My bank has me seeing red
By Errol Muirhead, Sympatico / MSN Finance
Talk about toxic debt. If ever you have some time on your hands, you should because you can’t afford to do much else when you're too busy padding the mattress with the pennies you save.
Take a look at the color of the transactions when you get your bank statement or when you go online. If each transaction is red and the red continues down the page or pages, then you have a serious problem that needs some attention.
Many banks offer you overdraft protection with an annual interest rate greater than 20% on the balance you owe plus a monthly fee. The latest farce that I’ve come across is overdraft protection that charges the account holder $5/day each day the account holder is in overdraft, but no monthly charges.
Along with other ridiculous bank fees like Interac charges and in-bank transactions fees, consumers have had enough of being nickled-and-dimed out their hard-earned funds. It's almost as if you are forced to pay some of the charges with no sensible alternatives.
Banks, give us a break in these tough economic times. Stop stiffing the consumer with these charges or at least waive many of them until the economy recovers. I’ve seen a few movies where thieves rob a bank, but instead of physically lifting a big chunk from the vaults, they use software that withdraws small amounts from thousands of accounts.
At the end of the day, the amount deposited to the bad guys’ offshore account is usually in the millions and no one is the wiser until some smart-Alec cop figures out the scheme and spoils the plan. In real life, the tables are turned, I feel like I’m being ripped off by some slick, tech-savvy, smooth operator (aka my bank), but no one is coming to my rescue and no one is saving the day. All I can hear is that sinister laugh.
If your bank has you seeing red, time for you to pay up that overdraft and gradually become less dependent on the bank’s funds for daily living. Save a few hundred dollars and get back in the black and you’ll feel a whole lot better. Overdraft protection can be useful, but with such high penalties and interest rates, can you really afford it?
Posted by: Bieliquist | Mar 25, 2021 2:12:08 PM
I hear what you are saying, but I know my bank has me in a package whereby I pay one monthly fee which encompasses all my transactions, and, because I have my mortgage, RSP's and Visa with them, I get the exact amount rebated back to me each month so..."free banking" for being a loyal customer. Perhaps you need to approach your bank and see what other options are available to you before you go off on a tyrate and accuse all banks of this kind of behaviour. There are options out there, you just have to be a savy consumer and ask! I am sure the employees at your bank want to do nothing more than to help you...and change this kind of negative stereotype.
Posted by: Marvin Brown | Mar 25, 2021 5:16:00 PM
"employees at your bank want to do nothing more than help you" are you serious? Banks are businesses and they want nothing else but to make a profit and all employees in any Organization will have to understand where the priority lies.... for sure if you are savvy, then you can benefit by seeing the surface which is your bank telling you about "free banking". There is no such thing as free banking and there will never be, your bank just have you wrapped up in so many ways that they can afford to wave certain monthly fees to keep you happy but have you ever calculated how much of your mortagage payments actually goes to interest?
Posted by: John | Mar 25, 2021 11:10:02 PM
I have 2 accounts with one bank. As long as I maintain at least $3000 in one of them, all my banking fees are waived. The rest of my money is spread out in various investments. I have been mortgage free for 20 yrs (and I'm only 48), would never get a loan, and pay all balances on my credits cards in full before their due dates. If my bank is ripping me off, they are not getting much.
Posted by: KimsMom | Mar 26, 2021 12:27:05 AM
Exactly right, Marvin Brown - banks ARE businesses and are in the business to make money. Most notably, off YOUR money! However, there are ways around this. Try a credit union, for example. As a "member" as opposed to a customer, you get money back annually in the form of dividends. Also, our credit union doesn't charge to deposit, use the ATM, or use my debit card. I am also able to do internet or telephone banking without charge. Furthermore, I have a global payment master card (a debit mastercard) which is the same as a credit card without the monthly bill or the fees associated with the typical Visa. Take note of the Visa cards out there also that reward users with dividends, points, or airmiles - wonderful if you pay your balances off on time. You get the option of receiving an annual payment (I got over $400 back at the end of '08), points towards purchases in a catalogue, or airmiles (where do you want to travel for free????).
Do your homework and there are options!!
Posted by: You Can Bank On It | Mar 26, 2021 12:59:42 AM
Hey Mervin . Are you employed ? Does the company you work for ( or you yourself if you are self employed ) make a profit ? Of course banks have fees , and make profits . How else could they pay the salaries of the thousands of employees that work for them , and stay in business. They key here is they are a business . Banks are not socially funded organizations designed to give you the consumer a free ride . They charge for products and services and will willingly negotiate with you based on the value of your business . Don't forget that the same bank employees that guys like you regularly harass because they work for a profitable company are people that use goods and services and pay taxes just like you ( one can hope you pay your taxes ) . They help to keep your business or the one you work for profitable , and thereby keep you employee . We're al in this together . Find something else to rat on rather than the profitable Canadian Banks . I for one am glad they are profitable ,lest us Canadians end up in the exact same boat as our friends down south . And YES , I am a bank employee .
Posted by: Peter FS | Mar 26, 2021 5:32:22 AM
Recently my banks have increased the interest rate on my line of credits by 50 to 150 basis points. I use to pay prime plus 1%. Is it not ridiculous? How do you expect the consumers to spend. I think that everybody should open accounts with President choice and ING direct where there is not bank charges whatsoever and the interest rate is quite resonable too. SAVE YOUR MONEY!!!!!!!!!!!!
Posted by: Smt67 | Mar 26, 2021 8:12:02 AM
If you are being charged $5 a day for overdraft protection....then yes, your bank is robbing you. OR you dont' actually have overdraft protection, and you are being charged for constantly having your account overdrawn, which is probably the case. I too work in a bank, and our overdraft works with a $5/month charge. IF you actually have that feature on your account. As for service charges, you do have the option of paying no service charges if you go with a virtual bank like PC Financial. But remember, no service charges, no service. When you need to get a car loan, a mortgage, or anykind of loan, do you want to talk to a person, or computer?
So, if banks stopped charging service charges, thus making less money, thus putting them in the same position as the US banks,,,,is THAT a good thing?? Canadian banks are ranked #1in the world! Doesn't that tell you something. Canadian banks are also the most regulated by the Federal Government. We live by such strict guidlines, that we can't "rob" anyone.
Perhaps you should be a smarter consumer and shop around to find a bank that better suits your needs. It is YOUR money, and YOU should take care of it.
Posted by: Canadian consumer | Mar 26, 2021 8:39:18 AM
Canadian bank CEOs have to stop behaving like the rest of the corporate CEOs and draw a regular salary-and nothing more. There is absolutely no justification whatsoever for them to have big bonuses. Canadians have not started to pick on them-yet. Eleanor Clitheroe from Ontario Hydro took a lot of heat earlier in the decade for big bonuses drawn out of taxpayer money-these guys need to as well.
The mandate of Canada's banks (and I mean all of them) is to serve the Canadian public, plain and simple. That means giving out loans, opening accounts, and providing financial advice WHEN ASKED. They have no business putting their noses in other countries and doing wild investing, getting invariably into trouble, and passing the costs of their misadventures on to the Canadian public while the CEOs and bank directors continue to get their bonuses. Not as bad as a situation as in the US, but bad nonetheless.
Even if Paul Martin did nothing else right, he was very wise in prohibiting bank mergers. We cannot afford to have self-serving Goliaths that will bring down this country with their greed.
Posted by: malcolm mac donald | Mar 26, 2021 8:50:40 AM
All of the above and more are the reason that I no longer use the big banks. I only use my credit union and I get better service.
Posted by: dgh | Mar 26, 2021 8:59:54 AM
Yes, banks are busineses and out to make a profit for themselves and their shareholders. Seems to me this is the same for all companies isn't it? Not too many would be around for very long if they failed to make money.
As for the banks in particular be thankful or we could be facing the same problems currently being experienced around the world. As repeatedly pointed out in the media the Canadian Banking system is the strongest in the world and this can be traced back to strong management and government oversight.
Want to save money on your banking costs? Its not that difficult. Banks, like most other companies tend to reward customer loyalty. Virtually every bank offers the same services with the main difference being in the fee structures. As one of the other writer's pointed out customer loyalty goes a long way in reducing your costs. Bank employees go out of their way on a day to day basis to provide their clients with the best possible customer service in order to earn that loyalty. Their compensation often includes a bonus structure based on the bank's overall performance, but more importantly client service surveys, client retention, and number of services per client. They achieve these goals through the service they provide.
Talk to your bank, they will listen and provide you with the best banking package available to meet your needs. Negotiate on fees, but understand they cannot say to you "if you transfer your RSP or mortgage to us we will give you a better rate on your loan or mortgage". This is known as "tied selling" and is contrary to banking regulations.
Speak to a personal banker. These people can provide all kinds of advice with respect to budgeting, saving, borrowing, investments, etc. If they are not versed in a particular aspect relating to your financial needs there is a huge network of specialists they will arrange for you to meet. Together this network will provide you with the best package of financial services, at the lowest cost, to meet all your financial needs. And guess what? All this advice is provided to you at no cost other than the time it takes to sit down and discuss it.
Are you paying too much? Maybe, but what have you done to reduce those costs?
Its your money and regardless of the economic environment you are the only person who can take the actions necessary to ensure you are getting the best value for your dollar. Take some time and check it out, you may be surprised.
Posted by: steve | Mar 26, 2021 9:05:15 AM
My solution was to go with Presidents Choice and to get rid of all the high cost accounts. Surprisingly CIBC was the worst and they own PC Financial. I was paying over $30 per month to have a chequing acct there. I felt like I was being robbed.
When I signed up with PC Financial I got a free bag of cookies, I get free cheques always and the best part is I get interest in my chequing acct. It is only a few pennies, but it is money coming TO ME ! I was also getting 4% interest on a saving acct there last fall, far and away the best rate around at that time. When I mention this to the bank tellers they always quickly say "but you wont get service like you get here". This is true. The service I get from PC financial is light years better than I get at my bank. I can call on a Saturday night on a long weekend and get service or get things done. Try that at your brick /mortar bank. It isnt perfect, but you get the idea
PS: I already did all my banking online
Posted by: Canadian consumer | Mar 26, 2021 9:25:03 AM
I agree with everything you said except "strong management". We are in an OK position in Canada despite this. It is government oversight that did not fail in Canada while it failed in the US.
I also agree with Steve that CIBC is the worst. Despite a 5-figure (continuous) balance in my account I still pay $10 a month in service fees. They are also the ones that get in to the most trouble with investments.
Posted by: Peter | Mar 26, 2021 9:56:21 AM
I need to clarify some information that was posted by dgh. He is incorrect when he described what tied selling is. Tied selling is not "transfer your rsp's and we will give you a better rate on your mortgage or loan". This is NEGOTIATION. Banks are allowed to ask for your business, and can offer the client a lwoer rate if they bring more business to them. It make sense, the more business you have with your bank, the better your mortgage rate should be. Just imagine how upset you would be if you had all your business at a financial institution, but some guy off the street with nothing at the bank you deal with, gets lower rate then you.
However, your Bank can not say "We'll approve you for this mortgage if you bring your accounts/RSP's etc to us." This is TIED SELLING, and this contravenes banking regulations.
One more point, Bank's are there to make money just like every other business. Just like the business you work for (or own if your self employed). What does yuor company (or your own business) increase prices? If your complain about bank's, then become an owner of one, buy shares of a Bank. In fact buy shares now while they are "on sale". There is no industry out there that will give you a more stable return and steady dividends year over year. Buy shares in a bank and you will enver complain abotu their profits or fees again. In fact, you will smile when their profits go up.
Posted by: Randy | Mar 26, 2021 10:12:55 AM
I think the banks make more than enough money off the interest they gather on the money we make. They also gain funds in every service they provide. Perhaps not charging those who deposit into these banks transaction fees for using the debit machine may help eleviate the long lineups for teller service, the annoying idle chitchat at every wicket while those waiting in lines are in a hurry to get back to work themselves, or become late for appointments and are left standing in these lineups while a teller discusses their family dog for 10 minutes. Yeah, we as investors, (and we invest every time we make a deposit, after all where else would all those high interest bank loans come from if it were not for the deposits we make daily) have the right to complain when the service is slow and the lineups long, life is way too short to spend countless hours standing in line for bad service, and every bank has it. To simplify mattesr, remove the charges for using debit machines and make life easier for everyone all the way around. Charging us 1.50 for every transaction in desperate times like this is not very responsible in my opinion.
Posted by: Eric | Mar 26, 2021 10:21:40 AM
Canadian banks are regulated by the Canadian Givernment. Thank your lucky stars that Canadian banking standards are tight and high ad have not gone down the tube as over 20 banks have in the USA. Being a life long CIBC client, I agree that CIBC has had a mumber of investment difficulties, which they are now making their valued line of credit customers pay for with their 1% + monthly interest rate increase.There is no doubt, they will lose some of their customer base over this decision. One must remember that banks are a business and need to make an acceptable profit to generate growth and to keep-up with new technologies.In order to understand the complexity of banking in Canada, I strongly recommend that you read youor banks annual report. This will provide you with a better understanding of their operations.
Posted by: james r ruttan | Mar 26, 2021 10:30:18 AM
i have delt with every major bank in canada over the years and i can tell you it started before credit cards and all this other "junk" i joined a credit union and have better sevice and politer people giving that service than i ever got from the banks.if you just fell off the boat and wanted to go into business just apply for a government backed loan the banks fell all over themselves on this one then when you defaulted the govment paid the bank. if you were born in canada -------forget it ---- if you had 5000.00 in the bank they might lend you $.05 that is how magna international started ----frank nknew how to work the system and admiited it all these charges are not needed and it is just a legalised money grab fostered by the government
Posted by: Rainne | Mar 26, 2021 10:34:09 AM
Credit unions all the way! After dealing with the big banks (and working for one) for many years, I finally got smart and moved all my business to my credit union. I paid a one time $5 membership fee and that's the only "fee" I've paid since. My chequing account, cheques, telephone and internet banking, debit purchases, and withdrawls from ANY credit union atm are all free. I also have overdraft protection, and pay no fee for this service. I am charged interest only on the amount I use. I do not have to tie up any of my money keeping minimum balances in accounts either. When my mortgage matured, I transferred it to the credit union as well, since they offered me 1 1/2% lower rate than the big bank I was with. As my kids have reached 19, they too have opened accounts with the credit union. These kids do not keep big balances and tend to make many small debit transactions every month, so the credit union isn't making any money off them. Seriously, look at your credit union if you really want to avoid being nickeled and dimed to death by the big guys.
Posted by: rick | Mar 26, 2021 11:04:11 AM
Be prepared for increase in our line of credit, or home equity loans interest rates.
While the BOC has lowered its interest rates to record lows to help out the consumers during the recession, the greedy uncaring banks are going to increase the interest rates to our lifelines to financial survival in some cases.
I asked and they said it was because of "business" decisions they've made. Can someone please tell me why we are paying for their lack of business acumen?
Isn't this like the banks double dipping? The BOC lowers interests rates and the banks increase consumer interest rates ... and ... just how much did they profit (ie: how many billions) last year, the year before and the year before that????
Call your local member of parliament and voice your concerns.
Posted by: Mike M | Mar 26, 2021 11:22:59 AM
I don't like how, as the prime rate goes down, the banks increase their credit line interest rates. They are sucking the life from the country in a shameful way.
Posted by: Phil | Mar 26, 2021 11:25:53 AM
I work for a bank, interest rates on mortgages are at their lowest point ever to respond to a comment about greedy banks. For loyal customers we do offer free accounts, those fees you pay are more of a hassle and they actually give banks profit, profit is made on investements, banks barely make money on mortages because of the high competition. For one person who commented to look at how much interest is on a mortgage payment, consider that we are helping you build your wealth, without us, you'd be buying your first home at your retirement. 4.39% interest rates right now are a lot lower then most car payments. If I could suggest the following, try asking your bank some info before complaining that they make billions on your back, there are far worst companies making far more money.