Everybody hates bank fees, but there are two ways that you can feel better about them.
- Stop paying them.
- Profit from them.
I feel that a lot of the hate directed at the big banks is misdirected. Especially here in Canada where our banks weren’t involved in the same shenanigans that some of the big banks South of the border participated in. Besides, do you really feel like paying cash next time you want to buy a car or a house? Banks provide a necessary service in the loans that they provide.
Stop paying them
There are some great online banks that offer free checking and may even pay you a little interest! Since most banking is done online today, it has allowed these banks to do away with the costly branch locations and pass the savings on to you in the form of free banking.
Click on the links below to check out these three options.
Presidents Choice Financial – No Fee Bank Account
Coast Capital Savings Credit Union – Free Chequing, Free Debit and More Account
ING DIRECT – THRIVE Chequing
Profit from them
Bank stocks have proven to be one of the best long-term investments for many Canadians. They have fared well in tough economic times and have a long history of paying out increasing dividends. When a bank profits from all those nasty fees they charge customers, they pass those profits on to shareholders in the form of quarterly dividend cheques.
I think buying shares of one of the big Canadian banks would be an excellent choice for many first time investors. By following the bank you invested in and reading articles and quarterly reports, you would learn a lot about finances and the economy in general.
Even if you are not ready to buy individual stocks and would prefer to buy mutual funds, you will find that the top holdings of most balanced mutual funds are big banks anyways.
A quick glance at the Scotia Capital Balanced Fund shows that 22.8% of it’s assets are in the financial sector. Also humorous to note that this mutual fund offered by Bank of Nova Scotia hold more shares of Toronto-Dominion Bank (3.3%) than it does its own shares (1.8%).
This fund has a 3 year rate of return of 3.1%. Shares of Bank of Nova Scotia had a 3 year rate of return of 10.97%. The fund charges a 2% management fee. Shares of the bank pay you a 4.22% annual dividend.
This is my not so subtle way of telling you that I am not wild about mutual funds and the fees that they charge. I do own shares of Bank of Nova Scotia though.