist simply to be a convenient repository of our hard-earned cash, and a more secure replacement for the cookie jar.

According to the Canadian Bankers Association (CBA), we Canadians made over 700 million ATM cash withdrawals in 2005. Some of these were transactions at a customer's own bank's ABMs, which aren't subject to any additional fees. The CBA maintains that the fees that are charged are convenience fees, to pay for the privilege of using another bank’s ATM.

Really, I don’t expect to be able to walk into a CIBC or RBC branch and ask to withdraw money from my TD account. That ATMs allow this convenient service is great, but I have no problem paying for that convenience.

Of course, one of the biggest hits comes when one uses a “private” ATM, which charges a fee on top of any which one’s bank may also charge. Again, convenience has its price.

So, is the answer to eliminate fees altogether? Or is the answer to have consumers be more aware of the services they are paying for, and to shop for a bank and a service package which best meets their needs?

My own bank allows me 25 free transactions per month, for a monthly fee of $8.95. For an additional $4 I could have unlimited transactions, provided I maintain a minimum monthly balance. I am not in a position at present to maintain that balance, nor do I exceed the allowable transactions, so I am happy to stick with my current plan.

I also avoid withdrawing money from ATMs whenever possible. I get paid by cheque from both my employers, so when I bring them in to deposit them into my account, I take cash off the top. No fee.

When I buy groceries, or shop at certain large retailers, I have the option of getting “cash back.” Again, no fee.

When I do find myself in need of cash, and must do an ATM withdrawal I will go to my own bank’s ATM as a first choice. If that is not possible, then I will use another bank’s machine to take out a reasonable amount of cash at one time. The fee charged is per transaction, so paying $1.50 to withdraw $20 is ludicrous. Better to take out one or two hundred dollars, and make it worth paying the fee.

Finally, I avoid the private ATMs altogether.

If you find yourself paying too much in fees, take a look at your banking habits, and at the service package you have with your bank. Talk to your banker — they are more than willing to help, or should be.

You should be as careful in choosing bank services as you would be in making any other purchase…

…But, That’s Just My Opinion.