Are Banks Really Gouging You?

To most the answer to this question is an obvious answer. However to some--those accustomed to just paying whatever comes at them because that's the way it is--the answer may be a little murky. One thing I do know is that no one likes to pay bank fees. So just how badly is our collective wallet being raped?

According to an article by Canadian Press journalist David Friend, the six largest banks in Canada have posted a combined annual profit of more than $19 billion. Royal Bank of Canada recently posted a 40% jump in yearly profits, to a record $4.7 billion. TD Canada Trust's 2006 profits more than doubled their 2005 numbers to $4.6 billion. Scotiabank also posted a record $3.5 billion profits. The rest of the banks, as you can imagine, also posted record profits in fiscal 2006.

With this insane amount of money being floated around by six companies, you would think some of this tidy profits would trickle back to you in the form of some savings. After all, without your money these banks would have nothing to loan out, would they? Well, thinking that these people that hold your money would actually care about you would be false.

When you use an ATM machine from a bank other than your own, it will most likely cost you $3.00 or more. $1.50 from your bank, and another $1.50 from the bank who operates the ATM. Most of us chalk this up to the cost of convenience and walk away from the machine without another shot. Consumers in the UK had other thoughts when banks in their country were about to implement the same fee-gouging scheme.

The following is an excerpt from an article at News1130: Customers angry about ATM fees charged by banks:

In Britain, a full scale consumer revolt, media campaign, and threat of parliamentary review forced banks there to dump ATM fees a few years ago. Canadian banks say if you don't like those fees, then use your own bank's ATMs more.

How's that for customer service on the side of the Canadian banks? I was listening to Charles Adler on the radio the other day and he had a guest—whose name escapes me at the moment—on talking about the exact same subject. He says that Canadian banks chalk the consumer's payment of the fee up to the cost of doing business, while the British banks use the exact same response in reference to themselves having to eat the fee. Interesting, isn't it?

In the United States, TD does not charge it's customers to take money out of a competing banks ATM machine. Their reasoning? It's more competitive in the US market. Unebelievable.

If the ATM fee was the only bank-issued fee that I was having a problem with, I probably wouldn't be writing this article. But what about the instant fee you are charged monthly just for doing business with your bank, the so called "service charges?" Every month your bank withdraws somewhere between $6 and $10—or more—for baseline services that usually include a few "automated transactions" such as debit withdrawals and Interac purchases. If you so happen to go over your allotted amount of transactions though, look to be hit with charges in the area of $0.40 - $0.60 per transaction. This is where they really hit you, and you can see your service charges get near $40 or $50 a month.

Interest rates on savings are incredibly low, but loan and credit card interests are sky high. I could go on forever about the outrageousness of bank fees, but we all know the story.

There was once a time that the banks paid you for the privilege of holding onto your money in the form of interest. Not anymore. It seems as though the banks have become accustomed to a non-competitive way of doing business and are reaming the benefits of taking your wallet for a wild ride.

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