Why is banking so expensive in Canada?
We have two major oligopolies in Canada — the communication companies (Bell, Rogers, Shaw, and Telus) and the major banks (BMO, RBC, CIBC, and TD).
I’m routinely annoyed by both, but today I’m going to complain about the banks. In the US, banks compete with one another, and routinely offer no-fee, no-limit chequing accounts. The major banks here do not.*
I recently learned that the bank I deal with, RBC, offers their $10.95/month unlimited chequing account FOR FREE in the States. Have a look: US RBC Free Checking Account
Meanwhile, their Canadian division charges more than $130 a year for the same product!
Why do they do this? Because they can. They’re colluding with the other major banks to keep fees artificially high, and nobody has challenged them.
Aren’t these guys supposed to keep watch for this sort of thing?
* Yes, I know some of the “fringe” banks like PC Financial do, but there are a lot of drawbacks to these accounts. They have deposit wait times, and limited access to your money.
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August 21st, 2008 at 4:31 pm
Hey, I agree completely about the telecom companies. Having lived in England and now the US, it frustrates me even more when I look at Canadian prices.
I think banks are a bit more complicated though as the US has a very fragmented market. What about HSBC Canada? They are an international bank, are they just as bad?
August 21st, 2008 at 4:41 pm
15-20 years ago Canadian banks didn’t charge service fees. Everything was done at branches through tellers and their expenses were much higher.
Now most banking is completely automated — through machines and electronic transactions. Their costs have gone down, but they’re milking fees from from all angles.
August 30th, 2008 at 2:19 pm
I have to say that US Banks really aren’t that much better. Unless you keep a minimum amount (usually $1500) in your account, you are charged fees. And you have to have things like direct deposit on a lot of the accounts too. For me who is now not working and $1500 is almost all I have, it sucks because once I go below that minimum amount, I will have to start paying big fees. I’ve actually been more frustrated with the banks down here in the US than I was with Royal Bank in Canada. I’ve switched banks about 5 times trying to find something that has even the technology that I got with RBC 10 years ago. I guess the grass is always greener