The Canadian Bankers Association (CBA) released a new report titled, “Focus: Banks and Consumers,” on September 7, 2021 that advised a greater proportion of Canadians are paying less (or nothing) in bank account service fees than ever before. The report stated that 31% of Canadians say they pay no service fees at all and another 45% pay $15 or less per month. This is a big change from the past and a welcomed response due to the industry adopting a greater emphasis on technology to lower their input costs.

There exists many different options to achieve a fee-less bank account these days, whether you do a quick search online or have a discussion with your bank about the type of accounts that you have. If you put in a little research then it will usually end up saving you money most of the time.

Let’s assume that you are paying the stated total of $15 per month for your accounts. This would work out to an annual expense of $180, which may still seem trivial to some, but this starts to add up over time. If all you did was set the money aside in a bank account then after 5 years you would have put away $900, after 10 years you would have a balance of $1,800, and after 25 years you would have accumulated $4,500.

The real magic starts to happen when you invest the savings into an investment earning a modest return of between 5% to 10% annually. If you can achieve 5% per year, on average, then after 5 years your meager $15 per month savings would have a value of $1,021, after 10 years you would have a value of $2,325, and after 25 years you would have a value of $8,822. If you were to achieve 10% per year, on average, then after 5 years you would have a value of $1,158, after 10 years you would have a value of $3,022, and after 25 years you would have a value of $18,647.

This is the beautiful thing about compounding, as you continue to push the length of time greater into the future then you actually see these meager savings achieve a substantial value.

That’s one way for your bank to pay for your next vacation or a future home renovation. So take a look at your bank statements and ensure that you aren’t paying any account service fees.

Resources: https://cba.ca/Assets/CBA/Documents/Files/Article%20Category/PDF/bkg_consumers_en.pdf

Want to chat about it? Email me at info@financerx.ca