Why Do Canadian Banks Have Account Fees?

Canadian banks charge account fees because everyday banking is a big part of how they make money.

Those monthly charges help cover the cost of running branches, processing payments, offering customer support, and still turning a profit on basic chequing accounts.

A No-Fee Alternative: KOHO Essential

If you’re tired of paying traditional bank fees for basic day-to-day banking, with KOHO Essential:

• It has a low monthly plan fee that can be waived when you set up direct deposit or add +$1,000.

• Use a prepaid Mastercard® for groceries, bills, subscriptions, and travel.

• Grow your savings with a 2% interest savings rate on your entire balance.

• Earn 1% cash back on groceries, eating & drinking, and transportation.

• You can subscribe to Credit Building for $10/month, it's an affordable way to build your credit history.

• Enjoy unlimited transactions and free e-transfers (never worry about fees when sending money to someone again).

Why Traditional Banks Charge Monthly Fees

1. To Cover Operating Costs

Banks have to pay for:

• Branches and ATMs

• Staff and customer support

• Technology, security, and payment networks

Monthly account fees help fund that infrastructure, especially for people who keep low balances.

2. To Make Everyday Banking Profitable

Not everyone has big loans, investments, or high balances.

Account fees are a steady revenue stream from people who only use basic services, so the bank still earns money even if you don’t borrow.

3. To Encourage “Premium” Bundles

Some accounts bundle:

• Unlimited transactions

• Extra perks (like overseas ATM access or premium cards)

Banks use fees and account tiers to push you toward more expensive packages, even if you don’t always need the extras.

4. To Reward Higher Balances

Many banks waive monthly fees only if you:

• Keep a minimum balance

• Use multiple products with them

That structure nudges you to park more money with the same bank so they can use those funds elsewhere.

What You Can Do About Fees

If you’re not getting value from your monthly fee:

• Look for no-fee or low-fee alternatives

• Check whether you can waive fees by changing how you use the account

• Consider switching your everyday account to something like KOHO Essential so more of your money goes toward your saving goals