Canadian Personal Finance Blog

Given that for now I am still a telecommunications employee I can join the Telecommunication Technologies Credit Union (this is not a promotion for them, nor am I being paid to mention them, this is me querying my readership). This Credit Union has ATMs on campus where I work, and thus if I need money I must use their machines (or drive to find a TD Canada trust machine).

As a bit of history about 10 years ago, CIBC was on campus and their ATMs were on site. They had a no charge banking deal back then, so I opened a bank account with them, where I put some “mad money” (usually no more than $50.00) where if I needed money and I was at work, I could withdraw it without incurring any extra service fees. This worked quite well, and then when CIBC played the dirtier trick of “out sourcing” their ATM machines, it was even better, because then I paid no service charges, but if I tried to take money out of my TD account, I got nailed with a $1.50 charge from TD, and CIBC nailed me with a $2.00 fee for it being a “White” ATM machine (and not a CIBC machine). You wonder why I invest in banks, they are just so darn EVIL!

Now I have the option to open an account with the Credit Union, which I almost did last week, since they seem to offer “no fee” banking so I was going to go back to my old “Work” account concept, except, the Credit Union has an interesting twist for new customers. I must be a “member” of the Credit Union, thus I must buy a share in the Credit Union (I think this is standard practice with Credit Unions), and this share costs $220. If I ever leave the Credit Union, this money is refunded to me, and it evidently earns a dividend of some sort every year as well.

This leaves me in a quandary, do I pay the $220 set up fee to have a convenience account for me to save $3.00 a month or so in service fees, or do I just get some “intestinal fortitude” and simply not take money out of my bank accounts willy nilly (and instead take out the money I need for two weeks in 1 block, and when it is gone, it is gone)? The Credit Union does not have a lot of ATMs around Ottawa, so thinking of them as an option to move ALL my banking to is not really “on” either, although they do seem to have some good services as well.

I can guess a few of my friends answers, but I am curious to hear what my readers think would be the better thing to do in this situation.

Lottery Tickets, another reason to Loath Them

The CBC is reporting yet another internal investigation at the Ontario Lottery Corp about their approval of a $21.5 Million “Insider Win” in the 6/49.  Given this is the 6/49 so the ability to tamper with this lottery is less likely (unless the person figured out how to “past post” the winners (see the Sting to understand that)), it still has the appearance of something smelly in the Lottery business (which already has had fun and excitement with Fraud allegations in the past year). Given the Lottery Commission has investigated, I guess they are satisfied their was no Fraud involved. Either way, I read this story, and I thank my lucky stars I don’t buy Lottery Tickets.

As has been pointed out by both Canadian Capitalist and Michael James the Bank of Canada’s 1/2 point rate drop has not been reflected by the major banks yet, in terms of Mortgage rates (especially in longer term mortgages). Short term mortgages and credit vehicles that are typically based on the Prime interest rate, do reflect this dropping, but longer terms (greater than 6 months) certainly do not reflect this drop.

Why are Mortgage Rates not Lower? Darn good question. Currently the TD Bank’s prime rate is 4.75% and that is also what they are charging on their variable rate 6 month mortgage, however, after that the rates start climbing, to a maximum of 7.75% for a ten year fixed rate mortgage (more than twice the current Bank of Canada rate).

Remember that all rates posted on these sites are negotiable in some fashion or another, and here we come to the real core of this post.

If the bank says, “We don’t negotiate Mortgage rates”, simply leave, and call a Mortgage Broker and you might be surprised that the Broker can get a cheaper rate from the exact same bank (and remember the Broker makes money on this too).

Banks Need You

Remember, if you are a good credit risk and you want to truss yourself up with a long term debt like a Mortgage, the Banks want you! They want your business, and they want your money passing through them. They want you even more, if you carry balances on your Credit Cards, but let’s not go to that subject today, but remember, the bank wants your business, and keep that in mind.

When you are talking to a bank about Mortgage rates and such, it is an excellent time to discuss getting Free Banking too. This corporation wants your business, now is the time to be asking (or demanding) for the best deal you can get. Be prepared to talk to a few banks, and also be prepared to be promiscuous with that information, tell the banks the deals other banks are offering you, and see if they will match the deal or even make a better deal (I don’t suggest lying, mostly because I am a lousy bluffer or liar, being dishonest isn’t the way to go).

Let me be honest, I am awful at negotiating, but I am learning that it is an important skill to develop, so I work on it. It is all a game for me, and getting the best deal I can, is the goal of the game. A really good tactic is to get friends or family to tell you what deal they got, and see if you can beat that deal. You may not get that deal, but maybe you’ll get a better deal, you never know, until you negotiate.

The only thing I can tell you for sure, if you do not try to negotiate, you will not get a good deal from the bank. Strangely the opposite of this is not true (i.e. if you negotiate you will get the best deal), but, if you don’t negotiate, I promise you will not get a good deal (unless your father or mother or a relative owns the bank or works at the bank, but then you are playing the game by using connections, so go for it).

After posting yesterday’s best of: Free Banking post, I received my monthly balance sheet from the bank for my bank account, and dutifully I went into Quicken and ran my monthly reconcile of my chequing account. At the end of the document from the bank it had this very interesting statement:

You have saved $72.50 in Service Charges this month

I beg your pardon? The statement reflect that if I was paying for the $12.95 a month TD program, that I might not be paying for right now, I have saved $72.50. If I was gouged for $73 in bank service charges for a month, I’d start putting my money in a mattress or carrying it around in my shoe.

Then I started to wonder is there anyone out there who actually pays that much a month to the banks? I really hope that is not the case, as you saw yesterday, I think it’s ridiculous to pay $13 a month, $73 a month would be highway robbery. What services could be worth that much?

• Tellers deliver money directly to my house?
• Bank Manager drops by and helps clean out my garage for the spring?
• FREE MONEY! (two words I love to see)
• Interest payments that amount to more than a single bus ticket in value?

Given none of those services are offered by my branch of TD, my guess is those service charges of $73 are fiction, since no one would pay it, would they?

This is why I invest in banks.

Snow and Flooding

With the snow pack in Ottawa disappearing the flood planes of Ottawa are filling up quickly. My area of Ottawa is less likely to flood, however, I am not that far from the Mighty Jock River so there is a chance yet.

How much does flood insurance cost? What does it cover? Is it better to just invest in a sump pump? I have a good shop vac for small wet spills, but if my basement floods, I would have to run to Canadian Tire to get a real pump!

Is flood insurance worthwhile? Opinions?