Canadian Personal Finance Blog

Archive for the ‘Service Fees’ Category

It has been pointed out that my post yesterday about a Real Service for Chronic Over Spenders is at best naive at worst unlikely to ever happen. Why wouldn’t a bank run a service like this? The answer is simple, it does not make them any money.

Banks make money on:

• Customers who carry balances on their credit cards.
• Customers that use the over-draft service available to them.
• Folks with bad credit that don’t get preferential interest rates.
• Consumers who do not carry the minimum balances in their bank accounts to get free banking (and thus pay $25 a month in service fees)
• Debtors who do not pay back their loans quickly (i.e. they do not make over payments)

This is an interesting paradigm for the Banks.

They must portray themselves as being helpful, trustworthy and someone who wants you to succeed in your financial journey, when in fact anyone who does succeed, does not make the bank a lot of money. I have friends who have paid off their mortgages in 5 years instead of 25 years, saving themselves tens of thousands of dollars (but in turn costing the bank tens of thousands of dollars in lost interest earnings), yet the bank must publicly say that this is a good customer, even though they are bad for their business.

A good bank customer makes minimum payments on their debts (especially their credit cards), incurs many service fees (or penalties) and rarely if ever talks to anyone in the bank about their issues. Reading that sentence it seems to be an oxymoron, in that it seems to be a description for a bad client, but if all you look at is the bottom line banks will fight over getting these customers.

How do they fight over them? They offer interest free credit cards (for the first six months), and lower interest rates on loans (for the first year), and other interesting marketing gimmicks (free iPods even). These customers make banks much more money than someone who is careful about their debt load, and that keep meticulous records of every purchase and pay things off quickly.

Conclusions

This week I have let my imagination run a little wild, on the problem of how to help people who spend too much or that are chronically in debt, but at the end of it the answers are evident:

God helps those that helps themselves –Anonymous

The banks will help you, but be careful of the help you get –Big Cajun Man

It is kind of like the guns don’t kill people, people kill people argument the NRA uses, in an obtuse way of thinking. People get into debt trouble because they can’t control their spending, and try to fix their spending issues with more debt, which the bank gladly obliges, and the financial death spiral (TM) begins.

Final conclusion:Getting out of debt is hard work, choose your tools to get out of debt carefully (unless you would like to try out a prototype Financial Shock Collar, then contact me).

OK, Air Canada has been an important part of my life, but their new “Leg Room Tariff” is one step too far in my estimation. Over the years I have watched traveling in an airplane going from being an elegant thing, where civilized folks dressed well and were all civil with each other, to these days where I think it’s lucky that folks are wearing clean clothes (don’t get me started about the people who travel in sandals and then complain that the plane is too cold).

As time has passed, we have gone from complimentary candies at the start of flights and on landing to help you with “popping ears”, to the point now where I would not be surprised to see pay toilets offered by an airline.  Hidden costs abound in air travel these days, where they could just as easily offer a free flight to Toronto from Ottawa and still end up charging you over $150 in service fees (there is a landing fee, does that mean if I don’t pay it we don’t land?).

This new tariff for the seats in Economy that have a bit more leg room are now going to cost more is beyond gouging. Being someone who does not fit in airliner (unless I am in Business class or First Class) being able to sit in a seat that allows me not to have to fold myself in half to be able to fit was nice, but now I will not have access to these seats unless I am willing to pay for them, and the seats are “available”.

The fee will only be $14 for each leg of your trip, to sit in a bulk head seat or in one of the emergency exits, but it stinks in my estimation.  So if someone who cannot open the emergency exit pays for the seat, and refuses to move people may die in an emergency situation? Seems like a safety issue to me.

Will you pay this fee? Me I don’t travel these days, so it is a non-relevant question for me right now, but for the frequent fliers out there are you going to pay? I single out Air Canada on this one, but I will bet other Airlines will add this fee quickly if Air Canada succeeds with this new fee.

PC Repair For Fun and Profit

After reading an interesting blurb in Wired about the Geek Squad I am astounded at what passes as genuine good customer service. I have seen more articles about “We’ll Come Fix Your PC at Home” services (maybe I should copyright that name) and what they charge, it really does make me scratch my head.

I am one of the folks that people call when they aren’t sure what to do about their computers. I am by no means an expert, but more of a well informed “noodler of technology” and the stuff I know, I usually have learned through trial and error (emphasis on error), however I am glad to help friends who ask questions or need help (I am also quick to point out when I am in an area I have little experience in). Most of the people I help, usually pay me back by helping me in other areas, or they let me drink their liquor or beer (which is fine payment by me).

The “We’ll Come Fix Your PC at Home” seem to offer similar services, but their fees seem much higher than the job warrants (yes they have overhead like those annoying VW Bugs with logos all over them, and all those nifty T-Shirts they wear), and I wonder if this is really not just a “mugs game”.

Who really uses these services? Let’s assume small businesses use legitimate service providers in these areas, so the folks that are using this are families and folks that do not know computers, and thus are easy prey to these “Technology Buzzards”, who can do what they want to your system and you won’t know whether they caused the problem or not (much like a lot of Car Repair shops work, but let’s stay away from that subject for now).

How can consumers protect themselves from this techno-scurge? Find friends who know computers and ask them questions, most folks will gladly help out (but make sure they know what they are talking about too). Take courses at your local community college, if your PC is an important part of your life maybe you should know how it works? Only use repair services that have been recommended by people you respect and who you think know computers, better still ask the folks at work that support your computers about things, sometimes they are glad to help out too.

Don’t pay $249 to get someone to come to your house to do an Operating System Installation/Upgrade, unless you really don’t want to do that, then Caveat Emptor is all I can tell you.

Jim Flaherty came through with an interesting and I would say very optimistic Economic Update (mini-budget, whatever), yesterday that took aim at something that all voters love to see under financial siege, Government Agencies and MP’s. 

No Debt Financing?

With some very creative and optimistic accounting the Finance Minister is promising to try to have either balanced budgets or very small surpluses up to 2013, which is very contrary to what most economists are saying is possible in the current economic instability (i.e. Financial Apocalypse). 

Flaherty did couch his optimism with the following cold statement:

“Any additional actions to support the economy will have an impact on the bottom-line numbers in our next budget. These actions, or a further deterioration in global economic conditions, could result in a deficit.”

So he isn’t saying there isn’t going to be deficits, just that there will be measures taken to avoid a deficit if possible.

Take that Ottawa Fat Cats

Not Really an Ottawa Fat Cat

No that is not a real Ottawa fat cat, it’s my cat from when I lived in Kitchener, but he is a good Metaphor for the “Fat Cats” in Ottawa.

Some of the measures against the “Ottawa Fat Cats” taken will be:

• Elimination of the $1.75 per vote allowance to support political parties that receive more than 2 per cent of the vote, staring April 2009. I really like this one, because all of the politicians are howling about it, so it must be a good thing. 
• Wage controls holding increases to public servants, including MPs and senators, to 2.3 per cent for last year and 1.5 per cent for each of the next three years. I really like this one, because the MP’s are mad about this as well, and the public service doesn’t like it either.
• Slash cost overruns on government travel, hospitality, conferences, exchanges and political services, this sounds like something they should have been doing already? What exactly were they doing before this, wait, I don’t want to know the answer to that one, so please don’t answer.
• Provincial equalization payments are gauged to the average GDP growth over a three-year period. Can’t wait to hear Dalton McGuinty tirade about this one.
• No mention of any extra taxes, but since this is not a budget, then I guess nothing has to be mentioned about that (yet).

Some pro-active steps being taken are:

• Giving $350 million in equity into the Export Development Canada and another $350 million in equity into the Business Development Bank of Canada. Interesting, guess I should send my resume in there since they might be hiring soon.
• A scary one for soon to be pensioners is allowing federally regulated pension plans to spend 10 years instead of five to make solvency payments if necessary. This is a slippery slope I think and it could end up like some of the private pensions that are woefully underfunded these days.
• Only allowing seniors to withdraw $7,500 instead of $10,000 from their Registered Retirement Income Funds (RRIFs), which is supposed to slow the cashing in of stocks and mutual funds I guess. 

Good Graphic to Show Canada is Doing Better than Most:

Canada Doing Not Bad with Debt

I have had this discussion with a few folks, and figured I’d bring this one to my readership:

Why do governments assume we will pay fees to dispose of hazardous waste?

When I first moved to Ottawa every weekend the City of Ottawa would run a hazardous waste drop off at the dump near my house, where you could bring your paint cans, spray paint, old household cleaners and chemicals, etc.,. It was a good system (in my opinion) which made sure a great deal of these chemicals did not make their way into the landfill and were disposed of in a safe manner.

Since then the number of hazardous waste drop offs has been cut to 2 or 3 a year, and I am confident that a great deal of the hazardous wastes are not being disposed of in a safe manner.

CRT’s Disposal Charge by the Pound

My biggest complaint now is the disposal of CRT’s and old Televisions. A year ago I took a 14 inch monitor from my Church to a store that disposed of CRT’s and was horrified to see that I had to pay almost $30 to dispose of this device (I was charged “by the pound”).  My Church gladly paid the fee, but this kind of “fee” to dispose of something hazardous makes me wonder if this is the right way to do it?

Many people I know have voiced the unlikelihood of them paying this fee to dispose of their CRT’s, and instead the CRT’s will be disposed of in more creative ways. I agree that it is wrong to dispose of CRT’s in landfill sites (lead, and other interesting chemicals are some of the by products of CRT’s in landfill sites), however, making it expensive for consumers to dispose of them is not going to encourage folks to be good “ecological citizens” of this planet.

I found a way to dispose of 4 of my CRT’s, but it was at the expense of my former employer. They were having a “clean up the campus” week where you were supposed to clean up work spaces and put the “waste” in appointed areas. I decided to expand the “clean up” to my home office, which had many old CRT’s and I brought them to work, and my former employer disposed of them (I hope).

Solution to this Hazardous Issue?

My opinion is that there should at least be some kind of “amnesty” for folks to be able to drop off old TV’s and monitors without having to pay more than $10 per device (or free would even work better). Anyone care to disagree?

Interesting North American Car Manufacturer Solution?

Completely changing the topic, my mechanic gave me the best bail out idea for the North American car manufacturers. Make all cars sold for the next 4 years tax deductible (the purchase price). You want to see car sales sky rocket, with no money invested by the Government (other than a loss in Tax income)? This intrigued me (I’m sure it is completely impossible, but it was an intriguing idea).