Credit Checks Can Cause Issues

It is interesting to see how the dominoes fall  in the financial world, and one of the most entertaining stories I have is from about 25 years ago as my wife and I were looking to buy our first house.

As we shopped for the first Big Cajun Hacienda,  Mrs. C8j and I decided we needed to shop around to get the best mortgage deal, that was possible at the time. At the time interest rates were very high and we were hoping to find as low a locked in rate as we could (it ended up being 12.5% for a five-year term). We spoke to our bank (at the time) Scotiabank but my brother had (at the time) a good deal (in his opinion) with BMO, so I went and spoke to them as well.

Both banks wanted to “pre-approve” me for a mortgage on the basis of my income and such, so they both came back with about the same deal for me, so we were leaning towards Scotiabank (as they were our current bank). Scotiabank also suggested I apply for their Visa card to help with moving expenses and such, and it seemed like a good idea (at the time).

Gift Cards, Cash

So Many Cards so easy to get these days.

The application seemed straight forward, but about 3 weeks later I got a terse, but polite, letter saying that my application for the Visa Card was denied, with no explanation (but thanking me for applying).

I was flaberghasted, insulted and very mad (in my younger days, I was even a bigger hot head than I am now), so I phoned the number on the letter to get an explanation for this serious insult that had been inflicted on my Financial Ego! I spoke to a very patient and nice lady at the Scotiabank Visa help center (I would say she earned her pay that day), and she calmly explained that my “file had been flagged” and that was why I was refused the Visa Card.

“Why was the my file flagged?”, I asked.

The answer was simple, my “credit file” had been accessed twice in the week before my application, which caused the system to kick out my application as high risk. Why did my “credit  file” get accessed? Remember those two pre-approvals? Those two procedures cause the whole system to suddenly view me as a bad credit risk, because people were looking up information on my credit, as simple as that.

Once the patient young lady on the phone and I figured this out, she said she could put through my application, and get me the card in a few days, but I decided not to do that, and decided to go with BMO instead.

Dell Canada Inc

This was the first time I had been exposed to the Business of Credit, Mortgages and Banking and it was an eye-opening experience, and from that I have learned to be wary of banks, and to always ask questions about all processes no matter what transpires.

Oh, and isn’t it interesting that I was actually turned down for a credit card? Anybody heard of that these days ?

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Bell Ringing Banks and Frank Costanza

One of my favourite Seinfeld episode (if I can have just one) is the episode where Frank Costanza (played by Jerry Stiller) starts a PC Sales company out of his garage, and every time someone made a sale (not George, but that Lloyd Braun!) they  rang a table bell, needless to say things get a little out of control and “SERENITY NOW!!!” (something I also yell a lot) was in great usage in that episode.

Why would I bring up such an obtuse TV reference, maybe I had nothing better to write (did I just hear a bell ring), or maybe it was because I was in my local TD Canada Trust branch and saw the following sign:

“… if you like the job we did ring our bell to show your satisfaction…”

(Or something like that). My wife dutifully rang the bell after visiting with the young teller she was at, but as I left, I rang the bell as well and pronounced loudly:

“That was for the banking machine it did a GREAT JOB as well!”

I just wish I’d yelled, SERENITY NOW! right after that .

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Interest Paid – Bank Fee = Shrinkage ?

I was looking at the various tax forms appear this Tax Season and I received my “Interest Earned T4A” forms for a savings account, and I am going to get Taxed on that “income” however, I am not just not as far ahead, I think I am way behind, thanks to bank fees.

Remember that:

Net Growth = Interest Paid - Bank Fee - Tax on Interest

In this instance, it is Net Shrinkage (like my money was in a cold swimming pool (bad Seinfeld reference)). Not only do I lose income thanks to Income Tax on it, thanks to Bank Fees I am losing money by putting it in my bank, due to low-interest rates (1.9%) and high bank fees ($14/month).

Now THAT is some financial shrinkage

Now THAT is some financial shrinkage

No, I am not espousing putting your money in your mattress (although sometimes I wonder), maybe find a lower fee (or no fee) model if you are not going to carry minimum balances in your accounts (where you usually get no fees charged if you leave $5000 as a minimum balance in your bank account). There are plenty of on-line banks and PC Financial that give that to you without having to threaten to leave.

Maybe taxes could be written off against Bank Fees? Don’t make it a full credit, if you don’t have any interest income to write it off against, but it really does seem to be an ever shrinking savings world.

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Updated Tip: Scan those Bills

So one of the first useful tips I wrote about was To Scan All Your Bills, so you didn’t necessarily need to keep paper copies of them.

I still continue to do this, although I do keep paper copies as well, for things that I am sure that the CRA might want to look at if I make claims on my taxes like:

  • Tuition receipts for University and my son’s schooling
  • Utilities bills, as I do claim part of those as business expenses
  • etc.,

The interesting updated idea that I have changed to is that I no longer only save these images on my computer at home (which is being backed up). There are now many different services that offer free off-site backup of files such as:

  • Google drive, which comes with your Gmail account
  • Dropbox which is an app that runs on many devices
  • Outlook has file space for you
  • iCloud from Apple
  • Even Ubuntu One offers some free disk space

I am a little leery to use “the cloud” for this kind of storage, so you might want to encrypt them if you use these services, as you never know who the heck might look at your files from elsewhere.

The interesting part about the scanning of my bills was that I did exactly that when I was asked for receipts from the CRA, and I sent them scans of the documents in question, and they seemed happy enough with that. My guess is if it was an actual audit, they would want to see the originals, but for a “request for receipts” the government seems happy enough with a scanned image now as well.

Unfortunately you need to keep your paper records for a while before you can safely dispose of them (i.e. shred and/or burn), but maybe we are finally getting away from paper copies of things?

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When Cheques are Stolen

Last week Mrs. C8j and I found out that our son’s school had been a victim of theft (from their main office). The school is private, and we pay the fees with post dated cheques. All of the cheques (from all the students) along with a quantity of cash was stolen from the office.

The school informed us of the theft right away, and told us that we should cancel all the post dated cheques (a good security measure to take in all circumstances similar to this), and they supplied us with a Police Case number, to give to the bank. The school also said that if we were charged any fees for canceling the cheques, the school would reimburse us, however, they also told us that one parent had already checked that Scotiabank was waving any fees in this situation.

I trundled off to my local TD branch, to extricate more money from my daughter’s RESP (this time fairly quick, but I had to go to the branch to do it (and include a proof of enrollment)). While I was there the Rep I spoke to also took care of the cheque cancellations. She was not sure at the time how the fees might work out, so I left unsure of whether this was going to cost me money or not, but I found out on Sunday the importance of following up and watching account balances closely.

I looked at my account and saw the following:

9/11/2013 STOP PAYMENT FEE  $         12.50
9/12/2013 STOP PAYMENT FEE  $         12.50
9/12/2013 STOP PAYMENT FEE  $         12.50
9/12/2013 STOP PAYMENT FEE  $         12.50
9/12/2013 STOP PAYMENT FEE  $         12.50
9/12/2013 STOP PAYMENT FEE  $         12.50
9/12/2013 STOP PAYMENT FEE  $         12.50
9/12/2013 STOP PAYMENT FEE  $         12.50
9/12/2013 STOP PAYMENT FEE  $         12.50
9/12/2013 STOP PAYMENT FEE  $         12.50
9/12/2013 STOP PAYMENT FEE  $         12.50
9/12/2013 STOP PAYMENT  $       120.50
9/12/2013 STOP PAYMENT  $          4.50
Totals  $       137.50  $       125.00
Total fee paid  $         12.50

As you can see there are 11 stop payment charges, however there was only 10 cheques that needed to be cancelled.

I called the Easyline folks, and after a little bit of sleuthing by a helpful young lady on the line, we found that yes one cheque had been cancelled twice (must have been an extra nasty cheque), so another refund was given and now we no longer owe anything for having the cheques cancelled. Good on TD for finding the error and fixing it.

Remember if you don’t ask the answer is always no, so it never hurts to ask if fees can be waived in exceptional situations.

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