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Fuming all the way from the bank
Mar. 22nd, 2013 02:50 pmMy bank recently sent me a leaflet announcing various service fees that will be going up, effective June 1. All of which leads me to wonder: Just WHY should we be PAYING for the "privilege" of giving (or at least lending) a financial institution our hard-earned money?
When I first opened my account, things weren't so bad. Interest rates were quite high then, and account fees and even transaction fees were rare. There was no such thing as an ATM, so naturally you didn't pay extra to have a real human being handle your request! Nowadays, you're lucky if you get a penny or two (even though pennies are being phased out) of interest a couple of times a year, yet you're generally charged at least $5 a month just for giving the bank your business. Canada Revenue Agency has stepped into the picture too. Used to be, your first $1000 worth of interest did not have to be declared as income. And with the double-digit interest rates of the 1970s and early 1980s, the prospect of getting that much interest in a year was not so remote. Well, CRA has long since closed that loophole. Instead, they were generous enough to introduce the Tax-Free Savings Account. You can put $5500 a year into such an account and the interest accrues tax-free. Big deal - if you're lucky enough to get 1% a year on it, you might almost recoup your annual account-servicing fee! But at least this isn't Cyprus, where there was a proposal (luckily for Cypriots not enacted) to syphon off 6.5% (for smaller deposits) and 10% (for larger ones) in taxes to save the troubled economy.
I think what annoys me most about financial institutions is that if YOU want something from THEM, you have to really scramble to get an appointment with somebody. That might be understandable if you're wanting, say, a loan or a line of credit (although I suspect they make plenty of money on those too). But if you actually want to give THEM money, like if you're buying a GIC or making an contribution to an RRSP or TFSA, it's crazy. On the other hand, once you actually have a reasonable amount of money in accounts and other investment products with them, suddenly THEY'RE all over YOU - wanting to discuss your financial goals and objectives and plans and priorities and phoning you at inconvenient times (while warning you that the call may be monitored for quality assurance purposes) or wanting you to come in and meet with them.
I do think co-ops and credit unions are a little more flexible and reasonable. Moreover, if you're automatically a shareholder, than you have a vote and at least a bit of a say in how their business is conducted. Unfortunately, in our federalist system, they fall under provincial jurisdiction. So for example, when I was working on the Quebec side, I didn't have access during the day to a walk-in branch of the CS CO-OP, although they did have ATMs over there. When the CS Co-op decided to expand, it was a Toronto-based organization, Alterna, that they united with. So if I'm travelling, even within Canada, I don't really have proper access to my money.
So for the foreseeable future, I'll need to maintain accounts with both types of financial institution, and pay for the privilege. They've got us over a barrel.
When I first opened my account, things weren't so bad. Interest rates were quite high then, and account fees and even transaction fees were rare. There was no such thing as an ATM, so naturally you didn't pay extra to have a real human being handle your request! Nowadays, you're lucky if you get a penny or two (even though pennies are being phased out) of interest a couple of times a year, yet you're generally charged at least $5 a month just for giving the bank your business. Canada Revenue Agency has stepped into the picture too. Used to be, your first $1000 worth of interest did not have to be declared as income. And with the double-digit interest rates of the 1970s and early 1980s, the prospect of getting that much interest in a year was not so remote. Well, CRA has long since closed that loophole. Instead, they were generous enough to introduce the Tax-Free Savings Account. You can put $5500 a year into such an account and the interest accrues tax-free. Big deal - if you're lucky enough to get 1% a year on it, you might almost recoup your annual account-servicing fee! But at least this isn't Cyprus, where there was a proposal (luckily for Cypriots not enacted) to syphon off 6.5% (for smaller deposits) and 10% (for larger ones) in taxes to save the troubled economy.
I think what annoys me most about financial institutions is that if YOU want something from THEM, you have to really scramble to get an appointment with somebody. That might be understandable if you're wanting, say, a loan or a line of credit (although I suspect they make plenty of money on those too). But if you actually want to give THEM money, like if you're buying a GIC or making an contribution to an RRSP or TFSA, it's crazy. On the other hand, once you actually have a reasonable amount of money in accounts and other investment products with them, suddenly THEY'RE all over YOU - wanting to discuss your financial goals and objectives and plans and priorities and phoning you at inconvenient times (while warning you that the call may be monitored for quality assurance purposes) or wanting you to come in and meet with them.
I do think co-ops and credit unions are a little more flexible and reasonable. Moreover, if you're automatically a shareholder, than you have a vote and at least a bit of a say in how their business is conducted. Unfortunately, in our federalist system, they fall under provincial jurisdiction. So for example, when I was working on the Quebec side, I didn't have access during the day to a walk-in branch of the CS CO-OP, although they did have ATMs over there. When the CS Co-op decided to expand, it was a Toronto-based organization, Alterna, that they united with. So if I'm travelling, even within Canada, I don't really have proper access to my money.
So for the foreseeable future, I'll need to maintain accounts with both types of financial institution, and pay for the privilege. They've got us over a barrel.
