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Bank Transaction Fees Explained

Written by Barry Choi

Monday, May 27th, 2019

If you look at any chequing account, one of the features might be how many bank transactions you get. It could be 10, 25 or even unlimited transactions before you're charged transaction fees, depending on what type of account you open.

Which chequing account you choose depends on what benefits you want, and how many transactions you need every month. But have you ever wondered what exactly counts as a bank transaction?

Most people assume bank transactions refer to anything that goes in or out of your chequing account, but that's not always the case. In fact, the word “transaction” can mean different things depending on the bank, so review your agreement with your bank carefully. What constitutes a transaction really depends on the bank and its account agreement.

Here are transactions that could count towards your monthly limit and suggestions for reducing your transaction fees.

Types of Bank Transactions


Technically speaking, anything that happens within your account is a transaction, but only transactions that move money out of your account should count towards the limit you need to stay within. This is important to know, because if you go over your monthly transaction limit, you could be charged an amount for every additional transaction. If you prefer to avoid transaction fees, these are examples of the types of transactions you'll want to keep an eye on:

  • Transfers to another bank account
  • Pre-authorized withdrawals such as payments or investments
  • Cash withdrawals from an Automated Banking Machine (ABM) or in branch
  • Online or in-branch bill payments
  • Interac e-Transfers
  • Debit purchases
  • Mobile payments linked to your bank account
  • Cheques
  • Bank drafts
  • Telephone-assisted transactions
  • Wire transfers

Any money coming into your account shouldn't count towards your monthly bank transaction limit. That means you shouldn't need to worry about payroll direct deposits, ABM deposits, money transfers coming into your account, etc. if you're trying to keep your number of transactions down.

How to Reduce the Number of Transactions


Some people constantly go over their monthly limits and incur quite a few transaction fees. To get around this, you could upgrade to a free chequing account offering unlimited transactions, or something that gives you more or unlimited transactions, but that might come with a higher monthly account fee.

You could also reduce the number of transactions you make by doing some of the following things:

  • Withdraw enough cash to last you the week or month instead of getting money from an ABM as you need it
  • Pay your credit card bill in full once a month and avoid additional transactions
  • Consider using the cash-back option when purchasing by debit, as a way to avoid making a separate trip to the ABM

Consider a Different Plan or Account


If staying within your limits is difficult, you might want to explore whether to change the account plan you have, or see if it would make sense for you to switch to an account that doesn't limit the number of transactions and/or doesn't have these types of transaction fees at all.

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