Despite Massive Profits, Banks Raising Fees Again
These are tough times for many of us.
According to a survey by the Canadian Payroll Association, nearly half of all Canadians are living paycheck to paycheck. Income inequality is growing, as the share of income going to the richest Canadians has increased, while the share going to middle and low-income Canadians has declined.
Something is clearly going wrong with the economy, not just in Canada but in much of the world. More and more people are struggling with perilous employment, unemployment, and rising personal debt. We are working harder than ever, but falling further behind.
By contrast, banks are recording massive profits. As reported by the CBC, TD Bank made a $2.05 Billion profit in the 2nd quarter. CIBC made $941 million.
Despite these billions in profits, TD Bank, Scotia Bank, CIBC, BMO, and National Bank are all raising fees on customers. Almost across the board, Canadian bank fees are increasing. This has sparked outrage, as it’s just the latest example of more and more wealth being taken from low-income and middle class people and going to the already rich.
So, the rich get richer and everyone else gets screwed again. No wonder people are pissed off.
The fee hikes may seem small to a bank CEO, but they add up. And with people struggling just to make ends meet, every little bit counts.
This is about fairness. This is about what is best for our future. The growing gap between the wealthy and everyone else is not sustainable. Trickle down economics has failed miserably. Even the International Monetary Fund has admitted that the best way to grow the economy is to put more money in the hands of low-income people, and reduce income inequality.
Is it any wonder then that with income becoming concentrated at the top, our economy is growing increasingly stagnant?
What can be done about these unfair fee increases? First, people should express their anger. Last year, RBC backed down from some fee hikes when tons of customers spoke out against them.
Another option is to look for alternatives. According to a survey from J.D. Power, more and more Canadians are fed up with their banks and looking for change. The survey showed that anger focused most on – you guessed it – bank fees.
There are good alternatives out there. As reported by Global, PC Financial and Tangerine offer accounts with minimal fees. Credit Unions offer a variety of options, some of which can be cheaper than the big banks.
A combination of the two approaches – expressing anger, and looking for alternatives – will have the most impact. If banks hear loud and clear that they are losing customers due to gouging customers, they could very well reconsider their actions.
Finally, we will need to address banks putting avoiding paying their full taxes in Canada. As reported in the Globe and Mail, “Canadian banks pay a lot of tax, but they are also very effective at reducing the taxes they pay. According to the Canadian Bankers Association, about 15 per cent of the industry’s profits are taxed in foreign countries where rates are lower. And much of their future expansion – and profit growth – will likely come outside the reach of the taxman in Ottawa.”
This is a huge problem. We are potentially losing hundreds of millions, if not billions of dollars in money that could go towards social programs, infrastructure, or tax relief for low-income and middle class Canadians, just because banks want to avoid paying their fair share in Canada. That has to stop.
The banks are big and powerful, but the true power rests in all of us. By sharing our thoughts on unfair fee hikes and forcing the banks to compete, we have the ability to bring some fairness back into the system.
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Photo credit: dehghanr (Flickr) https://creativecommons.org/licenses/by-sa/2.0/