Junk fees are harming Canadians' financial and emotional wellbeing

Adding hidden costs onto financial transactions should be prioritized by lawmakers because they are harming Canadians’ finances and their emotional wellbeing, a new survey reveals.

Junk fees have an adverse effect on emotional wellbeing, especially when applied to daily financial transactions, with more than half of survey respondents saying this had affected them, rising to 81% for international payments.

The report from Wise polled 2,500 Canadians and identified that international payments often see hidden fees added, such as through inflated exchange rate markups. But despite the federal government proposing legislation to outlaw many types of junk fees, international payments are not included, although 79% of respondents say they certainly should be.

In fact, 96% of those who took part in the survey said they expect to see transparency in all fees for financial services and when they are hidden it harms their budgets, travel plans, and saving for large purchases such as a home. And most also said they would not use, or stop using, a financial institution that adds hidden fees and 75% said it reduced their trust in those firms.

“Canadians are under financial pressure and junk fees are only making things worse,” said Brigit Carrol, Senior Policy and Campaigns Manager, Americas at Wise. “I hope these insights compel policymakers in Canada to start having important conversations about broadening junk fees legislation to include financial services and transactions, particularly hidden exchange rate markups in international payments. Broadening the scope when looking to alleviate unnecessary financial stress for their citizens is not a could do, it’s a must do.”

The specific issue of junk fees in international payments is not a small one with more than half of respondents having made such transactions in the past year.

“Canada is home to a diverse population of generational immigrants and world travelers who deserve to have peace of mind when sending or receiving money abroad. Instead, this process often leads to unnecessary financial strain,” said Carrol. “The responses of this study showcase that hidden fees in international payments must be part of continued discussion on this issue, or financial service providers and policymakers risk losing Canadians’ trust for good. With these findings, we hope to reignite the conversation on junk fees.”