Table of Contents
- What Are Bank Withdrawal Fees?
- Types of Bank Withdrawal Fees
- Transaction Fees
- Convenience Fees
- Access Fees
- International Fees
- How to Avoid Paying Bank Withdrawal Fees?
- Bottom Line
- Frequently Asked Questions (FAQs)
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Coughing up a few dollars here and there just to access your cash is part of the hidden cost of daily banking for most people.
However, bank withdrawal fees can add up quickly and put a serious strain on personal finances. Thankfully, there are ways to cut costs and save money in the long run. This guide covers common bank withdrawal fees and tips on how to avoid them.
What Are Bank Withdrawal Fees?
Bank withdrawal fees are charges for moving funds out of an account held with a financial institution. These fees can show up on bank statements for routine activities like making debit transactions, paying bills, transferring money and withdrawing cash.
Banks typically charge a fixed fee per transaction or a percentage of the total amount being withdrawn (sometimes both). These fees are meant to help banks recoup operating costs for processing transactions and maintaining ATM networks. That said, banks are a business and fees are also a means to generate revenue.
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Types of Bank Withdrawal Fees
There are three main types of bank withdrawal fees:
- Transaction fees
- Access fees
- Convenience fees
It should also be noted that International fees technically fall under transactions, but they have additional charges that usually appear separately on bank statements.
Transaction Fees
Transaction fees are charged for processing any type of payment or withdrawal. This could be using a debit card for a purchase, sending money via Interac e-Transfer transferring money between banks or making an automatic bill payment.
Most cash withdrawals from an ATM will also charge a transaction fee. The amount you have to pay depends on the bank, account type and transaction. Some banks will offer a certain number of “free” transactions every month and they will only charge fees when you exceed this limit.
Convenience Fees
Convenience fees (sometimes called service fees) are charged by merchants when you buy goods or services using a debit or credit card. These charges help cover the costs merchants incur for processing card transactions. Some merchants also charge fees for using a privately owned ATM, like the ones in convenience stores. Convenience fees can either be a flat rate or a percentage of the total payment, which can add a hefty charge on large or recurring purchases.
Access Fees
Access fees are charged for cash withdrawals from an ATM that isn’t in your bank’s network. This could be an ATM owned by another bank or an independent merchant. These withdrawals charge a fee to access your bank and for using the ATM. In other words, you could be paying two separate fees (access and transaction) for one withdrawal. Access fees vary between banks and ATM operators, but they generally range between $1 and $5. Banks will often list these charges under user fees on account statements.
International Fees
International fees (or foreign transaction fees) are charged when a transaction is in another currency other than Canadian dollars. This includes any purchase made in person while travelling or when you make a purchase from an online merchant located outside of Canada. A foreign transaction fee is generally around 1% to 3% of the transaction amount (usually 2.5%). This is on top of a conversion fee banks charge to convert money from one currency to another. Using an ATM abroad to withdraw cash will charge these fees in addition to those same network access fees mentioned earlier. Note: If you want to avoid incurring foreign transaction fees on your credit card purchases, there are a number of credit cards that offer no foreign transaction fees as a feature.
How to Avoid Paying Bank Withdrawal Fees?
There are several steps you can take to reduce or avoid paying bank fees and save money on your everyday banking tasks.
Review What Fees You’re Currently Paying
Reviewing bank terms and fees may sound obvious, but it’s often skipped in the pursuit of getting an account up and running. By implementing this step and the tips below, you can avoid paying unnecessary bank withdrawal fees and keep more money in your pockets.
Get More Transactions
Choose a bank account with unlimited transactions. There might be a monthly fee, but it should be lower than what you’re paying when you add up each individual transaction fee. Some banks also offer no-fee chequing accounts that have no limit on monthly transactions.
Find Network ATMs
Only use ATMs in your home bank’s network and opt for a bank that has no-fee withdrawals. Banks with multiple branches and ATMs in other countries can also help you cut down on fees when traveling abroad. Mobile banking apps with ATM locators and your bank’s website can help you find the nearest in-network ATM.
Use Travel Cards
Find a debit card or credit card that doesn’t charge foreign transaction fees. Travel credit cards are an alternative option to skip bank withdrawal fees altogether. Some cards offer extra perks like travel insurance and priority flight privileges.
Get Cash Back
There are plenty of grocery stores, pharmacies and other retailers that offer a cash back option on debit card payments. Getting cash back on a purchase generally doesn’t incur any fees. Even if there is a convenience charge, it’s usually lower than ATM fees.
Bottom Line
Bank withdrawal fees don’t have to be a drain on everyday expenses. Clear these financial hurdles by choosing a bank with favourable or no-fee options and sticking to network ATMs. Keep in mind, banks are required to disclose fees in writing, so always read the fine print to make sure there aren’t any surprises when opening or considering a new bank account.
Frequently Asked Questions (FAQs)
Do all banks charge withdrawal fees?
Not all banks charge withdrawal fees. Many online banks and credit unions offer free withdrawals for members. Even banks that charge withdrawal fees might have chequing account options with no fees or no fees on a certain number of transactions. Fees may still apply to withdrawals from an ATM outside your bank network.
Why am I getting charged withdrawal fees?
Withdrawal fees are the charges that banks impose on customers for taking money out of their accounts. Many banks charge these fees for withdrawing from a chequing or savings account and using an ATM. The fees vary depending on the type of withdrawal and the bank.
Do chequing accounts have withdrawal fees?
Most chequing accounts have withdrawal fees. These fees vary between each bank, depending on the type of transaction and amount withdrawn. Most banks also charge a fee for withdrawing money from an ATM that is not affiliated with its network.
How much does it cost to withdraw money in Canada?
Most banks charge fees to withdraw money from an ATM in Canada. The amount varies depending on the financial institution and ATM network. Fees for using an ATM owned by your bank can range between $0 and $2. Using ATMs outside your bank network can cost $1 to $9 per transaction.
