An Edmonton senior is angry after learning that bank fees ate up one quarter of a savings account she had opened for her grandson 13 years ago.

Irene Kuraitis paid little attention to the account — other than making the occasional $25 deposit — until a recent visit to her branch.

"I wanted to know how much money was building up on this account," Kuraitis said, "and I noticed all these $9.95 withdrawals.  I asked the teller, ‘What’s all this?’ and she said, ‘Service charges.’ I’ve never heard of services charges on a savings account."

Back in March 2000 Kuraitis was taking her grandsons, 10-year-old Trevor, and Ian, 13, on an outing at Londonderry Mall.

The boys had recently lost their mother to cancer.

"And I just out of the blue said, ‘We should do something fun today — just something different — and open a little savings account for you two boys,’" she said.

"I told them it would be their own special money for some day, maybe they were going to go to college or buy a house."

Kuraitis opened a First Bank Savings Account at the mall's Bank of Montreal.

She kept the pass books for the boys’ accounts for several years, later turning one over to Ian, but holding on to Trevor’s.

It was while she was checking Trevor’s account balance when she noticed the mysterious withdrawals which began in March 2010.

Money came out faster than senior put it in

That's when BMO apparently changed the name of the account from First Bank Savings to Plus Plan and started deducting a monthly service charge, she said.

The service charges began at $8.50 and rose to $9.95 in November 2011.

si-bank-fees-bill_1

Three years ago, the bank began charging monthly service charges of almost $10 from the savings account. (CBC)

Meanwhile, the interest the bank had been paying on the balance was a penny a month, increasing to $.02 in later years.

By the time Kuraitis noticed the charges, BMO had deducted $190.50, more than a quarter of all the money she had ever deposited. At that rate the account would have been drained in five years.

"They told me these were the new rules and regulations, that I should read them, and that I’m not keeping up with the times," Kuraitis said. "But I didn’t think rules could change in the middle of the game."

Kuraitis complained to bank staff who agreed to credit the account for the service charges, but only for the last three months.

That wasn’t good enough, she said.

"I don’t have a lot of money. It comes out of my grocery money. In a few years there’s going to be nothing. It’s stealing from a senior. Everybody’s going to be one, one day"

Bank of Montreal agrees to refund service charges

After Go Public got involved, BMO agreed to refund the remaining $160.65 in service charges to the account.

BMO declined to give an interview. But in an email to CBC News, public relations manager Laurie Grant said BMO customers who want to open accounts for children usually opt for a "BMO Youth Account." 

The account doesn’t charge service fees until the child turns 19, when it automatically converts to a Plus Plan and begins charging fees.

"These fees and terms, including the automatic conversion at age 19, are always discussed at the time the account is opened.  A take-home information package and plan agreement fully explaining these details would also have been provided," Grant said in the email.

Kuraitis says none of this was discussed when she opened the account in 2000, and she insists she was never notified the service charges were about to begin.

‘Just a plain rip off,’ says consumer group

"Some of the charges applied here are just a plain rip off," said Bruce Cran, president of the Consumers’ Association of Canada. "(Banks) shouldn’t be charging us for keeping (our money) in their vault."

"This is a negative marketing issue, it’s been illegal for a decade," Cran said. "It’s not enough to send you a printed book (announcing changes to an account) or post it on the internet. This old lady probably didn’t have a chance."

Cran said banks have a duty to obtain consent from customers before making changes to their accounts. He said he doesn’t understand why banks can’t resolve complaints like this quickly at the branch level.

"They do have ombudspeople in the bank and this matter should have been referred to them and dealt with much more quickly."

Grant said the bank pushes complaints to higher managers if the customer isn’t satisfied with the answers he or she gets at the branch.

Kuraitis was happy to have the service charges refunded. But she said BMO still plans to charge $2 a month for her to keep the account passbook instead of her grandson.

For that reason she’s shopping for a new bank, she said.