Tag Archives: CIBC

Financially Supporting Your Adult Kids? Maybe…

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According to a CIBC survey last week, one in five parents are helping their adult kids with money to the tune of $500 a month. 71% said it was through free room and board, almost half by paying for groceries and household expenses, and almost 40% by paying cell phone bills.

If experts say it is the generation of helicopter parents, it only stands to reason that becomes enabling them as adults. But we do have to exclude parents helping kids going to college or university! The’ going to school deal’ with be different for every family, and seems reasonable for me as an outsider. This survey also doesn’t account for families who certainly have the wealth to help. If kids have a parent who’s a PHD (Pappa Has Dough), why wouldn’t they make the call for money?

But another survey some months ago found that 80% of parents don’t talk to their teenage kids about money – and this is the result. If they don’t know, they can’t manage their money, learn priorities, or boundaries as adults.

If your adult kid is not going to school and you’re not wealthy, there’s a big problem here. Your love for your kids is unconditional, but you only have a finite amount of money and little time to save for retirement in comparison to your kids. Broke people cannot help others – family or not. I know that’s easy to say when your kid calls – but it’s the truth.

The time to lay the groundwork for this starts at age 14 or so. But here you are now needing to learn to say no in a loving way, and to set financial boundaries if you cannot honestly afford it!

The old Ronald Regan saying of: Trust but verify applies here: If it were me, and that’s how I always discuss things, my kid would need to email me their last two credit card and bank statements. I want to see what money goes in and where it gets spent. Think about it: Priorities 101 say: Food, rent, utilities, transportation. If they cannot even afford food, there’s something WAY bigger here than a few dollars. I would tell my kid that I love them and that’s exactly why I won’t send money. But I’ll have them hooked up with a couple of part-time job interviews by the end of the day.

See, the problem is that many kids won’t take a job they think is “beneath” them. They’re holding out for the BIG job and BIG title. Sorry, eating and shelter trump the cool job in favour of any job to bring in money. A part time job with limited income will immediately re-arrange the financial realities and priorities they didn’t learn at home or at school.

If you do help AFTER you’re comfortable knowing it’s not a lazy, budgeting, blowing through money issue, you need to be smart about it: Make the check for part of the rent payable to the landlord. That way you know where the money goes. Get them a gift card for groceries. It has to be a grocery-only store, so not Wal-Mart (they sell too much other stuff that isn’t from the food family). Make it clear this is an exception and not a monthly support payment. It gives them a 30-day heads up to get that part time job or change their priorities.

While You Weren’t Looking Your Credit Card Charges & Rates Went Up!

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As I keep saying: What happens in the U.S. will come to Canada. This time, it’s a massive increase in credit card penalty interest rates. It was announced last week by the CIBC and TD that, if you get behind on your credit card, they’ll jump the rate – a lot!

It’ll increase by up to 15%. That’ll put a low rate credit card of 12% or so to upwards of 27%. And it used to be for six months – now you’ll be in the penalty box for a year at that insane rate. If you play with fire, you’re going to get burned. Credit cards are a great convenience but they’re not your friend. If you carry a balance, low rate 12% cards are a bad rate, 20% normal cards even worse – but 27% is insane. And who pays them? The people who can least afford the penalty rates, because they have a hard time making the minimum payments. Don’t charge today what you can’t pay off by the end of the month. Whatever you’ve bought on your credit card isn’t worth paying for years at close to 30%.

The second bank change, this one on lines of credits and credit cards, also has to do with your credit rating – your credit score. You’ll see a ton of rates that are now “prime plus.” When rates go up, your rates will go up right with it the following month. On the TD website, their Emerald credit card is now prime plus 1.5% to prime plus 12.75%. If you apply, you don’t know what your rate will be when you get the card in the mail. It might be low or insane. That totally depends on your credit rating. Reason number 238 to go to equifax.ca and purchase your credit score. If you don’t understand it, email it to me and I’ll explain it, or go to yourmoneybook.com for the US Fighting Back! book. It has a huge section on credit scores…something Americans all know and live and die with. Us Canadians better get to learn it, too – it’s coming to Canada right now!

Lots Of Financial News In Just a Week!

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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!

A New Tim Horton Visa Card

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Affinity cards are regular Visa, MasterCard or American Express cards, but they’re issued in conjunction with a company or organization. You can get a University of Vancouver MasterCard, a Target Stores Visa, a Shoppers Drug Mart card, or even a Justin Bieber pre-paid credit card…with a ton of fees. The Kim Kardashian card was pulled off the market as lawsuits started with all the fee traps…but I digress…

As of last week, there is now a Tim Horton CIBC Visa card. With 3,500 locations, the marketing for this card is all over their stores – inside and out. If you’re one of the 5.3 million visits a day, you’ve probably already seen it. CIBC needs the business as they lost half a million cardholders to the TD last year, and Tim Horton will get a big kickback on every charge made.

Yes, I actually read the 12-page disclosure because you aren’t going to…you’re welcome. This is a normal Visa card with a 20% interest rate and no annual fee that you can use everywhere Visa is accepted. The perk, or reward, on this card is that 1% of your purchases can be redeemed at Tim Horton for coffee, or anything else. Since Tim Horton sells over 2 billion coffees a year, I’m sure they can afford some freebies.

After a year of work and research, it’s the first credit card with a blinking light. If that excites you – I’m not sure why. One light will blink if you’re using it as a regular credit card and a second light blinks if you’re using it at Tim’s to redeem your rewards.

Who should consider getting this card? That depends on whether you want to get free coffee, regular price coffee or pay around double the price for your coffee:

If you run a credit card balance: You need (not want) a low interest rate card. There are a half dozen in Canada, including the Scotia Value Visa. You’re way ahead of the game at a 12% rate versus 20%. If you don’t, your so-called free coffee reward will actually cost you double with the extra interest you pay.

If you charge a lot but always pay off your card, you want a reward card with 1.5% to 2% perks. You can get 50% to double the rewards with other cards if you shop around. A listener e mailed me last week. She runs $55,000 on her card a year and pays it off monthly. She shouldn’t chase $550 of free coffee when she can get $1100 of other rewards.

If you charge maybe $500 to $1000 or so a month, and pay off your card, you’re not likely to reach any huge rewards with another card. If you like Tim Horton, this card may be for you. At least you’re getting some return for your spending.

Two more quick things:

As with any credit card, you’re playing with fire and one day you will get burned – it’s just a matter of when, and not if.

One day, I want to issue a new Visa card. It’ll have audio with it, and not just a blinking light. When you use the card it’ll say: Your balance is already $3485.00 are you sure you want to make another charge that you won’t be able to pay off anytime soon?

The Fine Print Of Reward Credit Cards

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A few months ago we talked about CIBC’s switch from their Aeroplan card to their own Aventura card. CIBC wants a card that can be used for any travel, instead of just Aeroplan points. It’s likely you’ve seen the cute penguin commercials as their $50 million launch campaign is well on the way.

Since I’m likely the only person to ever read the fine print of credit card disclosure, I wanted to highlight some of it for you. The disclosure on this card is 8.5 size font and over 3,000 words. That’s what makes me pretty sure I’m one of the few people to read it. This is from the Aventura card, but the fine print is pretty standard for all cards and the details and traps of the perks are roughly the same for every reward card.

You’ll earn one point for every dollar you spend on the card. So if you want a travel reward that’ll take 50,000 points, get ready to charge $50,000 on the card!

The card has a $120 annual fee and a 20% interest rate. That’s pretty much the same as others. So make sure you only get this type of card if you’re always paying off the balance in full. If you often carry a balance, a 12% card with no annual fee will put you light with no annual fee will put you miles ahead of trying to chase points and paying interest AND the annual fee! In other words, the saving on interest and no fee is money you can use to buy your own travel at less cost.

Travel cards generally advertise that you can fly anywhere and anytime with no restrictions of any kind. Well – not quite. The fine print states that ‘flights are not available at the lowest point level to all destinations, or at all departure times. So you thought it’d take you 25,000 points to fly to London. When you go to look or book it may turn out that the point level to get there is actually 50,000 and…well, you’re not going anywhere. You also need to remember that the points required can be increased at any time without notice. It’s in section 34…if anyone gets that far in the disclosure.

If you’re close, the card lets you buy up to 20% of the points you’re short. The cost is 3 cents per point. But that’s only if you’re close to getting the travel reward you were working towards. Using your points is at 2 cents per dollar.

If you’re not up to date in your payments one month, it’s not likely you’ll get the points for that month. If you get tired of paying the annual fee and close the account, you have 60-days to redeem your points or they’re wiped out. If the card issuer closes the card out from under you, you lose all the points immediately.

Starting to see why Consumer Report found that 75% of airline reward miles never get used? Before you sign up for any annual fee travel card, stop and do 30 seconds of math:

How many points will you need to go where you want to go?

How much do you charge on the card per month?

If you need 50,000 points and charge $1,000 a month or so, it’ll be 50 months before you have enough points. That’s the 5th year. Plus, it’s assuming the point level never increase in those five years, which is pretty small odds. So you’ll pay $120 annual fee times five years, which is $600. Do the math: Are you sure it wouldn’t be cheaper to pay cash?

A Very Personal Tale of Two Banks

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I strongly believe in a paraphrased saying that you can easily judge a business by how they treat those who can do nothing for them. In other words, how you get treated when you need help and not when they know they’ll make a profit from you.

My stepfather recently died and I became executor of his estate. After I had all the legal documents necessary, I went into the Royal Bank where he had dealt for over 50 years, but that started off badly and got worse. All I had wanted to do is to hand someone his credit cards and ATM cards to close, and a letter asking that his accounts be blocked. The receptionist asked me three times if I had an appointment. No, sorry – I didn’t, and was only in town for the funeral and to handle these basic starter issues on the estate. “Nobody has time unfortunately – we do have clients with appointments.” What I wanted to say was that my stepdad didn’t die with an appointment, but managed to simply ask to speak to a manager. Surely someone in this huge branch would have five minutes for me.

An assistant manager did come out to also ask if I had an appointment. At that point, my perception was that this question was just code for “please just go away.” She did volunteer that I could go to any Royal Bank to deal with this. What? I can’t get into the branch that has more than $1.3 million of my parents’ deposits? Did she really believe I’d have more success at a branch that hasn’t made some significant income from my dad over all these years?

After about half an hour I did get to meet with an account manager. When she took me into that wing, there were about 14 total offices. Three had their lights out, making me figure that those staff had the day off. But 11 offices did not have a single customer in any office! A half hour at reception fighting to get in, being re-educated that I really should have an appointment, and in the 10 minutes I was in the office wing there wasn’t a single customer – anywhere!

A month later, a staff member left me a phone message on some estate questions. I returned her call twice, then waited over three weeks with no reply. At that point, my only option was to start communicating with the Royal through the estate lawyer…at $375 an hour…until one of their Vice Presidents contacted me to apologize for dropping the ball. To this day, I still can’t get their cooperation in a number of areas. But I’m still getting the odd call with an apology for dropping the ball…again…and again…

There’s some good news, however. When I went to the CIBC in Montgomery for the same requests, it was as though I’d entered into a different world. Not the world of the large no-service banks. A lady named Maria, one of their Financial Services Reps immediately took me into her office and made the call to cancel his Visa card. She blocked the accounts, closed the ATM card, and even printed out his entire account listing and balances that was going to be needed by the estate lawyer. It made my day from hell a whole lot better to know someone actually cared and was helping me for no financial gain or profit.

If you’re ever going to die, remember that someone will be your executor and will need to deal with whoever you chose to trust with your business for two or three years more!

Goodbye ING

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Last month, Scotiabank purchased the on line bank ING Direct Canada for $3.1 billion. This un-bank as they called themselves started in 1997 and grew to 1.8 million customers through great savings rates, which were often double that of the big banks, competitive mortgage rates, and a lot of innovation.

Around the world our six Canadian no-service big banks are knows as being rather conservative. In some ways that was a blessing in the banking meltdown, but they’re also turtles in any innovation and modernization. Recently we talked about the technology that lets you just scan a cheque on your smart phone and have it instantly show up in your account. No need to head to the bank, just scan and done. Well, two of the banks had never heard of this when I contacted them. I guess they don’t watch TV as almost every US bank now has this in place already.

ING was instrumental in getting all North American banks to focus on on-line banking, customer service and the likes, or they still wouldn’t have much of it. Two of the biggest changes caused by ING’s success are just rolling out: Paypal, which everyone under age 30 is familiar with, is teaming up with Discover to become a bank. Plus, Amex and Wal Mart are in a joint partnership and will offer banking to the 40 million Americans who do not have any bank accounts. They’ll be able to get a pre-paid debit card, actual cheques, and be able to do all their transactions at any cashier in any Wal Mart. No fees, no overdrafts, no minimum balances – and it all started with ING leading the way.

Now our Canadian banks can slow down again, because one of them took out ING. Scotia won’t be continuing their operation and ING will disappear. Hopefully, if you were one of their customers, you’ll switch over to President’s Choice. Unfortunately it’s one of the only on-line banks left, even though they’re owned by CIBC.

Competition is great for us consumers. Unfortunately, another one bites the dust, and we’re all going to be worse off as a result. Scotia is betting they can retain most of these 1.8 million customers. But with all the banks, you have to remember that your loyalty will never ever be rewarded. The longer you deal with them, the more you’ll be taken for granted.

But the last thing we do is to shop around for a better rate, much lower service charges, or a place where it doesn’t take an appointment two days from now to see someone.

I got Fired and Ripped-Off Twice

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…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.