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Fees come up frequently as the top source of annoyance in dealing with these institutions. Yet the annual survey of bank satisfaction by J.D. Power revealed a higher level of comfort in 2016 than 2015.
Happily the survey’s findings don’t show that we’ve lost our minds. Rather it’s a case of less pain, being interpreted as some pleasure. We don’t like bank fees, says Jim Miller, senior director of banking for J.D. Power, we just saw fewer changes this year.
The number of fees is increasing as banks feel pressure to maintain profits and boost dividends. Full-service lenders are under pressure from more nimble financial technology firms. Discount banks are after core savings. Mobile banking technology is expensive and banks have to support thousands of branches and vast ATM networks.
On top of that, as interest rates have fallen the spread between what the banks charge for a loan and what they pay for savings has narrowed. So they need other sources of income. Fees are fertile ground.
The changes are usually pitched as something customers want, but ultimately they are just a way to raise money. The banks know the irritation will quickly pass and here our inertia works for them, says Miller.
One reason we give in is that while we understand the purpose of big fees for mortgages, or to set up lines of credit for example, small fee changes come as a jumbled shopping list. They are confusing, hard to compare with current charges and the numbers seem quite small. Advantage: Your bank.
The Canadian Bankers Association says fees make up 5 per cent of industry revenues, which seems small as a percentage. But in their latest three month reporting period, the Big Five had revenues of $ 33 billion. That means they generated $ 1.65 billion through all fees in that three month period.
You can’t avoid paying fees but you can minimize them.
As an example, my irritation level reached the point of action this spring when my bank started charging $ 1.50 per e-transfer for no reason I could discern. Not a lot of money, but I asked them to waive these charges and they have.
Share your wealth: Discount banks are paying up to 2.25 per cent on a basic savings accounts. Compare that to about 0.50 at the chartered banks. Websites including Fiscal Agents, RateSupermarket and RateHub can help you compare.
Avoid inertia: The banks count on the fact that reaction to the changes is short lived and most people do nothing, Miller says. Don’t give in.
Small potatoes, you say. For him that’s a couple of weeks of groceries or two nights on the town. Why give that to your bank?
More columns by Adam Mayers
Satisfaction with the Big Banks
Based on a 1,000-point scale
1. RBC Royal Bank765
2. TD Canada Trust761
Big 5 average 760
5. Scotiabank 753
Source: J.D. Power, July, 2016