Tag Archives: bank fees

Dear RBC: What a Rotten Idea…

According to PIAC, we already pay over $700 million in paper statement fees in North America. And, since it’s summer again, it’s the bi-annual increase in service charges. Global Television had a big story on the Royal leading the way with their 18 million customers.

Have we just become numb to this, shrug our shoulders, and take it…twice a year? That’d be sad, but I have a hunch that that’s the case. The nastiest change by the Royal is that the seniors fee plans are changing from age 60 to 65. Great if you’re a shareholder because you get to rip off millions of seniors for another five years. That’s 60 more months of full service charges! The story featured one lady who has set up an appointment at her branch to see if she can get some fees waived. Sorry, lady – you’re wasting your time. The quote from the Royal was “we’re working hard to keep costs down.” That’s funnier than any comedy show you’ll watch this year.

What’s the behind the scenes reasoning for this one? We Canadians are slowing our borrowing down a bit. Maybe not by choice, but because we’re pretty maxed out. It’s also the result of a slower economy. Do you think banks are just going to see their income drop from interest income and not replace it somewhere else? The Royal already makes $1.5 billion in account service charges (2014). That’s 5% of all their income! Want to bet it’ll hit $2 billion this year if you don’t go somewhere else?

Why can the banks do this? Because they’ve made millions of you really sticky. That’s a bank phrase that they focus on a lot. When  you’re stuck – you don’t move elsewhere. If you have five dealings with a bank you’re so stuck, you’re not moving. A chequing account, direct payroll deposit, some RRSPs, a credit card, maybe a line of credit, and a mortgage, and they’ll likely have you forever! Then you’ll pay the increasing service charges, whatever fees they dream up, and take whatever bad service (if any) that you can get.

You’ll complain and moan. but you ain’t moving to a credit union. Your perception is that it’s too hard to move everything. It’s not! Get to a credit union TODAY. Open a chequing account and change your direct deposit. That’s the big step: Where your income is going. Then move your auto payments and you’re set. Oh, and while you’re there open up a Choice Rewards MasterCard, low-rate, or student card. No fees, no hassle, better and more flexible rewards, getting treated like an owner (because you are), and you’re never going to be charged a fee to enter a branch, or to pay your own payments down the road. It takes an hour of pain to move things around…for a lifetime of being valued for your business AND a rebate the end of year on all your dealings! My service charged went DOWN this month AND I got over $600 back in my annual profit sharing! As Nike says: Just Do It! Enough is enough! The government isn’t coming to help you here – so repeat after me: If it is to be – it’s up to me!

But part two is even nastier. The Royal announced they were thinking of charging their customers to pay their own Royal Visa payments, their loan payments, and mortgages. Yes, you heard that right. A service charge to pay payments for their own loans and credit cards. Last Friday they backed off. But you have to know this will come up again. How sick, sad, and just wrong!

The Federal Government has a long track record of not being big on helping consumers. They did force cell carriers to discontinue their paper statement fee. Yet they aren’t shutting down the banks from these rip-off fees that are probably a hundred times more than the little cell carriers and impact millions more people. Is it because Bay Street and the big no-service banks are some of the biggest contributors? You decide…

The Giant Banks Are At It Again

If you’re really quiet, and listen closely, that sucking sound you’re hearing is your bank ripping you off for some more, and bigger, service charges this month.

I’m looking at the notices from two banks. The others are pretty much in lockstep with each other, so there’s no point singling out these two. If you listened last year, this is now the second increase. It used to be once a year, now they’re changing the fees twice a year. Why? Because we don’t complain, and we don’t take our business elsewhere. So why wouldn’t they, if you think about it.

By the way, the reason they do it in February is because you got the notice for these in December. There’s an internal banking industry newsletter called the Fee Income Report. It had a story that the two times a year banks should give notices for increases are in August and December. Why? Because in the middle of summer, and just before Christmas, we are least likely to take the time to read our bank statements, or the inserts to give us notice.

Here are some of the highlights of the latest increases:

Different types of chequing accounts are increasing their service charges around 20 to 30 percent. That’s an insane increase, and it’s the second time in the past year!

On one account, with a couple of banks, it looks like the service charge went down, or was eliminated. Well, not really. It’s a shell game, because they drastically reduced the number of free transactions before you have to pay for each additional one.

There’s a bunch of accounts that will now also add a $1 charge to send your statement. Yes, you have to PAY to find out what the transactions are. For on-line statements, you won’t have a charge, but now you have to pay to get it by mail.

The carrot to get your monthly service charge waved just got a lot further away. The minimum monthly balance went up by 25 to 50%! So if you have $1,500 or $2,500 in your account, the fee is waived. But then, that’s billions of dollars the banks get to use for free, if you add up all the chequing accounts.

On savings accounts, the per-transaction fee increased by 25 to 50% as well. And that’s for EACH transaction on savings accounts.

Heavens forbid you ever bounce a cheque by mistake, because that’s now $40 to $45. Or the can trap you with an overdraft which changed with a number of banks from prime plus a bit to a fixed 19% or so. With Scotia, for example, that means the overdraft rate has more than doubled.

I would bet almost nobody knows this, or has read the notification. You have to look at your statement, and get in touch with your bank. Better yet, move your business to the credit union. Because the only way things will change is when you complain and vote with your feet! Until then, the banks know that THE most loyal clients are people with basic savings and chequing accounts. That’s also a large quantity of people, so $2 or $3 in added fees, twice a year, is billions of dollars of pure profit.