Tag Archives: banking

What Are the Odds You’ll Win At These Financial Issues?

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Let’s set some odds of whether these things are likely to happen:

-The Canucks winning the Stanley Cup next year?

-Your son, daughter or grandkid getting a good deal on buying a vehicle? The typical sales person sells three or four vehicles a week. Your son, daughter or grandkid buys three or four in a lifetime.

OK, how about getting a good deal in the dealership finance office? There are usually two business managers, so they see 3 or 4 customers a DAY. They’re former sales people who are 100% on commission and your 18-30 year old has no idea of what they need to avoid, or ask, or even understands a lot of what they’re being told or are signing.

-What are the odds they’ll get a better than most people deal with anything at their bank? I bet the odds are tiny. If you don’t believe me, just google all the bank investigate reports of rip-off under: CBC Go Public. You’d be amazed how easily they can sell them an overdraft they’re stuck in for a decade or more, a service charge package that’s overpriced, or a line of credit they’ll have for an average of 16 years.

A new JD Power survey found that eight out of 10 people want financial advice from their bank. That’s way too many and from the totally wrong source! The staff of financial institutions are on commission or bonus pay! They are sales staff – period. That is not the people from whom you should want – or should get – financial advice if you want it to be of benefit to you versus them! Big commissions, big fees, annual fees, low returns, selling you an overdraft, or another credit card, aren’t likely what those eight out of 10 people are looking for, especially your 18-30 year old.

-Credit cards: Millennials tend to use their debit card more than a credit card, and that’s a great thing. But what are the odds they’ll shop around for the right credit card versus just being sold the one from their bank?

Credit card marketing staff consists of some of the best marketing minds in the country…your graduate has never had a credit card in his or her life… Having one is so convenient and always lets them buy today and pay…well – whenever…until they reach their limit and then their statement will show that little line hidden on there: At minimum payments, it will take 27 years to pay off your balance.

Victory doesn’t happen in the game – it happens in practice. The same way, financial wins aren’t in retirement – they’re in your today actions.

George Boelcke – Money Tools & Rules book – yourmoneybook.com

Is Traditional Banking Dying?

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Banks have now spent over 30 years getting us out of the branch and onto using ATMs. They’ve also spend almost a generation slowly getting us to use online banking. Those are certainly big changes to the traditional banking model. But when they don’t see you in the branch, it’s much more difficult to sell you products or services.

On the one hand, that’s great news. You can’t be sold something you don’t need, or that’s not suited for you, if you don’t talk to the commission based people in the bank. On the other hand, banks’ profits keep reaching new highs of billions per quarter. Well, that’s because the service charges increase twice a year now and we just take it without firing them.

But how long can this go on? Here are some insights from the founder of a new U.S. online bank called Bankmobile. They’re U.S. stats, but we’re not much different here in Canada:

The average person goes into a branch twice a year, but does 20-30 transactions a month. What’s even more stunning is that the average bank branch opens between 40 and 50 new accounts in a year! That’s it!

The average online banking customer is 27 years old. And I’d bet most of them have never been anywhere else but online.  I recently talked to a 20-something who had never seen a cheque, never had a cheque book, and had no idea what they are, and what they do. He’s not alone – an entire generation has direct deposit and online everything else.

The millennial generation of 35 and under are actually way smarter than us older people who deal with banks. As of an hour ago, online bank Tangerine (bought by Scotia from ING) has a basic savings account rate of 1.1% vs. TD of zero interest until you reach $5,000. Then it’s 0.5% – same as the other banks. So the online banks are more than double the rate and don’t grab your first $5,000 without paying you a cent of interest.

In the U.S., the branch network has shrunk by 10% over the last few years and is expected to shrink another 20% in the next three. The largest nine Canadian banks have 6190 total branches – no change since 2012. Many fewer visits, but still an incredibly expensive branch network. Small wonder they have the highest service charges, up them twice a year, and literally half the savings returns compared to online banks.

Maybe the under 35 generation is helping us all out by avoiding the physical banks in favour of online banking at vastly lower fees and significantly higher savings rates.

George Boelcke – Money Tools & Rules book – yourmoneybook.com

Financial Trouble for Seniors?

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More and more stories are showing up everywhere about the financial troubles of seniors. These range from bankruptcy filings to collection troubles and living life below the poverty line. That’s pretty serious when those who have worked hard all their lives are having significant troubles making ends meet. However, it started way before retirement:

An RBC Consumer confidence index earlier this year found that 57% of us have nothing set aside for an emergency. If there’s not even a one-weeks’ pay set aside for emergency, what are the odds those people have any retirement savings?

Then there was a study a few years ago that showed almost 50% of us do not believe that a debt-free retirement is a must. I was somewhere between stunned and in disbelief. Is that really true? Do we believe having a bunch of monthly payment is OK when we reach the point of living on a fixed income, and there’s no more extra money coming in? Or have we just thrown up our hands and given up and given in – to the fact that we’ll never be debt free? It’s just so wrong, and so dangerous, to carry any debt into retirement because your golden years shouldn’t be spent working at the golden arches.

The biggest pre-retirement step you have to take is that your retirement savings have to come ahead of helping your kids with university costs or other loans or gifts. There are a number of ways to pay for university, but there is only one way to save for retirement, and that is you and your savings. You cannot help others if you cannot help yourself. If you are already retired:

-Cut up your credit cards: At 19% interest they are way too dangerous, and even the minimum payment is robbing you from money for necessities. Never mind that the balance will become almost impossible to pay in full. If you’re going to ignore that advice, at least call them and get your limit reduced to $500 or $1,000.

-Do a budget: You need half an hour to put in writing where your net income is going. Start with the priorities of shelter, food, utilities, medical expenses and the likes. THAT is how you will need to spend your income. It cannot be making a credit card payment first. If the card goes in arrears – so be it.

-If your kids owe you money you need to have a family meeting. Get them in the same room and explain the reality of finances for a retired person. Put the pressure on and demand to get paid back. The niceties are over, it’s time for them to grow up and pay up. You can’t care any longer if they get a loan, line of credit or put it on their credit card – you want to be repaid.

-If you have payments on a vehicle, it has to get sold – today. Those payments are a budget killer for everyone, especially those on a fixed income. You can’t afford them.

-If there is a possibility of collections down the road, your savings and pension money has to be in a bank different from the one who has your credit card, line of credit, or overdraft. Banks have the right to just grab your savings to offset what you owe them. Before that happens, move your money to a financial institution where you do not have any borrowing. It’s critical that you do this, or they can wipe out your savings to pay themselves back.