Are you currently paying bank fees, specifically monthly maintenance fees? If you are it’s akin to paying the supermarket a fee for the chance to buy food from them. When we pay these bank fees we are in effect paying the bank to make them richer. Let me explain. Banks make their money by lending out depositors’ money (your money) at a higher rate than they pay to depositors (you). Notice that your mortgage or line of credit carries a higher interest rate than your savings/checking account. Essentially depositors (you) are giving the banks their product (your money) which they take and use to make themselves a healthy profit. Without your deposit they would have no means of making money.  At the core when we pay bank fees we are really paying them (the banks) to get richer.


Now, banks (both traditional brick and mortar banks and online banks) provide a valuable service in keeping money flowing through the economy. There are some valid fees that are logical and expected. For instance, fees for bounced checks due to insufficient funds, foreign transfer fees, lost debit card fee, paper statement fee (vs. a free online version). These are justifiable, but the monthly maintenance fees that are required by some banks are incomprehensible.  Traditional brick and mortar banks are guilty of this fee. Most online banks don’t have these fees.  They have free access to ATMs, unlimited check requests and they also pay interest on the balance on your checking account not just your savings account. It makes sense to use a bank that does not charge us a fee for simply opening a bank account.

Fees, especially those that go unnoticed or the ones we never question, add up over time. These bank fees are an example where our herd mentality still haunts us. Our primal instincts require us to confirm with the herd for survival, we might be living in a modern world but we are still running on primal software. It is only with conscious effort can we override this primal instinct.  It is important that you understand  how the financial system really works. Then you would be better able to make an informed choice and not just follow along with the masses. Not because everyone is doing it makes it right.

For Canadians this is a good read:

We don’t need to be paying some of these banks fees. They are unfair and unwarranted. This holds true for bank fees and investment fees.  The Oracle of Omaha himself has said it “When trillions of dollars are managed by Wall Street charging high fees, it will usually be the managers who reap outsized profits, not the clients.” Warren Buffet February 2017.

Fortune's Most Powerful Women Summit - Day 2

It is common for many of us to think that we are powerless against the big banks and corporations. We seem to keep forgetting that we are the very people who keep them in business. They only exist because of us. Without our money these banks and corporations will not be able to function. When more and more of us start to realize this and act accordingly, only then we will see where the true power lies.

This week I encourage you to investigate what fees you’re paying. If you haven’t done this before, be prepared to learn something new and save some money in the process.


Dr. M


Published by Dr. M Finance Blog

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