Tag Archives: Bank of Montreal

So-called “Good” Debt and Your Stay-at-Home Partner

BNN recently featured a Bank of Montreal survey with the headline that Canadians are taking on more “good” debt. Oh nice. So everything is fine – nothing to see here – move on.

Give me a break. I understand the logic of what they’re saying, but I disagree with the premise that there’s really such a thing as “good” debt.

The survey called borrowing for the purchase of a home, to do renovations, or for education good debt. Well – maybe. But most of these CAN be done with cash and without taking on more debt. The only exception would be the purchase of a home. But only in comparison to taking on debt for vacations or credit cards, as two common examples.

News flash: At the end of the day you still need to make the payments. It’s “good” if the rate is really low, bad if it’s the 20% credit cards. But debt is debt. It stops or reduces the amount you can save, because you only have a finite amount of net income. So, every time you borrow, you’re taking a voluntary pay cut: Same pay, minus the necessity bills minus one more new payment now.

It’s good or at least “gooder” if it’s a fixed loan where you have three, four, or five years and there’s an end. It’s never good when it’s interest only, such as a line of credit where the average person owes over $35,000 and owes it for more than 14 years. It may have started off with the sales pitch that it’s “good” debt, but when you add up all the interest and time to eventually pay it off, it was a horrible idea.

And one more thing, if you have a spouse who is a stay at home parent with your kids: A new study just found that a stay at home parent would be fairly compensated at $117,000. So if your partner is a full time parent, do not begrudge them their “me” money, or question their personal spending unless you want to pay them what they ought to get paid! You really need to read the Money Tools relationship chapter: When you got married, it stopped being  “your” money or “their” money and became “our” money.

Three Credit Card Updates and Heads Up

The Bank of Montreal has a new cash back World Elite MasterCard out that they’re promoting pretty heavily. The card has 1.75% cash back, which is pretty close to the best in the country.

I was all excited until I did 30 seconds of math. The rate and terms are pretty much the same as every other card, but it’s a $120 annual fee. So if you take $120 divided by 1.75, you need to charge just under $7,000 a year to only pay for the annual fee. That’s almost $600 a month before you even get a penny of actual cash back. So, unless you’re a huge charge and pay it in full every month, the card doesn’t make much sense for most people.

Did you take my advice two years ago and get a Capital One Platinum card if you regularly carry a balance? If so, you and I have been getting a rate of prime plus one percent all this time! A 4% credit card was something nobody else could match and would have saved you thousands of dollars in interest. But that’s come to an end. I just received their notice it’s changing to prime plus 7%, which makes it a 10% card. Still a good deal, but a 10 or 11 percent card is something you can get in a dozen others, including the Scotia Value Visa as an easily accessed one. Here’s the link to a federal government comparison site that’s really worth looking at: http://itools-ioutils.fcac-acfc.gc.ca/STCV-OSVC/ccst-oscc-eng.aspx   If you can’t grab the link, search for Financial Consumer Agency and then search on top for credit card selector tool. There are (right now) 26 cards at 12% or less and 12 cards under 11%.

When you get this, or any, rate changes on a credit card you have two options: Do nothing and take the rate increase. The second one is to call them and decline the change in the rate. If you do so, they’ll cut off your card for new charges, but you can take the forever plan to pay off your balance at the old rate, as long as you make the minimum payment. If you chose that, just make sure you get another card right away before this one shows a zero limit that will significantly drop your credit score!

Last week a relative was checking into a hotel in Prince George. The lady in front of him couldn’t get her credit card authorized. She had no idea why, and was quite rattled needing to get her daughter to find the cash. Here’s what you have to know if your card is a lower limit or near the maximum: Use your credit card at a gas station and they’ll put a $150 hold on your card. Even if you get $20 in gas, the hold comes off your available credit. Rent a car and they’ll typically put at least a $300 hold on it. Then, check into a hotel and they’ll typically do a $150 to $300 hold, depending on the hotel or how long you’re staying there. That’s even if you’ve prepaid through hotwire or priceline. Three stops and over $600 of your credit limits are used up for no reason and in the first hours of your trip! The block comes off usually in three to five days, but that’s a long time if you’re on holidays without a second card or the room on the one you’re relying on.

Lots Of Financial News In Just a Week!

Canadian banks are kind of ashamed they’re Canadian. Bank of Nova Scotia is now Scotiabank, Toronto Dominion is TD, Canadian Imperial Bank of Commerce has been CIBC for a long time, and the Bank of Montreal is BMO.

Last week, the Royal Bank went on a huge wave across the country to replace all their branch signs to read: RBC Royal Bank. The next wave will be to do away with the Royal Bank part altogether. Oh how I want to be in the sign business. In Canada it’s cool to be Canadian, but in the rest of the world, they don’t want to advertise that at all.

The RCMP in BC want to get the word out on a new phone/credit card scam. The crooks already have your stolen credit card number and give you a lot of information to put you at ease. All they’re after is the three digit security code and they can go crazy with online purchases. It’s the last and only thing they ask for, claiming they just need to “verify that you’re the cardholder.” Don’t ever talk to anyone about your credit card. Hang up the phone and dial only the number on the back of your card! Here’s the link from the RCMP:

Last week, CBC’s Marketplace did a short story on breakfast sandwiches. They’re loaded with fat, get you two-thirds of the daily sodium and a ton of calories. But here’s an alternative diet plan: Last week, New Hampshire just rolled out new scratch and win lottery tickets. They are now bacon flavoured. So grab your coffee and just sniff the lottery ticket. You’ll still lose, but you’ll win on the calories, fat, and sodium reduced breakfast!

Also last week, TD rolled out a ton more new ATM machines. These ones are optical readers. Just insert the cheque or cash you’re depositing. No more envelopes and you don’t even need to key in the amount of the cheque. Your receipt will print out a picture of the cheque you deposited. It was only last year we talked about taking a picture of a cheque with your smartphone and it’s deposited. Boy, how technology is advancing quickly.

The middle of last week, the Bank of Canada cut the bank rate by a quarter of a point. We’re a resource country and they’re seriously concerned with our economy with oil dropping by almost 50%. Within 24-hours, the banks cut most of their savings accounts interest rates by a quarter point. But they also announced that, no – they’re not cutting their lending or mortgage rates. So savers get ripped off and borrowers get hosed in order to make another few billion dollars. NOT nice and not right!

Hacking an ATM Seems Easy & God Can’t Get Credit?

Two 14-year olds in Winnipeg seemed to have no trouble hacking a Bank of Montreal ATM machine. They found an ATM internal operating manual online and decided to test it at a real machine.

They actually managed to get into the operating system of the ATM, and guessed the six digit password on the first try! Gee, when the password is 123456 you think there’s a problem? That was enough for them to get out of the system and go into the branch to share their information. But the branch staff didn’t take them serious. So the kids asked if it would be OK to get the proof and were told good luck trying.

Back at the ATM, they went back into the operating system and printed out the amount of money in the machine, the transaction history and the income made from surcharges.

They even changed the ATM surcharge down to a penny and the greeting to read: Welcome to the BMO ATM. Go away! This ATM has been hacked.

Back in the branch with all the printouts, the staff now realized they had a problem.

BMO Media relations stated in an email to the Calgary Herald that no customer information and contents of the ATM were ever at risk. Yea..right…

God can’t get credit?

A Russian immigrant by the name of God Gazarov can’t get credit. Yes, his first name really is God. He was named after his grandfather, and in Eastern Europe that first name is quite common. It’s kind of like many Latinos name their son Jesus.

But Equifax, one of the credit reporting agencies is refusing to accept his first name. As a result, they won’t open a file with his current credit references. No credit report – no borrowing, no credit cards, or car loan – something he tried to apply for last year. He now has a lawyer and is suing Equifax.