Weekend Reading: Incompetent Banking Edition

Banks are staying open longer to meet the needs of their busy customers, offering extended weekday hours and opening on weekends. You’d like to think they’d be able to deliver the same level of service during those off-peak hours, but my experience suggested otherwise.

My daughter and I walked into a TD branch Saturday afternoon looking to open a children’s savings account. We happened to be in the neighbourhood and had some time to kill. Well, that time was quickly wasted during this brief exchange with the teller:

  • Me: Hi there, I’d like to open a savings account for my daughter.
  • Teller: Yes we can help you. You’ll have to make an appointment with one of our advisors.
  • Me: I can’t just open the account now?
  • Teller: Sorry ¯\_(ツ)_/¯

Later I shared my frustration on Twitter, where many of my followers echoed similar experiences with not just TD but all the big banks in Canada:

It’s extremely disappointing that in 2018 I can’t open a simple savings account online, let alone when I walk into an empty branch on a Saturday afternoon. My nine-year-old doesn’t need to see an advisor – there’s no hope of upselling her a loan. C’mon, guys. Get your act together.

Weekend Reading Incompetent Banking Edition

Why though?!?

This Week’s Recap:

This week I brought attention to some of the most lucrative bank account promotions on the market today and, after checking under the hood, I explained why they’re not such a great deal for consumers looking to score a deal.

My Smart Money column at the Toronto Star looked at three ways to save on foreign currency conversion fees when you travel or shop online.

Many thanks to CBC’s Sophia Harris for interviewing me for her latest piece on Aeroplan. This week the loyalty program offered a glimpse into what their new program might look like beyond June 2020 when its long-time partnership with Air Canada ends. My thoughts: The new program sounds promising but many unanswered questions remain about the value of miles going forward.

Promo of the Week:

I used to pay to get my credit score from Equifax every few years to keep tabs on my score and look over my credit report. It cost around $25 a pop. Today you can get your credit score for free from online lenders such as Borrowell.

Checking your credit score with Borrowell is considered a ‘soft inquiry’ so it won’t affect your score. I make sure to check my credit score every few months, mainly because I tend to apply for a lot of credit cards and want to see how that affects my score (the answer is each credit card application lowers my score by about 10 points). I also look over my credit report to check for any inaccuracies.

My credit score usually hovers between 720 and 775. That’s not considered an ‘excellent’ score, but I’ve never had any issues obtaining credit or getting the best rate on my mortgage or other loans.

Weekend Reading:

Here’s the credit card churning secret: How to travel the world for free without ever damaging your credit score.

The federal Liberals announced that starting this month the Canada Child Benefit will be indexed to keep pace with the cost of living.

Also read: How families can get more from Canada’s Child Benefit.

This money diary post on the Refinery blog got the internet a-buzzing. It’s written by a young marketing intern in New York whose parents pay her $2,100/month rent and dole out another $1,100/month for living expenses.

A millennial reader asks PWL Capital’s Ben Felix whether she should go with Wealthsimple when she starts to invest.

Speaking of Wealthsimple, in his latest edition of Common Sense Investing Ben Felix tackles the topic of robo-advisors:

A Wealth of Common Sense blogger Ben Carlson wonders if expensive SUVs are ruining retirement savings?

Inflows into passive investments have slowed. Barry Ritholtz explains why index funds are going to be just fine.

Here’s Nick Maggiulli on rethinking how to view your time – the most important asset.

Equally as brilliant, Morgan Housel on optimism vs. complacency vs. pessimism:

Those are the three types of risk mindsets in the world:

  • Those who know stuff breaks and attempt to survive the breaks long enough to experience the eventual growth that occurs when people learn and improve from the breaks.
  • Those who think stuff doesn’t break and are broken when it does.
  • Those whose experience being broken leads them to believe there’s no such thing as eventual growth.

Optimist, complacentist, pessimist.

Warren Buffett has donated roughly $3.4 billion of Berkshire Hathaway stock to five charities, most of which is going to the Bill & Melinda Gates Foundation.

A lesser known billionaire – former energy trader John Arnold – has also signed the Giving Pledge and promised to donate the bulk of his wealth to charity.

He retired at 52 with a $3 million net worth — here’s what a week of his spending looks like.

It’s easy to fail at personal finance. Here’s what smart rich people do with their nest egg.

A wife fears her husband’s retirement will destroy their happiness:

“I am afraid I will quickly become resentful of having to go to the office every day while he enjoys a never-ending vacation. I know I should not think this way, and I am sure a lot of women married to older husbands somehow find ways to accept this kind of arrangement, but what if I can’t?”

Finally, Global’s Erica Alini takes an in-depth look at reverse mortgages and asks if this is the solution if you retire cash-poor?

Have a great weekend, everyone!

Is A Sweet Offer Enticing You To Switch Banks? Think Again

Canada’s big banks are trying to lure new customers to switch banks this summer by offering juicy incentives such as free iPads or hundreds of dollars in cash back. Don’t take the bait.

To get the sweet bonus you’ll have to sign up for an expensive monthly plan, and/or apply for other products such as a savings account or credit card. That’s not all. To prove your loyalty you’ll also have to complete a direct deposit (i.e. payroll) or arrange two or more pre-authorized bill payments within a certain period of time.

What it takes to switch banks

Banking is arguably the most sticky relationship we have as consumers. We stay with the same bank for years, decades, and in some cases throughout our entire lives. For many of us, getting a root canal sounds more appealing than switching banks.

Banks know they have to pull out all the stops to try and win your business. That’s why you’re seeing some of the richest ‘welcome offers’ ever advertised. They do look attractive at first blush.

RBC wants to give you the latest 9.7″ iPad at no cost. BMO can offer up to $350 cash, while CIBC and TD Bank each have $300 with your name on it. While I didn’t find a current promotion for Scotiabank, I did find a doozie from HSBC, which is offering up to $700 in cash back and rewards for making the switch.

HSBC $700 to switch banks

What’s the catch? There’s always a catch. Let’s take a peek inside the terms and conditions to see what those asterisks are all about.

How to get $700 cash back from HSBC

All you need to do to earn this bonus is open up an HSBC chequing account, make a minimum deposit, and register for HSBC online banking. No big deal, right? (Checks fine print). Not quite so simple.

You’ll get $500 when you open HSBC’s Premier account and make a $25,000 deposit within one month. Wait, what?!? There’s more. To be eligible for the Premier account you’ll need a minimum $100,000 in combined deposits and investments, or a mortgage balance of $500,000 or greater. If you can’t meet one of those requirements you’ll be charged a $34.95 monthly fee within six months of opening the account.

You can also receive $100 cash back when you set up a recurring payroll deposit within three months of opening your account. Then you can get up to $100 in rewards value when you apply for and receive the HSBC Premier World Elite MasterCard. The card comes with a $99 annual fee for HSBC Premier clients.

Let’s get real on this deal. If you’re the type of person who has $25,000 lying around are you really going to be interested in chasing $700 bank promos? Even if you manage to meet all the requirements and “earn” the $700 bonus it’ll take less than two years before fees completely erase that cash back.

How to get a free iPad from RBC

RBC iPad

Almost as incredulous as the HSBC promotion, here’s RBC offering an iPad (doesn’t everyone already have one of these?) at no cost for new customers who sign up for an All-Inclusive bank account. A quick Google search revealed this 9.7″ iPad retails for $429.

To get it you’ll need to open an RBC Signature No Limit Banking account ($14.95 per month) or RBC VIP Banking account ($30 per month), then set up your payroll as a direct deposit or add two pre-authorized payments.

At $30/month you’ll have paid back RBC for the iPad within 14 months.

By the way, if your devious mind is thinking about closing your account right after receiving your free iPad, think again. Get a load of this fine print:

If you received the Reward and then downgraded, changed or closed your Eligible Personal Banking Account or undid any of the Qualifying Criteria you performed to get the Reward, such as cancelled any payroll/pension deposit or pre-authorized payment, at any time before September 27 2019, we reserve the right to debit your Eligible Personal Banking Account or any of your accounts with us for the value of the Reward you selected as described in the table below, plus applicable taxes, even if this places you into overdraft. If your Eligible Personal Banking Account is closed and you do not have any other account with us at that time, we will send you an invoice for the value of the Reward you selected, plus applicable taxes, which you agree to pay in 30 days.

Ruthless.

How to get $350 cash back from BMO

BMO $350

BMO wins for the most complicated offer. Start with a chequing account. Choose either the Performance ($15.95/month), Air Miles ($15.95/month), or Premium plan ($30/month) for a $200 bonus, or choose the Plus plan ($10.95/month) for a $100 bonus.

To get your chequing account bonus:

  • Open a chequing account with one of the above plans and make a deposit of ANY amount.
  • Set up a direct deposit for three consecutive months with the first deposit posted to the account by November 30, 2018.

Add to your bonus by adding an eligible savings account, credit card or investment account. Each one earns you an extra $50 (for a total of up to $150). Fine print check: the balance of your savings account and/or investment account must be at least $5,000 as of November 30, 2018.

Once you’ve opened your accounts and met all the terms and conditions, you’ll receive your cash bonus by February 28, 2019.

Assuming you manage to earn the entire $350 worth of incentives it’ll take just under two years to give all that back to BMO in monthly account fees – and less than one year if you chose the $30/month Premium plan.

How to get $300 cash back from TD Bank

TD Bank $300

New TD chequing account customers can get $300 cash back by opening an Unlimited Chequing Account or All-Inclusive Banking Plan and then completing two of the following transactions with their new account:

  • Set up a recurring Direct Deposit
  • Make an online bill payment (minimum $50)
  • Set up a recurring Pre-Authorized Debit (minimum $50)

Pretty straightforward. Let’s check the fees and fine print.

The Unlimited Chequing Account comes with a monthly fee of $15.95, while the All-Inclusive Banking Plan comes in at $29.95 per month.

The $300 will be deposited to the new account within eight weeks after all conditions have been met. (Looks like TD is not as strict about closing or downgrading your account after receiving the bonus).

Choose the Unlimited account and you’ll pay back your bonus to TD within 18 months. Take the All-Inclusive option and you’re back to even after just 10 months.

How to get $300 cash back from CIBC

CIBC $300

New CIBC chequing account customers can earn $300 cash back by opening a CIBC Smart account. It’s the most straightforward and potentially useful offer to switch banks, but still requires a closer look under the hood.

The first step is to open the Smart Account and also provide your email address (for some reason). Next, complete a direct deposit or two pre-authorized payments within three months. Seems reasonable.

Pay as little as $4.95 per month if you stick to 12 transactions or fewer per month. Once you’ve made 20 transactions the monthly fee is capped at $14.95.

The cash reward will be deposited into your Smart Account within 12-16 weeks of completing the required transactions. At worst you’ll pay back CIBC in 20 months, but if you only paid the minimum $4.95/month it would take 5 years for CIBC to recoup its bonus from you.

Final thoughts

Acquiring monthly recurring revenue is the Holy Grail for any business. Banks feed off of it. That’s why they’re able to offer seemingly rich incentives like the ones highlighted here – because they know that a one-time $300 outlay will be paid back easily within two years, if not sooner, plus the potential for a longer term relationship and cross-selling other products.

It’s smart business for the banks, not so much for you and me.

While I’ll admit I’m the first to jump on a new credit card offer (as long as it meets my four rules for credit card churning), I’m reluctant to switch banks for what amounts to be a few hundred bucks and ultimately a huge hassle.

Save yourself some aggravation and don’t fall for the shiny toy in the window. If anything, use these advertisements as leverage with your own bank – negotiate a fee or a better interest rate for yourself. After all, wouldn’t it be nice to get something for your loyalty?

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