Why do banks charge service fees?
Fees are charged on the many bank services that help you access and manage your money. Twenty years ago, Canadas banks did not charge service fees on basic banking transactions, although they did charge fees for certain services. Back then, basic banking services were funded through the “spread” between interest paid on deposits and interest earned on loans. This meant that many of the bank services that were free to customers were, in fact, subsidized. But as competition increased in the lending market and the “spread” between deposits and loan rates began to shrink in the early 80s, banks adopted a “user pay” system. This way, the services were paying for themselves and frequent users would pay more than infrequent users. Today, consumers have many more banking services and options from which to choose. With the “user pay” system, customers pay only for the services they actually use on a per-item or package plan basis. For more information about service fees, the CBA has a helpful b
