Archive for Banking

Is Your Bank Making Too Much Money Off Of You?

Do you ever wonder if you are giving your bank too much money? Having a mortgage is one thing, but what about all of the unnecessary fees that some people pay without even paying attention.

1. Annual Credit Card Fees

I am surprised how many people have this and don`t realize their bank charges them to have their credit cards. Some of the fees include getting more air miles per purchase, and other beneficial things, but it`s important to check what your fee includes to ensure you`re getting your money`s worth. If you don`t need what they are offering for your annual fee, cancel the annual fee. It just takes a phone call to cancel it.

2. Keeping Credit Card Balances

Banks make a killing off of interest rates. Why pay them more than you have to. Paying off your credit card by the end of the month will ensure you don`t pay a dime in interest. If you often keep balances, or if you are paying down your credit card, call your bank and ask them for a lower rate. You may be surprised to see how easy it is to get a lower rate.

3. Going into Overdraft

There is really no need to go into overdraft if you are paying attention to what`s going on in your bank account. If you know you may be over one month, ask your bank if you can link another account to your checking account. If you have funds in your linked account, rather than going into overdraft, the money would automatically come out of your linked account free of charge.

4. Paying a Monthly Account Fee

Most banks charge a monthly fee just to have an account with them, or they ask that you keep a minimum balance. This requires a lot of monitoring to ensure that you stay within the limited number of transactions that are allowed in your monthly plan, or keeping a minimum balance in your account at all times. Review your plan to ensure you need it. You may also want to consider banking with either PC Financial or ING Direct which both offer unlimited free transactions on their checking accounts.

5. Statement Fees

Some banks charge up to $2 per month every time they send you a hard copy of your statement. Avoid this fee and check your statement online where it`s free. Besides how many times do you actually open your statement when you get it in the mail, especially if you normally check it online or at the ATM?

6. Insufficient Funds

This can cost you over $40 for an NSF charge. This can easily be avoided by monitoring your account. Most often checks are returned for NSF not only because the funds may not be in the account, but the funds may just be on hold. Often times when a deposit is made at a bank machine, a hold is placed on the funds to ensure it clears. If a check is being cashed while the funds are on hold and there is not overdraft on the account, the bank will return the check and charge you an NSF fee.

What are some unnecessary fees that you have paid or are currently paying to your bank?

Photo by Jim Corwin

I Miss Being Able To Withdraw $5 From the ATM

Does anyone remember the days when you could withdraw $5 from the ATM machine? I was in high school the last time I remember banks in Canada allowing us to withdraw a minimum of $5 from the ATM. It was great! Those were also the days when you could buy a meal for $5, so it was wonderful for days when I needed to withdraw just enough money for lunch.

I remember withdrawing $5 and knowing that once it was spent that was it, I didn’t even think about spending more than that. Once they increased it, I was forced to withdraw a minimum of $20 even though I only needed $5. This of course was a problem back in the day because I wasn’t actually budgeting like I am now.

I wish they would bring this back, or better yet Chase and PNC in the U.S now have bank machines that allow customers to withdraw denominations as low as $1, they also have $5 bills. I hope they this gets implemented here as well because there have been many times where I don’t need a multiple of 20, but I have to withdraw it because that’s all the bank will give me. Some machines give $50 bills, so that helps when I am taking out a large sum of money, but nothing beats being able to withdraw exactly how much you need.

To my U.S readers, have any of you tried the new ATM’s? If so, how do you like it? Does it make much of difference to be able to withdraw a lower denomination? To my Canadian readers, would you prefer the new ATM’s?

Online Banking Is The Best!

The following is a sponsored post

I just love online banking! Gone are the days where I have to stand in a line waiting for 30 minutes or longer to do a transaction. Pretty much everything can be done online in the convenience of my home. If I want to do banking at 3:00am, I don’t have to wait for the bank to open. Online banking is always open!

Over the years online banking has really improved. I remember when you could just do basic things like pay a bill. Now you can schedule a bill payment, order cheques, stop payments, set up automatic transfers, and send money to someone at a different bank. I love email money transfer!

You could even apply for a loan or a mortgage in your online. Remember the days when you had to go into your bank, sit and wait for your banker to finish meeting with the client ahead of you, and then wait another hour at times for your banker to take down all of your information. I mean you could easily be in the bank for a couple of hours. Not any more thanks to online banking.

There are loans that people can apply for where if you are registered for online banking and are approved for the loan, you could have instant access to the money since it will be transferred into your account instantly. That’s technology for you!

I must say online banking has made my life so much easier over the years. It’s fast, convenient, secure and 24/7. Do you remember when banking hours were from 9 – 5? I wonder how they expected the average person to do banking when they worked from 9-5? I always thought banking hours should be from 2-10pm Monday – Friday and 9-5 on Saturday’s. Now some banks have extended hours on Thursday’s and Friday’s and are opened on both Saturday’s and Sunday’s.

Thankfully we no longer have to worry about catching the bank before it closes.

Are you a big fan of online banking?

 

Ever Wonder What Your Banker Is Really Thinking?

When you walk into your bank and apply for a loan or a mortgage. Do you ever wonder what your banker is actually thinking when they are deciding whether or not to loan you money? You may have an awesome relationship with your banker, you may have even gone to lunch or played tennis with your banker. But when it comes down to lending you money, it’s a whole other ball game.

When banks are assessing whether or not they should lend you money, there are many things they look at. There’s what’s called the 5 c’s of credit and these 5 c’s of credit determine whether or not you are credit worthy.

Here’s the break down:

Collateral

Collateral is the security the bank has if you don’t pay your debt. Credit cards are unsecured, meaning the bank has nothing to sell to get their money back if you decide you don’t want to pay your bill, or if you can’t pay. This is why the interest rates on credit cards are much higher than mortgage and car loan rates. There’s more risk, which means you pay more. If you don’t pay your credit card bill your bank will send you to collections and the collection agency will try to collect the money. If you don’t pay your mortgage or car loan. The bank will eventually just sell your car or your house to get their money back. Lower risk, means lower rate.

Character

Character is what your bank looks at to determine if you’ll actually pay them back.  Banks always look at your past to determine your future. They want to know how responsible you’ve been with your current and past debts. Have you been paying your bills on time, do you pay your bills at all, do you go over your credit card limits, are you a credit seeker, meaning have you applied for every credit card under the sun. All of these factors determine your character.

Capacity

Capacity is affordability. Your bank definitely wants to know if you can afford your debt. After all, what’s the point of lending someone money if you know they can’t pay you back. That’s more like a gift, and we all know banks aren’t in the business of giving gifts. Your debt-to-income ratio is very important when determining capacity. Your bank will look at your income and all of your current debt and determine if you can handle more debt and how much more debt you can handle. Remember your banks main concern is can you afford to pay them back.

Capital

Capital is how many assets you have, such as houses, cars, cash, locked in investments and so forth. The more capital you have, the less risk the bank is taking on you. Someone who has one million dollars in investments and is applying for a $250,000 mortgage on a home that’s worth $400,000 is a great candidate for the bank, assuming the other c’s are in check. This person is less risky to the bank because they’ve accumulated a lot of investments versus someone who has $5,000 in investments. The reason why the millionaire is less risky to the bank is because if he/she was to lose their job, they would still have money to pay back the loan versus someone who only had $5,000 saved. Chances are that person would default if they didn’t find another job. This makes this peron a higher risk to the bank.

Credit

Credit is extremely important. This is where the good old FICO comes into play. Banks are looking at how much credit you have, do you make late payments, are your credit cards maxed out, do you have more credit than you can afford, have you ever declared bankruptcy, do you have credit in collections, and are you a credit seeker. (They can tell this based on your inquiries)

Online Banking Or Teller Service

Why do you currently bank at your bank? Is it because your parents bank there and they opened an account for you when you were young. Or maybe you like to shop around for the best rate and your current bank provided you with that. Maybe customer service is really important to you, so you bank with your bank for that reason.

My first bank account was at Canada Trust, which is now TD Canada Trust. The only reason why I had an account there is because my mom banked there and opened an account for me. I was about 11 years old and knew nothing about banking to even think about moving to another bank. I thought all banks were pretty much the same. I stayed with TD until I got a job with a major bank. At that point it was required that I open an account with them, which was great because I got free banking. When I left the bank of course I no longer received free banking. I did quite a bit of searching to find a bank that offered free banking. That’s when I ended up with President’s Choice Financial and ING Direct.

Both of these banks are virtual banks, which means they don’t offer teller service. Their focus is online banking. Virtual banks typically offer free banking and lower interest rates. They’re able to offer this because they don’t have as much over head costs as brick and mortar banks. There are however, some advantages and disadvantages to virtual banks.

Advantages

  • 24/7 banking
  • 24/7 customer support over the phone or online
  • Very convenient
  • No transportation costs

Disadvantages

  • You must have access to a computer
  • Internet access is required
  • You should be comfortable with online banking
  • No physical bank locations
  • Fees (money orders, drafts, insufficient funds and overdraft charges) are often higher than brick and mortar banks

If you like that personal touch with your banker, than virtual banking is not for you. You only speak to someone either over the phone or online with virtual banking. What do you prefer?

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