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December 14, 2017

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Service comes with a cost -- how to reduce those pesky fees

There are far too many fees that we know of and even a few more that we are not aware of that are just added to our accounts. If you hate those fees, and who doesn't, then here are a few ways you can either eliminate them completely or reduce them substantially. It starts with reading all your statements  -- bills, bank statements, investment statements, as well as reading the fine print on all special offers, especially those amazing deals you can't afford not to take advantage. Take a breath and read the terms -- the costs and fees associated with those deals may negate the savings.

The most blatant example are those great airline deals. Don't be lured into that amazing discount on a blue sky vacation without reading the terms and conditions.  There are usually extra fees tacked on beyond the usual extra baggage fee, like ticket change fees, priority seating fees, in-flight fees for everything from food and beverages to blankets. Read the fine print. If the extra bag check fee is contentious then consider packing light and only use a carry-on. Or, depending on the destination, it might be less expensive to ship any extra cargo.
Here are a few more of those bothersome fees and how to deal with them. Some of the amounts may be small but they add up.

  1.  ATM fees. This is obvious -- don’t use an ATM machine from a bank other than your own. And definitely stay away from the ones you find in convenience stores. The bank ATMs will charge up to $2 for the convenience but in-store machines charge $3 and higher.
  2.  Pay off balances in full. You can avoid late-payment charges and the interest on that charge by paying all your bills by the due date. If you're not good at keeping track of due dates  -- and it's not surprising if you're juggling plates  -- then, if you can, pay them when they come in.
  3.  Credit card fees. These can be costly. Pay balances in full, don't go over your limit -- some cards charge a fee  -- and find a no-fee card. Try to stay away from cash advances -- the interest starts ticking right away.  
  4. Home and Auto Insurance. If you can, pay the premium annually rather than monthly to eliminate the processing fee. Also, you can get a discount if you use the same company for both. You may also be able to reduce insurance costs by increasing the deductible.
  5.  Reduce mortgage default Insurance. This is insurance that is automatically added to your mortgage and can be as high as 4.5%. You can reduce the fees with a larger down payment.
  6.  Bank fees. Try these strategies: Maintain a minimum balance or find a no-fee account. Opt for online statement and save two to three dollars each month -- and save a tree at the same time. Non-sufficient fund (NSF) fees  are costly so try to avoid them. E-mail money transfers, although convenient, are relatively expensive at $1.50 a pop -- they add up. Check to see if your bank charges for these transactions. Some do, some don’t.
  7.  Video toll roads. If you travel along a video toll road more than once a week, you should get a transponder --  you’ll save big bucks. In Toronto, Ontario, the toll highway adds on a video toll charge fee of $3.90 each time you enter and exit the highway. Then there’s the trip toll charge.  It adds up.   
  8.  Review monthly data usage. You may be paying for more than you need.
  9. Watch for hidden investment fees. These fees are sometimes hidden deep in the prospectus. Read the fine print carefully. The fees won't show up on your financial statements but your investments are managed by a professional, whether it's a mutual fund manager or your financial planner. You'll find those fees under the terms of Management Expense Ratio (MER) or Front-end Load or Deferred Sales Charge. Every investment you purchase comes with documentation. Ask your advisor.  Then Google "Investment fees calculator" and find out how much you're paying. There may be a number of ways to reduce those fees depending on your situation, but first find out what you're paying.
  10. Avoid fees on those concert tickets. It's great getting your tickets online but they come at a cost. To avoid the processing fee, which can be as high $10 per ticket, try to purchase your tickets at the venue's box office.
  11. Automatic gratuities. This is becoming more popular. Next time you're eating out, double check your bill -- there may be an automatic gratuity charge of up to 15%  of the bill. If there is, don't tip –it's there already. Also, don't forget your credit card. One establishment in the news recently actually adds a $25 charge on the credit card of customers who leave their cards behind. Don't know how they get away with that one. Bottom line --  check your statement carefully for unauthorized transactions.



The Mortgage Group Canada (www.mortgagegrp.com)
Monday, May 08, 2017

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