Banking and Saving Fees

Back in the good old days, my office at Nortel had a banking machine on site. This was before banks started playing silly games with non-subscribers, charging them White ATM fee charges. Even then, I did open an account with CIBC, and back then they had a Zero Fee Account. That stopped working when the CIBC ATM changed to a Credit Union machine.

Stupid Bank Tricks

More Stupid Bank Tricks

My current employer has an RBC machine in the lobby, however, RBC doesn’t really have a zero fee banking account (unless I move all my banking there). No chance to resurrect my earlier brilliant idea there.

I did finally notice that across the street there is a Scotiabank branch, from my current office. After 2 years the light finally went on, I have a Tangerine Bank Account. As I have pointed out, Tangerine is owned by Scotiabank, and I can use their ATM machine with no fees.

This now means, I can use the Tangerine account which has zero fees (for now), and do transfers to it (for no fees) and withdraw money without fees, which seems to be ideal. You could also do this with Simplii and CIBC machines I assume.

Another stupid bank trick to add to my list of stupid bank tricks? Maybe, but if you have enough of them, you will have more money left in your bank account. Another way to live, is to simply take enough cash out every pay cheque that you need.

If you want to join Tangerine, use my code and I make some money too ( 47979477S1 ).

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Bank Accounts and Loans

It seems to be normal practice for most banks these days to attempt to maximize their business with you. Many try to upsell services to you, but others go with a simpler strong-arm tactic, if you want the service you must bank with us. This is within the rights of the bank to demand this, but you don’t have to capitulate either.

An example of this is the practice of forcing anyone opening a debt vehicle with the bank, to also have to open a chequing account. This situation arises if you use a Mortgage Broker or have bargained with many banks for your Mortgage.

Bank Accounts and Loans

You don’t have to open an account, but the bank won’t let you play either.

Creating the chequing account typically forces the user to have to pay a monthly fee to have the account (not in all cases, but in some cases). I have seen this with Student Lines of Credit, Mortgages and HELOCs as well.

This “policy” seems a throwback to the days when banking was done during bankers’ hours, but also another cash grab to make consumers pay more for services they aren’t using. This implies that transferring money from a different bank is hard for banks. The real reason would be they can then see the funds are available to pay the loan in question.

A reason I have heard quoted by bank representatives is that if the customer wants to have access to  on-line banking (e.g. to check their loan balances) they will have to open a chequing account. Seems a bit thin, as a reason, but I am not a bank.

Are All Banks Like This ?

These examples I have heard are from the “Big Banks” I am not sure about the on-line banks or trust companies.

As a stock holder in the banks it seems like a good business practice, but as a consumer I am tired of dying a death of a thousand paper cuts. Having to pay service fees to many banks a month does add up.

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Stupid Bank Tricks (revisited)

Previous Stupid Bank Tricks

I enjoy strategies to use the banking system to your advantage. With this in mind, I have written a few articles on Stupid Bank Tricks.

Stupid Bank Tricks

More Stupid Bank Tricks

More Stupid Bank Tricks

A co-worker told me about a stupid bank trick (with my apologies to David Letterman) that has helped him a few times. This one struck me as particularly good strategy.

Create a bank account where deposits will go. Deposits such as,

  • Pay cheques
  • Tax Refunds
  • etc.,

This account is solely in place as a deposit point. The account information is given to your jobs payroll department and the CRA.

The strategic part is to have a working account which scrapes this account, to build up funds for do day-to-day banking. This account is banking main street, where bills get paid, cheques written, groceries paid, and other normal banking tasks.

Why separate these two accounts? In the case of my co-worker, he found out he was going to be “Phoenix’ed”, as something had gone wrong with his pay, and they wanted to take back money from the account. His “scraper” functions had already taken the money from the account, so his wages could not be taken back, as there were insufficient funds in the account.

Why This Strategy ?

Compartmentalized bank accounts is an interesting idea. I have done this for saving, but had not thought of the ramifications of a “scrape back” on my account.

I assume there is a way to tell your bank not to allow withdrawals from your account by specific folks? This is not a topic I had ever thought about.

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Banking is Necessary Banks are Not.

This is a quote attributed to Bill Gates, which resonates with me. Whether the quote banking is necessary banks are not, is the real quote, or it is:

banking is necessary

Both of these quotes petrify banking executives, because they are both true.

Banks continue to claim they are embracing the use of technology, or FinTech as they would have you call it,  but that does not  ring true to me.

The reason I call bovine feces on this statement is my understanding of a few key factors in banks.

  • Banks do not like new things, until they are proven money-making ideas. Adaptation of new ideas is not any banks strong points (unless it makes them a lot of money).
  • The backbone of the #FinTech revolution is ATM machines and point-of-sale systems which are still running on Windows XP. #FinTech is not as futuristic as you might think.
  • COBOL programmers are still making a fortune from Banks , because Banks are afraid to upgrade their existing core system to a language from this millennium. This odd situation which arose with Y2K, where programmers were paid ludicrous sums of money to make the following change in systems:
    • 05 YEAR PIC 99
      * DEFINE A YEAR ONLY NEED 2 DIGITS
    • 05 YEAR  PIC 9999
      * NOW WILL WORK UNTIL YEAR 9999
  • Yes, that was a big money-maker for a few consultants (I am simplifying). These same consultants continue to make bags of money because banks are afraid to use a new language like say C++ or Java?
  • Banks have Fiefdoms and they don’t like playing with each other, thus they typically have very diverse computer systems. This I can guess on the basis of a few observations I have seen at a specific bank, which merged with a large trust company many years ago. The Trust Company still exists in parts of the banks system, which has lead to issues with systems interworking with each other.

There are countless other examples out there, but this belief that FinTech will be changing things for Joe (or Josephine) Six-Pack any time soon is a falsehood.

Automation of systems continues with Banks, but again, these are cost-saving measures, not technological leaps forward. Being able to photograph a cheque to deposit cuts down on the  bank having to archive cheques, mail out cancelled cheques, etc., so it was finally adopted by the big banks.

The applications on Smart Phones are allowing banks to close more branches, and cut down on employees, again a cost-saving measure.

The Future is so Bright?

We need banking services, but, unfortunately the way the banks implement them, leave a great deal to be desired. The business of banking will see many changes over the next few years, but not quite as many as a lot of financial pundits think.

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WYSIWYG Banking

WYSIWYG Banking

What the heck is WYSIWYG Banking? Why is it not possible to have a single bank account, that I can do all my banking with, without having to worry about transaction counts, and fees? This was the core of the presentation from Dan Dickinson of EQ Banks on the weekend, where they explained how their single account solution works (Tangerine also has a similar type of account), but this got me thinking about how (thanks to technology) banking has changed, yet, some “traditions” continue on (i.e. the Chequing Account, the Savings Account and the High Interest Savings Account).

Bank Fees and accounts should be WYSIWYG Banking

What are you seeing ?

What do I mean by WYSIWYG (pronounced “wiz-ee-wig”) ? In the 80’s the tech world wondered at text editors which were WYSIWYG, but in the 60’s we loved a song by the Dramatics of the same name:

What You See is What You Get

OK, so the Dramatics song is actually called Whatcha See is Whatcha Get, but you get my point. Having an editor that showed you what your final document might look like was a huge breakthrough.

What do I mean by this archaic technology phrase? Why is it that if someone talks about a new and exciting banking account it comes with about 30 disclosures/commentaries (usually in a very small font at the bottom of the page) (disclosure: I stole that line from the EQ Bank guy), how is this that much different from one of the standard accounts I have.

If I do more than 2 withdrawals or payment transactions on my HISA (High Interest Savings Account), I get dinged with a huge fee (I think it’s like $7.50), and my chequing account pays no interest whatsoever, but I keep asking why? Yes, in the days of ledgers, and paper records keeping this made sense (maybe), but now the record-keeping is all technology based, so why can’t I have a single bank account? Why must I have:

  • A chequing account, where I do most of my banking like paying bills, writing cheques, etc.,
  • A savings account (or a HISA) to put my rainy day money
  • An Emergency Account, that is a safe place to put money, but I can still get at quickly if there is a problem.
  • Not to mention all the registered savings accounts that I have.

It is starting to get to the point that I have as many bank accounts as I do log in IDs on the Internet (OK not that many but I have well over 10 different accounts, and that is only with 1 bank, I have other accounts at other banks).

Tangerine and EQ Bank look like they are trying to get to a single bank account (or WYSIWYG Banking), but they are not quite there yet.

Yes, this is a great song too!

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