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Escape these Unwanted Fees

The adage is that death and taxes are unavoidable. To build upon that observation, certain fees that we think are an inescapable part of modern living can be overcome. There are various areas where we can cut out the unnecessary expenses and keep the cash.

Related: 25 Ways to Save Money

Credit Card Fees

An obvious one to many regular readers of this blog: if life involves paying monthly interest to credit card companies, then it is time to take stock. There are bigger issues to fix than saving a few dollars here and there as most of the sections below will discuss. The plastic card is certainly handy in many cases and helps in not having to carry a lot of paper money everywhere. But, poor use of that card can put the individual in a debt pool capable of swallowing one’s life, while boosting profits for the credit card companies.

Related: Top FREE Cash Back Credit Cards in Canada

Shipping Fees

Online shoppers on sites like eBay will know that the same item could be offered for substantially different prices and that closer inspection will reveal the difference being offset by the shipping charges. It is possible to select sellers who offer free or low-cost shipping solutions while comparing prices. However, most sellers insist on buyers paying for return items and it is rare to find a seller who will reimburse shipping fees for return items.

Airline Baggage Fees

Airline baggage allowances have changed over the last few years and presently, airlines only allow one free checked luggage for most passengers. Being a premium/elite member in an airlines’ loyalty program may offer relaxed rules. The weight limitations vary for longer flights but the number of bags allowed still remains the same for most travelers. Packing light and smart by using a packing list and eliminating unnecessary stuff on a vacation/business trip can help avoid this expense.

Editors Note: For Canadian travelers, Air Canada allows ONE free checked bag for domestic flights, but charges for ALL bags for international flights.  Westjet, on the other hand, still allows ONE free checked bag for international flights.  Right now, AC charges $25 per bag per direction so with two travelers, that’s an extra $100 + tax added to your flight cost.

Car Rental Insurance Fees

Renting a car may not be expensive if one is savvy but still, extra options like insurance, collision damage protection, and personal accident coverage can add up. Many credit cards cover car rentals but please check for restrictions that might be placed. In addition, auto insurance policies may offer extended liability coverage for vehicles not owned by the member; it may be worth checking out for frequent renters. Evidently, there will be a fee (the irony!) for this additional coverage; so, it is necessary to compare with the plan offered by the rental company.

ABM/ATM Fees

Most banks charge a fee for every transaction done at partner banking machines. Withdrawing cash ahead of time (goes with planning and budgeting) can save this cost. However, if a situation necessitates using a partner ABM, it might be worth withdrawing sufficient cash to avoid another transaction in a few hours at the same or another partner banking machine.

Chequing Account Fees

Most banks charge a monthly fee for chequing accounts but a few of them waive the fee for clients who hold other products. For example, RBC waives the monthly fee for clients having an RBC credit card and an investment product (say, GIC) to go with the chequing account.

Related: ING Thrive vs PC Financial – The Battle of the Best Free Chequing Accounts.

Brokerage Transfer Fees

Certain discount brokerages have started covering the transfer fee that an incoming client would incur at their previous discount broker. However, this service is usually reserved for accounts of a fair size (say, total of $25K and higher). Either way, it would be useful to verify if the new broker would cover the transfer fee before moving accounts.

What tips do you have on avoiding fees to save money?

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About the author: Clark works in Saskatchewan and has been working to build his (DIY) investment portfolio, structured for an early retirement. He loves reading (and using the lessons learned) about personal finance, technology and minimalism. You can read his other articles here.

{ 8 comments… add one }
  • Beth July 11, 2012, 10:32 am

    I avoid late fees by automating most of my bills. (I don’t have many bills, so it’s easy to review them for mistakes.)

    Library books are another story ;) I’ve started posting reminders in my calender app a few days ahead of when books are due.

  • Money Beagle July 11, 2012, 11:24 am

    If I ever cancel an order mid-stream it’s 99% likely to happen when the shipping fees are ‘revealed’. I think many companies sell products almost at cost and then make their profit exclusively on the shipping fees. It drives me crazy. I thought I heard that eBay was trying to counter this somehow.

  • bob July 11, 2012, 3:31 pm

    On credit card fees (not interest, but annual fees), it can sometimes be worth it to pay an annual fee for a higher cash-back %, depending on your spending habits.

    This tool by MoneySense does a nice job of helping pick the best bang for your buck

    http://www.moneysense.ca/2011/08/26/canadas-best-credit-cards-2011/

    For example, if you put absolutely everything on your credit cards (as I do), then it is well worth it to pay a $99 annual fee to get back 800+ dollars at the end of the year (plus all of the perks that come with fee-based cards like added insurance, warranty extensions, etc.). So long as you pay off your balance every month, of course.

  • Greg July 11, 2012, 10:39 pm
  • SavingMentor July 11, 2012, 11:27 pm

    Avoiding fees, especially recurring ones, is a great way to save money. Declining the Collision/Loss Damage Waiver at the car rental agency is a good one. However, declining the liability is another matter all together and you need to make extra sure that you have coverage before declining that one. No credit cards offer liability coverage and being able to get it through your own insurance provider varies by province.

    Also, the amount of liability insurance that the rental agency has can also vary by country, state, and province. It’s quite complicated and often insurance agents don’t have a straight answer or don’t know. I would recommend getting the liability insurance unless you are 100% sure that you are covered as confirmed by multiple people.

  • Ed Rempel July 12, 2012, 2:34 am

    Good post, Clark.

    We find many people don’t understand how high credit card interest can be. It’s not just the 20% interest. It is the formula that can kill you.

    There is a huge difference between paying a credit card down to $1 vs paying it down to zero. For example, let’s say your bill comes in and you only owe $10. Why bother paying it? How much can the interest be? You could be shocked.

    The interest for one month on $10 could be $250! Why? If you pay your bill in full, you get an interest-free grace period of about 6 weeks – from the date of purchase until you get your bill and then a few weeks until the bill is due.

    However, if you owe any balance at all, the grace period is gone and you are charged 20% interest from the date of purchase.

    Let’s say you don’t bother paying off your $10 credit card bill. Then you book a nice vacation for $10,000. Because you left the $10 unpaid, you are charged 20% interest on $10,010 for the 6 weeks’ grace period – the current month and at least part of the next month.

    $250 interest for one month on $10 can happen.

    This can also happen if you just pay late or don’t allow enough time for your payment.

    I agree with Beth. Have your credit card bill paid automatically in full every month.

    Sorry for the little tirade, Clark, but I’ve had to give this speech many times.

    Ed

  • Elbyron July 13, 2012, 3:23 pm

    Beth has it right: automate everything. Especially credit card bills. You’ll never pay late fees on bills again, but make sure you always have enough funds in the account that’s paying the bills, along with some “cushion” room just in case a bill is larger than expected or is unexpectedly early or late. One time I accidentally transferred too much from chequing to savings and was dinged NSF fees by both my bank and by the credit card company (plus a small amount of interest charges for being a couple days late).

    In terms of library books, like Beth I have a hard time getting them returned on time, though it’s often a matter of intentionally keeping it past the due date in order to finish reading it. I like to think of my library fines as a donation (though not on my tax return), as my library doesn’t charge very much for membership and I save a lot of money by not having to buy books all the time!

  • Steve Zussino - Canadian Coupons July 18, 2012, 2:30 pm

    Sometimes you can’t escape fees. More importantly you need to weigh the convenience and cost factor (time is money).

    It is more important to eliminate interest and late fees.

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