More DOLLAR$ AND $EN$E Blogs
- Til DEBT Do Us Part
- Bank On It
- Retirement Planning Starts Sooner Than You Think… like NOW!
- Pay Yourself First
- Financial Storms
- A 'TAXING' TOPIC
- Free or Fee?
- Money Tips: Review Part Two
- Money Tips: Review Part One
- Is Money Important?
- Give Yourself Credit
- INVESTING - Make Money While You Sleep
- Hey Big Spender
- I'm not afraid of the Big Bad Money
- Need vs Want
- Shhh... Money Makes the World Go Around
- Quiz - What's your money style?
- Summer's here...NOW SHOW ME THE MONEY!
- Can Money Make You Happy?
- $AVE ME!
April 2009 Blogs
Free or Fee?
DOLLAR$ and $EN$E, April 2009, by Brian Bogaert
FREE or FEE?
How much do you PAY for your money?
The other day I heard two teenage girls talking while I was waiting to make a purchase. They were discussing shoes and the one girl was telling her friend she should REALLY buy the ones she just tried on. The first girl said, “I don’t have enough money…” and her friend replied, “What do you mean? Just get more at the bank machine!”
I decided I wanted to write and tell LOTS of girls what I was thinking about this.
WHERE DOES MONEY COME FROM?
I wondered where this girl thought the money in her bank account came from. She looked pretty young to have a job so I assumed someone in her family just put the money in there for her. When she needed more, she just put her card in the ATM and presto, the money MAGICALLY appeared. Judging by the look on her friend’s face, it didn’t work that way for her bank account. She probably had an allowance or maybe worked for her money. As much as the girl who couldn’t afford the shoes probably feels like her friend is ‘lucky’ for having money available at the push of a button, she may see things differently in a few years. The girl who has to do nothing more than ask for more money to get it is not learning the valuable lessons about saving, managing and spending her money wisely. One day, the money won’t just BE there…and then what will she do?
But wait, there’s more to think about!
THE MAGIC MONEY MACHINE
Put up your hand if you take money out of ATM machines. Okay, you can put it down now, we can’t really see you... ;) Have you ever looked at the fees you are paying for the ‘convenience’ of getting your money without having to go to the bank? That’s right, it isn’t exactly FREE to do that. What am I talking about? Read on.
Go back to the Jun/Jul 08 issue and read my column about credit cards. I said that companies like banks make money, LOTS of money, by giving you loans and charging you interest.
HOW BANKS MAKE MONEY
Well, there’s another way banks make money and it is actually the #1 way they make it – they charge you FEES to use their services. And just to get you thinking, one of the Canadian banks, RBC, made 1 BILLION $$ in the FIRST THREE MONTHS OF THIS YEAR. Like I said, they make LOTS of money…
If you use a bank, chances are you pay fees (for those of you who manage to not pay any, good for you!). It can be more than $20/month to have access to YOUR MONEY. There is usually a flat rate fee you pay each month for a certain number of transactions, whether you use them all or not. If you go over that number, you pay more. If you want to use other services not covered, you pay for that too. It gets really expensive if you aren’t careful. And for all of you out there that use ‘convenient’ ATM's, you pay for that convenience, sometimes up to $3 per transaction!!!
Example
Imagine if you reached into your wallet for a $20 bill to pay $15 for a movie ticket and popcorn and it swallowed up a ‘convenience’ fee of $3! …so instead of having $5 left you now only have $2 from your $20. Maybe that sounds crazy, but that’s what happens all the time with a bank…
So what can you do? I’m not saying don’t use banks... I use them and they can be very handy. Just be sure to remember:
MONEY TIP #9
Be smart with your money. Know where it comes from and where it is going.
THINGS YOU CAN DO NOW
Check your bank statements (they come in the mail or you can look them up online). Find out what you pay in fees. You may be able to downgrade to a lower fee account, or switch to a different bank that has no fees (just search ‘No Fee Banking’). Be clever about which ATM machine you use to take out your money. If you are a TD customer, go to a TD bank machine. If you are BMO, use theirs, etc. You pay lower fees to use your own bank’s ATM. Unless it is an emergency, NEVER use the ATM’s that don’t belong to banks as they charge the highest fees! Remember that you ALWAYS pay for ‘convenient’. How much is up to you!
~ Brian