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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Fees and Penalties

Fees and penalties are the staple of many service industries. 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?

Penalties and Fees

No More Fees and Penalties

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?

Fees That Are Not Long For This World ?

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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Wanting the Big Piece of Chicken in the Financial World

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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