Fees and Penalties

Remember that great expression from your local video store

“Be Kind, Rewind”

Back then, some places even charged a penalty if you didn’t rewind your VHS tape. Interesting that this fee went away, but that is because the entire “VHS Rental” business disappeared. That sounds like a fairly sarcastic commentary, but how many fees disappear?

VHS Tape

I will bet there are readers who have never used one of these

  • My home telephone bill (yes I still have a land line) had a “Touch Tone” charge on it (up until July 2015), but if I tried to use a rotary phone I get nasty remarks from Bell, pointing out the technology really isn’t supported any more. The fee finally went away after Bell was shamed into removing it by the CBC.
  • How about that fun “paper charge” if you still got your bill mailed to you? Wasn’t that Green and cool? That went away (mostly) after the Government said they were not allowed. I actually can see why that charge was there.
  • Account fees for day-to-day banking continues at most major banks, even though many smaller banks offer free banking (PC Financial, Tangerine and others), yet we continue to pay for the services at major banks? Michael James has pointed out that eventually the Major Banks will take a dive and may finally stop charging these fees? Nah, never gonna happen.
  • On line trading fees started at $29.95 and it has dropped steadily since (and is around $9.95 or lower). Since I am pretty sure the trading houses are still making money on this, it does make me wonder how low could these fees go?
  • The airline industry seems to have completely built their profit structure around service fees, gas fees, take off fees, sitting in nice seat fees, not getting broken cookie fees, etc.,etc.,. and not many of those fees are going away. Aren’t they charging for carry on luggage now?

Are there any fees that may go away some time soon? I can’t think of many (maybe gas taxes once gas cars go away). Pretty sure overdraft fees will never go away.

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Michael James, inspired me to write another rant/commentary on the financial industry. He wrote about Mouths to Feed in the Financial Industry and it reminded me of a very funny monologue by Chris Rock: Bigger and Blacker (Amazon Link) about how Fathers don’t ask for much in life.

What does daddy get for his hard work? The big piece of chicken at dinner! My mamma would kill us if one of us ate the big piece of chicken by accident!

Daddy's piece of chicken

That is a BIG piece of Chicken

What does this have to do with the Financial System? Everybody in the financial system thinks they are Daddy, they all want the big piece of chicken.

  • Mutual Fund managers want you to pay the front-end, back-end and high MER fees because they are doing that much work to invest for you. That is a whole chicken, not just part of it.
  • Banks think they are the Daddy, just for taking care of your money. There are banks in Europe giving negative interest on your money (the money shrinks if you leave it in the bank).
  • Any Cell Phone Company (in Canada) is your Daddy, how much do you think their service really costs, but they are making sure you get quality service.
  • Internet Service Providers are plumbing, but they want a big piece of Chicken for the way they count your packets (and charge you if you use too many)

Let Daddy have that big financial piece of chicken? No way! They get enough, without taking the big piece of chicken too!

 Image courtesy of piyato. at FreeDigitalPhotos.net

 

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Is Your Toilet Flushing Hot Water ?

That is a very odd title, but it did happen. My Brother had just moved into a new town-home complex, and there were a few idiosyncrasies that he found in his new place, but he didn’t notice this issue for a little while after moving in. He really only noticed one day when he sat down and noticed the warmth emanating from the commode, and only then realized that his toilet was connected to the hot water system for his house (not a huge issue, but it would waste a little money for a long time).

Pyromania is burning the unburnable!

No, it wasn’t that hot

Are you flushing hot water in your financial home? How many fees are you paying that you are unaware of, or worse, are ignoring? What kind of fees am I commenting about?

  • Bank fees, do you still pay those? There are so many banks that offer zero fee accounts, why are you flushing that hot water (money) down the toilet?
  • Entry fees, exit fees and high MER Mutual funds? Seriously, how many times do we (pretty much everyone writing about investing) have to write about this topic? Evidently, we have not hit the maximum count yet. They are called Index Funds, look it up.
  • What are you paying in Insurance rates? Are you shopping around? Remember that insurance is only for ” … in case stuff happens …” (to paraphrase Chris Rock).  If you are overpaying for insurance your money is flushing away.

Am I missing any other Financial Toilets that flush hot water ?

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What the Hustler Taught Me About Banking

One of my favorite movies is “The Hustler” (the original with Paul Newman and Jackie Gleason). Mr. Newman played “Fast Eddie” Felson an up and coming hustler who wants to be a success, and his goal was to beat Minnesota Fats (played by Mr. Gleason). The movie is an intricate set of stories, one of which is the basis of my thematic premise about banking and the Hustler.

The Hustler at Amazon

The Hustler at Amazon Canada

“Always leave a mark with some money in their pocket, that way they keep coming back”

That is how banks have done it for years, but now they are finding new and more exciting ways to bleed some money out of you, but not so much that you decide to bank somewhere else (also, they are all doing it, your only other option is to put it in your mattress).

My opinion of the banks’ thinking in this area? Let me quote Fast Eddie from the Colour of Money:

“Money won is twice as sweet as money earned.”

They aren’t earning all this extra money, they are winning it off you, think about it.

My apologies if I sound like I am picking on the Banks, this is actually true of all the Service Industries we deal with, especially the Cell Phone Companies, the Internet Providers, the Phone Companies, and the Insurance Companies.

Better learn how the game is played, or you are going to get hustled.

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No I Can’t Do Anything About That

That is a direct quote from a TD representative when I asked if anything could be done about the interest rate on my Unsecured Line of Credit.

For the longest of times, this Unsecured Line of Credit was “Prime + 1.5%”, but about 2 years ago, it was raised to “Prime + 2.0%”, which while annoying, was something I could live with, however, about six months ago I got a terse piece of Snail Mail announcing, “Yeh, it will be Prime + 3.0%. I was quite irked by this (as a customer of TD), and decided the next time I was in the Bank (say to cash in an RESP) I would ask about this.

The Answer

The Answer is Always No, if you don’t ask

In the interim, my daughter got her Student Line of Credit from CIBC, which I co-signed, and she got that at Prime, so I figured I’d bring the documentation with me (to TD)  to see if I could motivate my friendly TD rep to do something about my unsecured line of credit rate.  This is where the title of this post came in to play.

First I was easily able to cash out my daughter’s RESP (as I had move all E-series Index Funds into the Money Market fund, won’t get fooled twice on that one), in a relatively quick few minutes. I then had to have my “investing profile” updated to allow me to do what I wanted in another account, again done quite quickly as the rep simply cloned the last time I did this update.

At this point I brought up my Unsecured Line of Credit and the high interest rate (in my opinion) and the fact that I have good enough credit to co-sign a loan for prime only, and the answer was short and to the point:

“No, that is an unsecured line of credit and I cannot lower that rate.”

I asked if there was any chance to discuss it, and was dismissed with, “Your Daughter has a professional line of credit loan, not the same thing, we can’t do anything for you”.  I believe I also asked if anybody else could help, but was told No. Now I have said previously, The Answer is Always No, unless you ask, but evidently it can be No even if you do ask.

If I remember the happy young lady at the CIBC, when she gave us the details about my daughter’s student line of credit, told me that an unsecured line of credit rate for me would have an interest rate depending on my credit rating and how much debt I carry, but she’d gladly check it out for me if I wanted her to do that. I guess I’ll be going to visit CIBC in the near future.

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