Different Types of Bank Fees in Canada

Imagine you just switched to a new bank or credit union in Canada. You log into your online banking or check your latest bank statement, only to find a collection of unfamiliar fees.  Maybe it’s a charge for using an out-of-network ATM. Or an overdraft fee because of a recurring transaction you forgot about. In reality, Canadian bank costs are more common than many people realize. Depending on the institutions, with banks vs credit unions for example, the fee structure can look very different. But understanding how these fees work is important. Over time, even small, recurring charges can add up. In this guide, we’ll break down the different types of fees Canadians may encounter and explain when they apply.

Bank Fees Defined

In Canada, bank fees are the charges that financial institutions apply for maintaining your account and providing services.

Bank costs generally fall into one of two categories:

• Recurring fees. This type of charge happens every month, quarter, or year.
• Transaction-based fees. These costs apply to your account when something specific happens. For example, you could exceed a transaction limit, use a certain ATM, or send a wire transfer.

The Financial Consumer Agency of Canada oversees the Financial Consumer Protection Framework, which states that “banks must disclose more information to you about your day-to-day banking” with a separate agreement that includes “a list of all fees that apply.” It is important to review this documentation as fee structures can vary significantly between traditional banks, credit unions, and digital banks.

Below, we’ll break down the most common types of bank fees Canadians may encounter.

Monthly Account Fees (Recurring Fees)

Monthly account fees are common. These flat fees apply every month simply for maintaining a chequing or savings account at a Canadian bank. According to the Royal Bank of Canada, banks charge these because they “help cover the cost of things like fraud protection, customer service and keeping your account secure.”

Monthly maintenance fees can exceed $30, though the Government of Canada specifies that “all Canadians can get a bank account with a monthly fee of $4 or less.” Some banks do waive the charge altogether if you maintain a minimum daily balance. Depending on the type of account you select, there are other ways to save on this monthly cost. You can check out FinlyWealth’s full post for more details on how to save on chequing account fees in Canada.

Transaction-Based Fees

As charges that apply when you use your account, transaction fees differ from maintenance costs. The latter occurs regularly, while the former depends on your actual account activity. That means the more transactions you make, the more you end up paying in transaction fees.

Some of the transaction charges you may see in your account include the following.

Everyday Transaction Costs

Canadians can trigger charges through routine banking activity. These costs will depend on your account type and the bank itself though. Watch for fees that apply to:

• Debit card purchases
• Bill payments
• Interac e-Transfers
• Customer service assisted transactions

If you use your account frequently, these costs can accumulate fast.

Pay-Per-Use vs. Included Transactions

Banks typically structure accounts in one of two ways.

Included transactions model

With an included transaction set up, the account fee will cover a predetermined number of transactions each month. Some account types will also bundle unlimited transactions into a plan with a higher monthly fee. Others may have a less-costly fee but limit the number of free monthly transactions in return. Once you exceed that limit, the bank will charge a separate fee for each use.

Pay-per-use model

You will have a lower monthly account fee under a pay-per-use model, though each transaction will carry a separate, distinct charge.

Neither of these account types is inherently better. The right choice will depend on how you use your bank account. If you are a low-activity account holder, then you may save more through pay-per-use pricing. Someone making frequent debit purchases and bill payments could find an unlimited plan more cost-effective though. In the end, it is best to match your account structure to your banking habits.

ATM Withdrawal Fees

You may see ATM withdrawal fees on your account if you take out cash from a machine that does not belong to your institution’s network. In that case, you could find a fee from both your bank and the ATM operator. For a full breakdown of the fees that may apply and how to avoid ATM fees in Canada, see FinlyWealth’s guide.

NSF (Non-Sufficient Funds) Fees

When you attempt to make a transaction without enough money in your account to cover it, you may see a non-sufficient funds (NSF) fee. This is because the bank rejects the payment, then charges a fee for it. In Canada, banks tend to implement NSF fees that cost “around $50.”

Unfortunately, the fund shortage can snowball past the NSF cost, with missed payments triggering fees from the receiving end as well. As a best practice, we recommend setting up low-balance alerts and maintaining a small buffer in your account to reduce the risk of NSF fees.

Overdraft and Overdraft Protection Fees

An overdraft fee happens when your bank allows the transaction to go through without there being enough money to cover the charge. This overdraft protection is optional and comes with monthly fees or per-use fees. While it helps to avoid missed payments, frequent use can become expensive. To reduce the risk of incurring these charges, check out FinlyWealth’s post about how to avoid overdraft fees.

Optional Service Charges

Some bank fees apply only when you use a specific service. This can happen when you request:

• Paper account statements
• Certified cheques
• Bank drafts
• International wire transfers
• Stop payments
• Cheque books
• Account transfers

While you likely won’t encounter these additional costs every month, they can be significant when they do arise. This is why it’s important to review your institution’s fee schedule before requesting extra banking services.

Conclusion

Fees are part of everyday banking in Canada. Some are predictable and recurring. Others come from one-off transactions or specific situations. By understanding the charges that apply to your account, you can better decide if it’s time to switch bank accounts to a lower-fee option. Or, perhaps you are getting appropriate value in exchange for these costs. Whatever your decision, we encourage you to review the fee schedule in full before opening a savings account or chequing account. Just a few minutes of research could save you hundreds of dollars over the long run.