This was written in 2011 when banks were more open to discussions about fees. Remember, Free Banking is readily available from many institutions. A Cheaper Mortgage Rate is also negotiable too.
That was the exciting plight I was in last week when I went in to talk with my bank. The topic of my visit was RESPs and such.
Usually, when I make an appointment at the bank, I bring a list of things I need to get done. I also bring a few Christmas wishes. Typically my main desire is to get Free Banking (i.e. no bank fees or a vacation from fees (yes, I already have a EQ account)). However, this time a co-worker gave me a different idea.
As background usually, every time I ask for Free Banking, the bank representative reacts as if I was asking for one of their kidneys (and possibly their spleen). They say it’s impossible to get that, and such, but will eventually relent and give me six months or a year of banking for free (i.e. no monthly service charge). It all plays out as a very poorly written soap opera. I decided this time I’d try for something with more impact. Cheaper Mortgage Rate?
Lower the interest rate on my Lines of Credit.
Currently, most secured lines of credit are pegged at Bank Prime (not the bank of Canada prime) plus 1%. I decided to ask, can that rate be lowered? As I have said the worst thing they can say is No.
The meeting was going very well, and I had reached the end of the tasks I needed to get done, so I figured I’d broach the interest rate subject and asked, “Is there any way to get a lower rate on my line of credit?”. The bank rep did not jump out of her chair screeching obscenities. She didn’t even seem remotely perturbed by request (which made me concerned that it was an easy NO). She typed a few things on her computer and said, “Yes, we can see if we can cut your rate to 0.5% over our prime”.
I believe my mouth dropped open. I blinked a couple of times but regained my composure enough to say, “Yes, that would be very good.”. Some forms were filled in, but I believe I have been approved for this rate. No fuss, no muss, no complaining about me wanting an internal organ, all very civilized.
This good news got me scratching my head a little since free banking costs the bank about $14 a month, whereas a rate cut by 0.5% on my Line of Credit is more than that, so what gives? The Service Fee is actual bank income and is very important to the bank. In contrast, income from Line of Credit interest (while important) is a more variable value, so losing 0.5% is not as important? I may be out in the left-field on this one, and I am open to suggestions if anyone has a better idea.
At the end of it all, I am proven correct. If you don’t ask, the answer is always no.
Of course, there are plenty of folks that offer free banking