What are Bank Service Charges?

Introduction:

Banks have become the base of the financial and economic status of a country. The country is one of the top most of the developed countries with a lot of banks servicing the people. The country’s banks are numerous but some of the main banks are the Royal Bank of Canada and the Nova Scotia Bank. The banks are the backbone of the country’s economic situation and there area lot of finance related services that it offers. However, the banks are also a type of business institution and it also needs to make a certain amount of profit. It can only do so by charging its customers a certain amount of money for the services it offers and this charge or amount of money collected from the customer for a particular service is known as the Bank Service Charge or the Bank Fees.

Bank Service Charges for Various Services:

The bank as a financial institution has a lot of services to offer to the public. Some for example are the credit cards, savings account, current account, cheques, transfer of amounts to other accounts, demand drafts, personal loans, mortgage loans etc. All these services are used by most of the people and the bank charges a nominal fee as a service charge for these services. For example incase a person wants to take a demand draft, he has to get a demand draft for the intended person by paying the required amount plus a percentage of the amount as a service charge to the bank. This service charge may vary according to the bank’s policies, but nowadays it is regulated by the government of Canada. For credit card related transactions the service charge is usually annual. This service charge is based upon the usage of the credit card and the type of credit card.

Another type of bank charge is by an indirect method in which the cheque related transactions are involved. The Cheque book with a certain number of leaflets is bought from the bank and the service charge for this type of transaction is the cost of the cheque booklet. This cost is not exorbitantly high but a very small percentage. There are also service charges for loans and mortgages but these are also not explicit charges, but included in the rate of interest.

Another main area where the service charge is collected is when a person tries withdrawing funds from an account that has insufficient funds. It may also occur in form of the bouncing of cheques in which the person who had issued the cheque has insufficient amount of money in the bank account to honor that cheque.

Regulation regarding the Service Charges:

The issue of Bank service charges was investigated in 1988 and the Office of the Superintendent of Financial Institutions was established in order to regulate the banks and other financial institutions that are in Canada. This Office is responsible for resolving all the issues regarding the Bank Service Charges and also for fixing these rates.

Conclusion:

Thus the banks of Canada have their service charges collected from the users and also follow the regulations of the OSFI properly so that no issues occur