Some fees are worth it. A good fee provides enough benefit to justify the cost — whether it’s time saved, peace of mind or actually saving you money in the long run. In some cases you’re better off handing over the money.
Last week, we took a look at some fees to avoid. In this updated version of a story we wrote more than a year ago, we look at fees worth the money, adding a few and taking a few out.
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1. Overdraft protection
Most banks and credit unions offer overdraft protection on personal accounts. Each time you let your account fall below zero you’ll be charged a fee of about $5 plus interest on the shortfall.
It’s a small price to pay compared to the charges and fallout triggered by a bounced cheque or untimely automated bill payment.
The ING Direct THRiVE chequing account offers free Whoops! Protection that covers you up to $250 if you’re a bit short. You won’t pay a fee or interest on the overdrawn funds provided you pay it back within 30 days. [Related: How to cut banking fees]
2. Warehouse club
The $55 annual Costco membership fee may be worth it if you buy a lot of food and household products in bulk.
You have to avoid the temptation to overbuy of course — but if you watch your budget and take advantage of occasional “good buys” or discounts, that $55 can lead to substantial savings.
3 . Call display or caller ID
Many people don’t want to pay more for their cell hone service. But here are two to consider: Caller ID lets you know who’s calling, which can save you from answering an unwanted telemarketing call, or let you know when you’ve missed an important call. It also helps maintain your contact list.
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Also known as call display, it can often be included in monthly packages or for a small additional fee. Another option is text messaging, which can save on long-distance fees if you can send a text message rather than making a long-distance call.
4. Used car report
A Carfax report gives you the history of a car based on its VIN number, including any past accident repairs. One report costs $35, or get five reports for $45.
Another good resource is Phil Edmonston’s Lemon-Aid Used Cars and Trucks Guide that helps inform and protect consumers when shopping for a used vehicle.
This research can save you hundreds if it helps you avoid buying a clunker or overpaying for a used car. It puts knowledge in your back pocket when it comes to negotiating price.
5. Auto club membership
If you own an older car not covered by a roadside assistance service, a CAA membership provides emergency gas, towing, battery boosts and lock service along with travel discounts, trip insurance and their famous maps.
Prices vary by region and benefits, starting at $65. Sign up online to avoid an enrolment fee.
Alternatively, your car insurance company may offer roadside assistance for a lower annual fee. If you are a parent of driving-age kids, either option provides a priceless benefit: Peace of mind.
6. Toll roads
Toll roads can save time and keep you out of gridlock. But even if you use them only occasionally, consider paying for a transponder (a wireless device that detects when you enter and exit the highway) to avoid additional fees each time you use the road.
If you use the Toronto-area ETR407 more than once a month, the per-trip fees will be more than the annual lease and monthly transponder fee.
Remember that off-peak rates can be a few cents per kilometre cheaper than rush hour rates.
7. Financial planner
Most financial advisers receive commission from the mutual funds they recommend to you. In addition to the funds’ management expense ratio (MER), these fees can include hidden costs like front-end loads and deferred sales charges that take a bite out of your portfolio.
Consider using a fee-for-service planner instead. You pay an hourly rate, but you get unbiased advice about the best investment products for you.
8. Accounting fees
Unless you are self-employed or rely on commission income, rental income, or significant investment income, an accountant will be somewhat limited in the planning they can do for you.
However, you can also look at an accountant as insurance. You don’t like paying it, but when you need it, you are glad you have it. There may be years where an accountant cannot provide much in the way of income tax planning, but there will be a year somewhere where they may provide advice that covers their fees for the next ten years.
9. Mortgage refinancing
When interest rates are low, many people refinance in order to save thousands of dollars over the life of their mortgage. It’s important to determine how much it will cost to break the mortgage, known as a prepayment charge. It is usually negotiated when you get your mortgage.
It doesn’t always make sense to break your mortgage, but a good rule of thumb is if interest rates are at least 0.5 per cent lower than your current mortgage rate, it’s worth looking at refinancing.
10. Safety deposit box
A safety deposit box is a good way to protect valuable documents and irreplaceable items from theft, fire or water damage in your home.
Banks charge between $45 and $250 per year, depending on the size. Your safety deposit box should contain digital copies of all your important records. It’s also a good idea to make a video of the contents in your home and keep a copy in your safety deposit box in case of an insurance claim.
11. Music
Many popular music subscription services, like Spotify, aren’t available in Canada. One of the few available in Canada isLast.fm, which is a music recommendation service. You use Last.fm by signing up and downloading The Scrobbler, which helps you discover more music based on the songs you play in your media player or iPod.
For only $3 per month, this music service gives you unlimited radio streaming and personalized recommendations. Sign up and listen to 50 tracks for free before the subscription kicks-in.
12. Netflix
Netflix lets you watch as many movies and TV shows as you want for $7.99 per month. While Netflix is somewhat limited in Canada, there are still over 7,000 films and TV shows available.
If you’re the kind of person who enjoys watching their favourite shows and movies more than once, Netflix might be a good choice. Rather than buying movies or adding expensive cable packages, Netflix offers a cheap alternative and decent selection that will save you money.
If you prefer to order movies “a la carte”, CinemaNow recently launched in Canada with 10,000 movie titles, including new releases.
Rob Engen’s 30-Something blog is found at Moneyville.ca
Image: Henry Stancu/Toronto Star.
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