More Reasons to Change Banks

Last year I wrote about how my daughter got a Student Line of Credit, to help pay for her second degree, as a Chiropractor. Remember, I am the one that talks about being willing to change banks, but unfortunately, my daughter is changing banks due to the mistakes of the local branch of National Bank of Canada (which is the reason I changed banks a while ago as well).

The problems started when the line of credit was first set up, and has compounded since then:

  • It took 3 visits to get the student line of credit set up (we thought) with the local branch. Once the application forms were set up, the first application for the account was declined, because the young lady at the local branch was unaware of how to do the application, it was declined  because the application was asking for the entire value of the loan (for all 4 years of the school). There had to be a reapplication to get the loan set up (finally).
  • The Student Line of Credit was actually set up as a standard unsecured line of credit. This caused the National Bank head office to call (more than once, and somewhat irate) to ask why weren’t the minimum payments being made to the account? It then would take an hour of explanation, and investigation for someone to figure out that the account had been set up incorrectly (by the local branch). The only way it could be fixed was by the local branch, and they failed (more than once) to remedy this issue. The account should be set up so that the interest payments do not need to be paid until my daughter graduated (but yes, they still compound).
  • There was an inability to make payments from other banks to the National Bank for this loan. This meant all banking would have to go through the National Bank only (or use Interac transfers to do things). This is also a shortcoming with the CIBC Student Line of Credit.
  • The on-line banking at National Bank, never really worked correctly for my daughter, she had to keep calling their on-line help folks to get access to the account (just to see what the balance was on the account). This happened every time she tried to access the account, and each time she would ask, “So with the information you have just given me, I can get access to my account”, and the help line person would say “Yes”. It worked that time, and then the next time, she had to call back in, because it would not let her in.
  • The straw that broke the camel’s back was that the National Bank Head Office decided that the “ceiling” (maximum for the loan) for students in Chiropractic College (for their entire program) was  dropped by 33%, and because of this, the line of credit would not have covered the cost of the entire program. The reason for this change (we theorize) was that the Chiropractic College in Trois-Rivieres was consulted to see how much their program cost, and the maximum for the line of credit was lowered to reflect that program’s total cost. This is an issue, as my daughter is going to the College in Toronto (which has higher fees and costs). This meant my daughter had to change to another bank or she would have run out of money, so she is now in the process of changing to CIBC for her Student Line of Credit (and Free Banking too). There were inquiries made to the local National Bank branch to figure out why the Loan Cap was lowered, no real answer was given, just that it was being put in place, and that even though my daughter had been enrolled last  year, and the loan agreement included the higher cap, her cap was being lowered in accordance with the new rules.
Change your bank

Keep this in mind if you want to change your Bank

As you can see a great deal of frustration and confusion lead to my daughter changing her accounts over to CIBC. Naturally I was involved in the decision to change, as I am a guarantor on the student line of credit (or as Michael James would say, I have a Student Line of Credit). The change of the maximum loan limit was the main reason, but the other frustrations certainly made the decision to change, a simpler choice.

Remember, never be afraid to change banks, especially if you feel that you are not getting a very good deal. Also, this is why student debt is so darn high.

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A Great Financial Idea Dies

When I first started writing, I wrote about how when I was at BNR, they brought an ATM into the office space, and initially it was with CIBC, however at the time, the charges for using a non-BMO (who I was banking with at the time) ATM machine was costly (although nothing like what it is now), so I decided to open a bank account with CIBC, to save that withdrawal charge. Later CIBC closed their office and took away the ATM machine and it was replaced with the Telecommunication Technologies Credit Union and I wondered whether I should open an account with them (I decided against it due to their yearly subscription fee).

The premise of this simple idea was:

Open a bank account with a bank with the banking machine closest to work, so that you can save the “Other Bank” ATM charges if you need some cash at work. Set up the “direct deposit” from your employer to put a small amount in that account which is then available to you.

Currently, my new office is very close to an RBC, so I figured I’d look at the numbers and see if it was worthwhile, opening an account with RBC so that I could avoid the extra charges that arise by using their ATM machines (which act like “White ATM Machines” for non-RBC customers). Unfortunately the numbers do not add up, even with the free iPad Mini 2 that might come with the account (if I either pay bills automatically out of the account or have part of my pay put into the account).

The big stumbling point with this simple theory is, the monthly banking charge on the account being about $14 a month. The equation to look at would be:

Monthly Bank Fee Z < (N withdrawals * $3 service charge per withdrawal)

In this instance if you withdraw from your account more than 4 times, it is better to have the “near work bank account” (for lack of a better term).

For me, I have decided to simply withdraw money from the bank near my house if I need it (and thus no charges for ATM access) and if I am short when I am at work, I work around it (i.e. go without lunch, or make sure I bring my lunch every day).

The better rule to live by is:

Withdraw enough cash for the week from your bank and never use ATM’s that are not associated with your bank, and never use a “White ATM” either.

 

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Thank You TD

I figure I should write an official thank you note to TD, TD Mutual Funds and TD Waterhouse, because without them I would not have some of my most popular articles.

TD Toronto Dominion Bank

TD

I went back over my archives and I realized that not only am I a customer of TD, TD Mutual Funds and TD Waterhouse (and a shareholder as full disclosure), but I write about their services a great deal.

Many (if not all) of the articles in my RDSP page talk about TD Waterhouse’s RDSP, which while currently one of the only RDSP Investing Vehicles that gives you the freedom to choose whatever portfolio you like, it still has many shortcomings that need to be addressed.

The RESP page is all about the RESPs that I initially set up with Canada Trust Mutual Funds, that got transferred to TD Mutual Funds, and I should have moved them over to TD Waterhouse (but that is my own fault).

Then there are the many discussions about Bank Fees and my begging for cheaper rates.

A Bill Paying Solution

I also note that the TD Banking Web Page has added a very useful tool to their web bill paying and that is the ability to show you the last time you paid a specific bill. Remember I lamented about getting inundated with bills from various sources, but with this page, I can at least go and check to see when the last time was that I paid a specific bill.

TD Bill Payment

New TD Bill Payment Page

Having the record of when you last paid a bill and how much you paid will make life a little simpler for me at least.

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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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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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