Being loyal to your bank could cost you big bucks
Published Tuesday, September 11, 2018 6:00AM PDT
Last Updated Tuesday, September 11, 2018 8:19PM PDT
Loyalty comes with a price and in the banking world that can add up. Did you know that Canadians are paying thousands of dollars in banking fees and could be missing out on savings because many of us are reluctant to switch banks?
A new survey by Ratehub.ca shows that we are influenced by others in our banking choices – recommendations by parents, grandparents and friends.
“If you’re a young Canadian today you probably wouldn’t want your grandparents deciding what kind of car you should drive, who should date, the clothes you wear,” pointed out Luke Sheehan, VP of Marketing at Ratehub.ca.
But when it comes to money, he says Millennials are sticking to banks that their family and friends recommend.
Forty-five per cent of Millennials (24-38 years old) rely on recommendations from family and friends.
Twenty-three per cent of Gen exers (39-53 years old) do the same. While only eight per cent of boomers (54-74 years old) fall into that category.
And once they choose a bank they tend to stick with it for a long time. For instance, it’s estimated the average Baby Boomer has paid out about $2,100 in banking fees in their lifetime, with 54 per cent holding their primary bank account for 21 years or longer.
“If you value the convenience, the ease of having all your products in one place, then staying with your institution might be the best option,” Sheehan told CTV News.
The survey found 32 per cent of Boomers chose their bank because "it is a known and trusted brand"
Websites like Ratehub, Ratesupermarket and No Fee Banking can help you find deals on fees because according to Sheehan loyalty doesn’t necessarily pay off.
“Because frequently (banks) when they do bring out new products, new rates, they’re often directed at new customers only.”
There’s a lot of competition, especially from digital banks that can offer no fee banking and better rates on savings.
Consider this, if you pay $10 in bank fees a month over 10 years you would have paid $1,200. But if you didn’t pay fees and put that same $10 a month into an interest bearing account at say, 2 per cent, you would have $1,327 in your pocket over the same amount of time.
But you have to be willing to switch and while digital banks may seem attractive Sheehan says they still have a long way to go in building trust and brand loyalty, even though they are regulated and insured like other big banks.
“As things currently stay on trend Millennials will be on pace to spend as much as prior generations, unless Canadians really start to challenge and rethink how they approach things like banking fees,” Sheehan said.