Does My Bank Deserve My Loyalty?
We’ve finally taken the plunge and sold our house and will be moving to another province. There are a lot of changes in store and details to think about, but luckily I’m a list maker and I have every eventuality covered.
One issue I’ve been contemplating is whether to make a clean break with my bank.
I’ve been a long, long time customer
I have been with the TD Bank since I started working for them in 1978. At first I needed a chequing account for my pay deposit. Then, it was a matter of ease and convenience to open savings accounts, get a car loan or two, a HELOC, VISA, mutual funds, and trading accounts. Also, with the employee perks of no service charges, waiver of fees, and better interest rates, it just made more sense.
Related: Why More Banks Are Open On Weekends
Since leaving the bank I no longer enjoy these perks, but I still have almost all of my banking with them. You could say I’m tied – or is it handcuffed? – to my bank even though I sometimes complain about certain issues.
Who wants to switch banks?
According to Scotiabank (as reported in the Globe and Mail), five years ago about 15% of Canadians were prepared to switch banks. Now that figure is around 5%.
“As a general rule Canadians are happy with the service they are getting from their financial institution… Something pretty harsh has to happen to …make them want to switch.”
Even high banking fees aren’t always a deterrent. When TD raised the minimum monthly balance from $1,000 to $1,500 on my chequing account, I complained big time, but then I just increased my deposit.
More than the level of fees and the ease of opening accounts, customers now want a good platform and the convenience of online and mobile banking.
Personally, I do the majority of my financial transactions online. Everything is right there on one page and I can easily transfer money around, pay my bills with the linked E-post page, make trades, etc. I like that.
We also have a PC Financial account for everyday banking that mostly my husband uses, but it’s become a bother to sign in to that site to see what he’s been up to (yes, I know that’s pure laziness).
Related: 3 Free Chequing Accounts Compared
It’s harder to lure customers away
According to the Globe and Mail, personal and business banking is extremely profitable, generating $16 Billion in earnings for the big six banks in 2013.
Is it no wonder that banks want to keep their customers loyal? They do that, in part, with cross selling. The more products and services you have with a certain institution, the less likely you will want to leave. They attempt to provide the right mix of convenience, value and service.
This makes is increasingly difficult to lure customers away.
Other initiatives are being used such as targeting students, new immigrants and first time home buyers, plus loyalty/rewards partnerships. In one rare visit to my branch I noticed they were giving away free iPads for new account openings.
Related: Seniors Discounts Are Vanishing From Our Banks
Final thoughts on bank loyalty
Now that we’re making some huge changes in our lives will I take the big step of switching my banking?
I know I can get no-fee banking with no minimum monthly balance, higher interest rates on savings products, and lower trading fees in various other financial institutions.
But then I’ll have to learn a whole new system. Am I ready for that?
Just to play the Devil’s advocate, when you’re moving is maybe among the worst times to change banks. I understand that it looks like a good opportunity to re-evaluate your relationship with them, but don’t you already have enough to worry about?
Years ago, when I moved, I went to the new branch (of the same banks) in my new city, and asked what would be involved in moving my account. The teller asked for my ATM card. I gave it to him, and after about 10 seconds, he said, “It’s done”. I was grateful for the ease and simplicity of the move; one less thing to worry about!
Just my 2 cents.
@Loonie Lover: You’re probably right. As long as I have on-line access I could leave everything the same. There will no doubt be a branch close by if I need it.
It’s easy to get complacent with banking and I’m definitely guilty of this. RBC is now offering an ipad mini and TD is offering a Samsung tablet so it seems like competition is hearing up. Congrats on selling your home, what province will you be moving to?
Thanks Dan. We’ll be moving to BC. I’m finding out the hard way that when Albertans claim BC stands for “Bring Cash” they are not kidding 🙂
@Boomer no kidding! I’m originally from there so I know all about that. Higher gas prices and income taxes…..but definitely better weather 🙂
@Dan: Did snow in May have any bearing on our decision? Possibly 🙂
Give a Credit Union a try. You just might like the personalized service.
@Patrick O’Malley: There seem to be a lot more credit unions in BC. I may check them out. Thanks.
Like most I would probably need a big shove to think about changing banks. I have considered moving some assets to another just to not have all eggs in one basket.
However the big shove would not be my moving within Canada. I am with TD also and they have a large presence like most banks. More importantly, well over 99% of my banking is online, and 100% of my investing, rendering my location a non-factor.
BTW wiith TD you don’t need to have a chequing account. Just get a line of credit and use it like one. Keep your balance negative and there are never fees for account or transactions. However ever time you sign on there is an unobtrusive message telling you to get an account, no reason supplied.
Hi Robert: Even though I no longer have employee perks, I’m able to avoid paying service charges (except for my trading fees).
I get around the 10 debit limit by using my LOC. One transfer (debit) from the PCA and pay all my bills through the LOC.
Don’t you think they’re going to catch on at some point?
Hi Marie
I am not sure about them “catching on”. The credit department may like the open account and figure sooner or later we are going to use the credit, or enough will to make it worthwhile. On the other hand, years ago I transferred from the Royal Bank who did not allow negative balances on LOC’s. I am aware things can change – but so can I.
I think the banking department does not like me not having a bank account. Recently I found they cannot transfer money overseas unless I have a “normal bank account”. They assumed I would open one but I just went elsewhere.
Yes I would say they are all equally bad. TD has redesigned its online presence to make it less friendly for power users. They also show all unread messages (at least CIBC just tells you the number until you click). And then there are the regular offers to get one of their lousy credit cards. Amazon Visa does not charge 2.5% vig on FX.
@Keith Charles Cowan: That’s exactly what my husband says when I complain.
I’ve banked with PC since day one and have to say it feels much more liberating than being tied to a big bank’s rules (yes, I know it’s owned by CIBC, but it doesn’t feel like it!). The idea of needing to have a minimum deposit in this account, or fees for something else, just seems so foreign to me now. Unless there is a specialized product that you need from one of the bigger banks, I would say go for it. The offerings from banks like PC and Tangerine make it pretty difficult to consider banking elsewhere.
Hi Barry: We also have accounts with PCF which I probably could utilize more. I don’t need a mortgage or loans though, and their investments seem to be through CIBC so I don’t see an advantage there since I’m satisfied with TD Direct.
I had a very undesirable experience with Scotia at one time, so I will never use Tangerine.
Considering the thousands of $ I’ve gained over the years by switching from one of the big five banks to PC Financial it seems rather miniscule to consider a switch back for an ipad mini or Samsung tablet and then start paying bank fees all over again!
What fees? I am with TD but unless it’s a real offbeat transaction I haven’t paid a fee in years.
Have to keep a minimum balance is a fee unless you’ve negotiated entirely free banking with them which is also possible but I don’t believe they offer a product like that “off the shelf”.
LOC accounts can be used as chequing accounts, are off the shelf, and usually carry no fees as long as you keep a negative balance.
Thanks Bernie. Yes, I forgot to mention in my post above the thousands (yes, thousands) of dollars I have received in PC Points. They have watered it down a bit over the years, but early on I received points on my outstanding mortgage balance, loan balances, etc. They don’t offer that any longer, but I purchased a complete patio set for 8, a BBQ, various small appliances and knives and tons of groceries with my PC points over the years. Aside from no banking fees, the rewards are great.
I hear ya Barry! I’ve also received thousands of dollars in PC points over the past 13 years since I switched over from the dark side. Life is grand with PCF 🙂
Maybe they are referring to trading fees. I know they try to ding you $30-$50 for wire transfers. But I use an alternate method to get my money moved at high FX rates and no fees.
I would go with a credit union – no minimum balances, no or low fees, and personalized service. They really cannot be beat!
My friend told me that Scotia Bank wants him to have a $3,000 minimum balance for him to have a free fee account.
He uses ING now Tangerine for some of his banking needs. He took the $3,000 that he would have to have as a minimum balance and bought in his TFSA in 2009 a $10,000, 4.937% B.C. strip bond maturing in 2034.
He told me that people don’t realize that with minimum balance accounts, it will cost thousands of dollars in lost interest, $7,000 in his case which works out to $280 a year over 25 years.
He has other accounts with P.C. Financial,Community Trust and Oaken Financial. All no minimum balance and no fee accounts.
Credit Unions are a better deal than banks, because as a member, you are a part owner, and they exist for their members, not for no-name shareholders. The fees are non-existent, they treat you like a human being. There is no minimum balance on my chequing account for example.
I’m amazed that people are willing to pay a bank fee for anything. It’s just stealing.
Well it is hard to argue apples and oranges. For starters my bank does not even make me have a chequing account – they have better(for me) products. Secondly, there are so few credit unions that the inconvenience is a worry – I live in a densely populated city, but unless I am a fireman or an Estonian there is no credit union within 5 kilometers of my home. Thirdly, I AM one of the no-name shareholders of my bank and get a nice return on my shares. Fourthly, my bank has been treating me very well in every way that matters to me.