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March 25, 2021

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?



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

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