Feel good about fees
Value and time saved encourage us to shop, use service clubs
There are some fees we just love to hate and we try to avoid them — at all costs. Whether bank fees, credit card annual fees or late fees at the library, the idea of voluntarily paying a fee is anathema to anyone with a frugal mind.
But some fees can be worthwhile if they save you time and money.
What makes a fee worth paying? To start, we want to get good value for our money, but that’s just marketing talk if the value can’t be measured in dollars saved. We might pay more for peace of mind, but it’s hard to put a price tag on how well we sleep at night.
Convenience comes into play — if you value your time, then you’ll pay a little more to save it. There are also tangible benefits to getting impartial, unbiased advice before you make a major pur- chase or life decision. But that advice doesn’t come free.
When it comes to worthwhile fees, look no further than the legions of loyal shoppers who pay for the privilege to shop at Costco. More than 10 million Canadians hand over $60 a year to shop at the popular wholesale club, and take advantage of bulk pricing and several
products unique to the store. Is it worth the money? The company says nearly 90 per cent of its members renew each year.
Annual-fee credit cards can be worth the money if you earn enough rewards to offset the fees, and then some. A comparison website, such as CreditCardGenius.ca, shows that when your monthly credit card spend totals $2,000 — including $600 on groceries and $200 on gas — you’ll earn up to $250 more cash back rewards using the Scotia Momentum Visa Infinite than you would using the top no-fee cash back credit card. And that’s even after subtracting the Scotia card’s $99 annual fee.
What about peace of mind? More than six million people carry a CAA membership, and for a $70 annual fee they can get immediate roadside assistance anywhere in North America.
Frequent travellers to the U.S. might appreciate a way to expedite lengthy airport lineups. A Nexus pass might just be the ticket. The program allows members to conveniently bypass pre-border security screening at major airports by going through a designated security line. The Nexus card fee is just $50, and is valid for five years.
Sticker shock might be the appropriate term when you first see the fees charged for professional services, such as for tax advice, drafting a will or creating a financial plan. These broader services can cost upwards of $1,000, but you’ll be in good hands with the right professional help.
Paying upfront for financial advice seems odd at first blush, but more Canadians are turning to fee-only planners to get unbiased advice, not just about their investments, but about their overall financial health. You might pay $150 to $250 per hour, but you’ll get a comprehensive and unbiased financial plan without the pushy product sales.
It can also make sense to pay a fee for unbiased advice before you buy a product. A Carfax report, for example, gives you detailed information about a vehicle’s history that can help you when deciding to buy a used car. One report costs $39.95, but the information it provides could save you from buying a lemon.
Consumer Reports is a nonprofit organization and another good source of information for saving money and protecting consumers. A subscription to the magazine costs just $30 per year, and for $55 per year you get full access to the website. Streaming music through apps such as Spotify, Apple Music or Google Play will cost $9.99 per month. The upside is an exhaustive catalogue of music to be enjoyed wherever you are, from any of your devices.
Finally, a list of worthwhile fees wouldn’t be complete without a shout out to Netflix. More than 13.3 million Canadians subscribed to Netflix in 2018.
Its standard plan now costs $10.99 per month, but by investing heavily in content, including originals such as The Crown and Stranger Things, Netflix keeps its members coming back often to binge on the next new series.
Some fees just can’t be avoided, but that doesn’t mean every fee is designed to rip you off. You can feel good about paying fees when they provide enough benefit to justify the cost.
Whether it saves you time, gives you peace of mind or actually saves you money in the long run — in some cases you’re better off handing over the money.