Dr.Unk's Office... in the Territory

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January 4, 2009

How can banks ever complain?

I remember as a child being taught the principles of banking. If you wanted to save money you could give your coins and bills to the bank and they would use your money to lend to others to keep the economy expanding. In return, they usually would pay you interest for that privilege.

In university, I learned the more complicated version, which I eventually forgot as I travelled and worked in environments largely unrelated to macroeconomics.

Either way, looking back at the progression from my childhood innocence to my current level of semi-maturity, there have been many changes in the way people interact with banks. The first change was of course, the introduction of the automated teller. This allowed people to make quick transactions without having to wait in lineups for the tellers. This, in theory, should have freed up the tellers to deal with more complicated customer service issues. We next had the introduction of the Interac (EFTPOS for any Aussie readers) system. You could carry less cash and in theory this would make it even easier for banks and tellers as the transactions involved computers more and people less. Finally, we have the internet and access to your accounts around the clock. All this, from my limited memory of my education, would in theory reduce a lot of costs for the banks as their staff are less involved in day to day transactions. I seem to remember that that was one of the selling points of the first generation of ATM's.

Of course, before this recent economic slowdown, we witnessed banks achieving record profits and doing quite well for themselves. Now how has the average customer been rewarded?....with ever shrinking interest rates paid on savings accounts (I may not be able to substantiate this claim), ever increasing costs of transactions and more red tape than a Red Army parade in Moscow.

I would love to know how the banks can justify charging the monthly rates that they demand for having an everyday chequing account. Even a basic plan that provides only the minimum amount of transactions/privileges is typically $7 a month. If you were lucky enough to have a savings account that paid 2% annual interest, you'd have to maintain a $4200 balance just to pay for that chequing account. And if you spend an extra $5 a month they'll give you so many more transactions without fees. Do you think that it costs an extra $5 every month per customer to enable those computers to handle your extra transactions? Not really sure about that.....

And why am I ranting like this? I recently closed down a CIBC account (which we had to open cause there's still companies in Jasper that are stuck in the last millenium/last decade and using paycheques as opposed to direct deposit) and found out that there's a fee for closing before three months has expired. I left it for a while and was busy with holiday preparations and work. When I went back to close it, I'd been charged for another month's fees and it ended up costing me $25 to close down our account. Not only that, because I'd forgot to have some cash on me, I had to use their ATM (which cost me an extra $1.50 service charge) to take money from my original bank just to stop using CIBC.

I will admit that some of the blame in all this fiasco is my own. I'm sure had I read through the tons of fine print I would have realized the extra costs of leaving the bank early or cancelling my business with them. I'm more writing of this to hopefully encourage others to pay much more attention to how the banks are using or misusing your money. It is really something that you have to stay on top of at all times.

Beware the bank!!

Posted by Dr.Unk at January 4, 2009 12:37 PM

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