If you’re 60 or turning 60 soon, you have a big decision to make about your banking.
Most banks have changed giving you free banking to age 65. The last one was the Royal – it’s covered in the banking chapter of the Money Tools book.
But credit unions are almost all still free at age 60. So your decision is whether a loyalty to your bank (that will never be reciprocated) is worth over $1,500 in fees for five more years…
If you buy your own tax software, here’s a big heads up. One of the more popular Canadian programs is Turbo Tax by Intuit. Usually tax software is $20. This year, Turbo Tax has a $10.00 program for sale. But be careful! It is so barebones that you can’t even put RRSPs in there – I’ve seen it. Clark Howard, on 400 radio stations in the US, calls it rotten behavior that stabs loyal repeat customers in the back by making them then call to pay a lot extra for an upgrade they can actually use. Apparently when you call to complain that the $10 one is useless, customers are often getting the upgrade for free…Buy the more expensive version, call them to complain, or purchase UFile for $20.
Have you had your 59th or 60th birthday? A good reminder from a Marketplace story that we talked about a couple of years ago. With every bank, when you reach that milestone birthday, you’ll get a ton of free service charge packages – depending on who you deal with. Only one or two banks give them to you automatically. With the rest, they’ll happily keep ripping you off until you go in to turn off the ‘charge’ button. You have to be pro-active and ask! I’ve personally seen stories of seniors paying $20 or $30 a month for years and years because the banks aren’t going to give up their profit voluntarily. And remember that when you do find out, the most you’ll get refunded two months. That’s as far back as you can challenge incorrect items on your statement. If it doesn’t apply to you – call your parents or grandparents and tell them!!
For three years, I’ve had an unloved, unused gift card here on my desk for Fairmont Hotels. It’s $150, but unfortunately, that amount doesn’t get you in the door at that hotel chain. I’m more of a $50 hotel person. We’ve talked previously about selling your unused gift cards online, and about a fundraising idea for gift cards. But Walmart has a better idea that they just rolled out. Wal Mart will take your unused, leftover, unloved gift cards and exchange them for a Wal Mart card. You might not be the biggest Wal Mart fan, but you know there are things in their stores you can actually buy and use. What a total win-win and I can’t wait for that to roll out across all their stores.
Bank of America blinked: Two weeks ago, one of the largest banks in the world announced they would start charging a $5 fee for debit cards. We talked about it, because I believe what happens in the US comes to Canada.
But Bank of America actually blinked. When the heat and negative feedback got so bad, Cit, Wells Fargo and a number of other banks who were also testing a debit card fee stopped it. Yesterday, Bank of America decided to withdraw that idea as well.
Ah, the power of the consumer. We don’t get mad very often, but when we do, it has powerful consequences. It’s too bad we don’t get mad more, instead of just tolerating higher and higher fees for less and less service. Apparently the impetus for their reversal is the Wall Street protest movement that’s now spread to so many cities, including some here in Canada. Their spotlight is partly on large corporations, and in this case, we all benefit.
When will you have an ah ha! or ENOUGH! moment with your personal finances in one way or another? At what point is the pain level of everybody getting rich from your pay cheque be high enough where you’ll do whatever it takes to turn it around and get out of your personal financial nightmare? What’ll it take? Because I hope it comes soon – it’ll be so worth it!
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.
J.D. Power Fall 2009 Credit Card Satisfaction Survey
Each fall J.D. Powers conducts a very comprehensive credit card survey. It rates overall satisfaction, along with how happy cardholders are with their rewards, payment processing, problem resolution, customer service, and fees.
This year, American Express rated five stars, head and shoulders above other national card issuers in all categories. At the bottom of the bottom, with the worst score on customer’s satisfaction with their credit cards were Capital One, along with GE Money. GE is a surprise, as they handle the Wal Mart cards, and Wal Mart prides itself on great customer service! As to Capital One – what’s in your wallet? I hope it’s not one of their cards!
But the scary response to the survey was that 53% of us did not know the interest rate on their card, even though it is printed on every statement. Not knowing that we are paying around 20% on our credit cards is not good news!
Scotiabank can’t be happy with a bunch of national press recently. But there’s a great lesson for anyone over age 59 to learn! All banks offer seniors a no charge service banking packages, or greatly reduced service charges at various ages, but for most it’s at age 59. Barry Ashpole, a 66-year old college teacher, had the TD and Royal automatically lower his fees, because all the banks have your birth date on file. But Scotia kept charging him the full service charges for seven more years! When he discovered the huge overcharges, he hit a wall of no help to get this reversed, and fought it all the way to their Ombudsman’s office. At that point, he received a six month refund of $71. They wouldn’t refund the other six and a half years! You need to make sure you know when you are entitled to a break of the huge service charges, or you’ll get taken, as Barry Ashpole found out the VERY expensive way.
And a final update on your credit cards: Time and time again, I point out how critical it is to check your credit card statement line by line. Stuff shows up that’s not yours, merchants who accidentally, or because of a kinky staff member, charge things twice, and all kinds of errors can and do happen. But less than 10% of us look at our statement items – and that number is way lower if you get your statement on-line!
There is a phrase you need to know. It’s called post transactional marketing. You buy something from a retailer on-line, or join a web site. Often you’ll get a pop-up asking you to join a loyalty program for deals, alerts, or whatever. Be careful, because in many instances, these pages look like they come from the retailer, but they’re third parties, and deeply buried in the fine print is a note that you’re actually going to have a monthly fee charged to your credit card! And it’s not small business, but the 1-800 Flowers, Barnes & Noble, airlines, Priceline and buy.com sites!
Be careful, as these marketers have scammed people out of over $1.5 billion so far, Facebook has now been hit with a class action lawsuit, alleging that they allow, promote, or profit from these post transactional marketing, and the U.S. Congress is holding hearings on the issue.
…other than that, it’s a great week.
Getting fired by CIBC Wood Gundy was both humiliating and a little unnerving a couple of months ago. It’s never happened to me before, and I needed the few months to calm down before I could use the words CIBC Wood Gundy in a sentence without bad language.
You see, I received a call from their national no-service discount brokerage department: Your RRSP account has been transferred here, please call us. I was simply dumped by the actual full-service broker because they weren’t making enough money off me, and I wasn’t close to the $100,000 accounts they want to keep. They handled it very badly, and everyone from my advisor, to their PR department, couldn’t even be bothered to return my calls.
It turns out that it can happen to you, too. According to a story in Money Sense magazine, about 20% of clients are simply dumped each year. It is those of us who don’t buy and sell lots and who don’t have $100,000 – or even close. It also happened to a family member with the Royal Bank where he, too, was bounced out of the branch and into the no-service national discount brokerage.
But you’ll get a letter that says it’s actually great news and you’ll be “better serviced.” You’ll never get told it’s because you’re a lousy little client, because that breaches industry codes of ethics and could lose someone their professional designation. Yes, I’ll be pursuing a complaint with the ethics boards against CIBC and the broker. In the U.S. it’s worse as reports are coming out that some firms will kick you out if your portfolio is under $250,000.
Now to the rip-offs: The big no-service banks have all expressed their thanks and gratitude for the bailouts and cash-infusion us taxpayers gave them by increasing almost all their service charges and dragging their heals on the prime rate decrease the middle of October, passing on half of it for a while.
But their charges are getting insane. I had to re-order some cheques for an account I need to keep for another year or so. They charged me $27 for one pad of cheques! I was so shocked I didn’t know what to say. Reason 426 to deal at a credit union where you never pay for cheque orders.
The second one was an attempted rip-off. I paid a credit card payment on-line and entered my transit number wrong. Well, two days later I got an e-mail that my payment had bounced and there was a $30 NSF charge. The odds of me bouncing a cheque, or paying a $30 service charge, are the same: They’re zero! It was a keypunch error and took two calls and 15 minutes to reverse. They just love to call everything NSF to be able add on that $30 when it costs the banks around 17 cents to process a reversal.
When these things happen to you, do not take it lying down. Make a couple of calls, challenge them and ask for what you want. YOU are the customer and getting service-charged to death is not something you have to accept. Or in the words of the captain on Hill Street Blues: Be careful out there.
Last week the Bank of Canada issued their bank’s monetary policy report. Kind of an outlook on the near-term future or a state of the economy report, and some of it was very interesting.
The bottom line of their report is that it’s going to become more expensive to borrow and that credit standards are certainly still tightening.
I know the media calls it a credit crunch. But the crunch is banks being reluctant to lend to each other. For us consumers and for businesses, it’s that the days of loose credit standards are gone and won’t be back for a long time. Higher risk equals higher rates. That’s something that I learned the second day I was in the banking business and that was about a hundred years ago. It’s just that the last five years or so – nobody remembered that – or chose to ignore it…
Now, in a time of dropping rates, why would the Bank of Canada state that credit will become more expensive? Simple: The bank losses they’ve had will become ours. In the words of Mark Carney from the Bank of Canada: “We do expect that ultimately they will be passed on.”
What? Did you think all of these lenders all over North America were going to just bite the bullet? No chance! Here’s a couple of examples already:
Bank of America upped their ATM fee to non-bank customers to $3.00 a couple of months ago. Sure there was some whining – but it didn’t affect their volume at all and lots of other U.S. lenders are now following now.
Two of the Canadian banks that I know of, and there may be more, have all increased their service charges on a huge range of things effective this month. Business accounts went up at a couple of them by 25%, and some personal account packages are up over 50%.
Yup, three or five dollars at a time, you and me are going to be paying. It might sound slow, but with millions of customers getting charge it won’t be long at all before you and I pay for all those stupid lending mistakes.
Now wouldn’t it be nice if you or I had someone to rip off when we make a mistake of this size…