Personal Finance

Banks have seriously lost their minds!!

  • Last Updated:
  • Jun 20th, 2016 1:17 pm
[OP]
Sr. Member
May 18, 2007
667 posts
992 upvotes
Toronto

Banks have seriously lost their minds!!

Got a credit card statement in the mail from Scotiabank. I don't bank with them so at first I thought it was a scam, then I remembered that they picked up the Sears card portfolio and this was the first stmt I had seen from them. I hardly ever used my Sears credit card... in fact I think I was just automagically given one when Sears decided to convert their instore cards years ago.

Anyway, it seems I had a $50 credit balance sitting on my Sears mcard... not sure why, but I sometimes overpay or pay twice by mistake.

Imagine my surprise when the first line of my first statement shows a CREDIT BALANCE FEE for -$25!?! My new credit balance was $25... I suspect next month it would have been $0.

Then, I got another surprise was when the Scotia customer service rep - who I spoke to about the fee, then about closing this acct - thought it necessary to ask "May I ask why are you closing your account today?". LOL!
33 replies
Newbie
Oct 4, 2015
30 posts
24 upvotes
Richmond Hill
Recently the big banks changed their policies such that when you have an overpaid card for a while then you'll start to incur a fee for pushing your card beyond it's limit; it's stupid in my opinion but they're doing it because people have cards closed for years that has an overpaid balance and no matter how many statements are sent out they don't do anything about it, so this was basically implemented to discourage the growing list of people who were in that situation. Also, in all fairness to the representative, part of their retention program is to ask the reason for closing the account and could have something to do with their compliance for following procedures.
Deal Addict
Jun 30, 2010
2659 posts
717 upvotes
Vaughan
MrCoolness wrote: Recently the big banks changed their policies such that when you have an overpaid card for a while then you'll start to incur a fee for pushing your card beyond it's limit; it's stupid in my opinion but they're doing it because people have cards closed for years that has an overpaid balance and no matter how many statements are sent out they don't do anything about it, so this was basically implemented to discourage the growing list of people who were in that situation. Also, in all fairness to the representative, part of their retention program is to ask the reason for closing the account and could have something to do with their compliance for following procedures.
They are discouraging people from overpaying their credit cards? You are telling me that the banks do NOT want more money??
Newbie
Oct 4, 2015
30 posts
24 upvotes
Richmond Hill
cloakster wrote: They are discouraging people from overpaying their credit cards? You are telling me that the banks do NOT want more money??
Actually yes because it is not their money to keep and it causes more problems. For example, any amount overpaid on a credit card is not insured by the bank for loss prevention. That is if you have a $5000 credit card and you have $10,000 sitting on there available and then someone scams your card for $10,000 then the bank is only going to cover $5000 because that was the agreed upon credit.

Also it's something that was implemented to all cards but is mostly meant for those who closed their cards and have an overpaid balance sitting on there and the bank constantly has to send mail to remind them and they still don't do anything about it. So this will hopefully encourage them to act.
[OP]
Sr. Member
May 18, 2007
667 posts
992 upvotes
Toronto
cloakster wrote: They are discouraging people from overpaying their credit cards? You are telling me that the banks do NOT want more money??
MrCoolness wrote: the bank is only going to cover $5000 because that was the agreed upon credit. Also it's something that was implemented to all cards but is mostly meant for those who closed their cards and have an overpaid balance sitting on there and the bank constantly has to send mail to remind them and they still don't do anything about it. So this will hopefully encourage them to act.
15+ yrs ago prime was significantly higher - yet the exorbitant interest rate charged on cards has been allowed to stay about the same: banks were making profits like bandits then.... they are making money like drug lords now.

How they have the nerve to rapidly drain a credit balance to zero is pretty absurd. I wonder if the balance was just $20... no doubt they would have started charging me interest on the new $5 debit balance!!

We're no where near as bad as the US, but it's crap like this that makes me loath the big 5.
Banned
Jun 14, 2016
45 posts
9 upvotes
People sometimes overpay their CC, so that they can take a cash advance from the ATM later on when they are travelling. Cash advance interest starts from day one, no grace period, people want to avoid that.

You will still pay the exchange fees and transaction/administrative fees if any. When I travel I find it easy to use my MC or Visa to withdraw cash as more ATM's accept it, instead of using by debit, especially overseas.
Member
Mar 27, 2009
264 posts
49 upvotes
rfdm4g4g9 wrote: People sometimes overpay their CC, so that they can take a cash advance from the ATM later on when they are travelling. Cash advance interest starts from day one, no grace period, people want to avoid that.

You will still pay the exchange fees and transaction/administrative fees if any. When I travel I find it easy to use my MC or Visa to withdraw cash as more ATM's accept it, instead of using by debit, especially overseas.
Curious about why you say this is better. The best credit card I could conceivably think to do this with is the Amazon Visa, and even then that card charges a 1% fee with a $5.00 minimum. Tangerine charges no forex fee and a flat $2.00 fee, Zenbanx likewise no forex and a flat $3.00 fee. Although Zenbax has a $500 daily withdrawal cap. Both are Cirrus network cards accepted just about everywhere in the world. I honestly cannot see any advantage of using a credit card in this manner.

But to the OP's point, banks do this because they get away with it. Canadians are complacent and will continue to use whatever card is dangled in front of them so long as there are "points!" to collect, with any consideration as to the huge amount of fees that they are getting charged so the banks can hand out those "points."

The only thing you will not get charged a fee for is using the card to pay for something (the merchant pays for that: see the Walmart vs Visa fight.) But not too long ago RBC wanted to charge you a fee just for paying your bill, and only backed down when the government threatened to start looking into it.
Banned
Mar 11, 2016
2081 posts
842 upvotes
YES!...I retired early from BNS after 25 yrs ..it got to the point where no one from managers to VP level gave a shite about customers or staff...only the bottom line...as a share holder , I get that...but it just got beyond ridiculous....every week, a new way to screw staff and screw customers came down the pipe....it got to the point that Branch Managers would just tell staff in weekly meetings to get over it ..nothing anyone can do about it..WTF??
Deal Expert
Mar 25, 2005
21444 posts
2268 upvotes
PaterFamilias wrote: Curious about why you say this is better. The best credit card I could conceivably think to do this with is the Amazon Visa, and even then that card charges a 1% fee with a $5.00 minimum. Tangerine charges no forex fee and a flat $2.00 fee, Zenbanx likewise no forex and a flat $3.00 fee. Although Zenbax has a $500 daily withdrawal cap. Both are Cirrus network cards accepted just about everywhere in the world. I honestly cannot see any advantage of using a credit card in this manner.

But to the OP's point, banks do this because they get away with it. Canadians are complacent and will continue to use whatever card is dangled in front of them so long as there are "points!" to collect, with any consideration as to the huge amount of fees that they are getting charged so the banks can hand out those "points."

The only thing you will not get charged a fee for is using the card to pay for something (the merchant pays for that: see the Walmart vs Visa fight.) But not too long ago RBC wanted to charge you a fee just for paying your bill, and only backed down when the government threatened to start looking into it.
The visa rate is much superior to Tangerine and Zen.

The fee is a nuisance fee to discourage holding credit balances, it costs the bank money to maintain the balance for almost zero benefit.
Deal Guru
User avatar
Aug 8, 2012
10198 posts
3984 upvotes
BC
rfdm4g4g9 wrote: People sometimes overpay their CC, so that they can take a cash advance from the ATM later on when they are travelling. Cash advance interest starts from day one, no grace period, people want to avoid that.

You will still pay the exchange fees and transaction/administrative fees if any. When I travel I find it easy to use my MC or Visa to withdraw cash as more ATM's accept it, instead of using by debit, especially overseas.
+1
PaterFamilias wrote: Curious about why you say this is better. The best credit card I could conceivably think to do this with is the Amazon Visa, and even then that card charges a 1% fee with a $5.00 minimum. Tangerine charges no forex fee and a flat $2.00 fee, Zenbanx likewise no forex and a flat $3.00 fee. Although Zenbax has a $500 daily withdrawal cap. Both are Cirrus network cards accepted just about everywhere in the world. I honestly cannot see any advantage of using a credit card in this manner.
If your alternatives for cash on your next trip are: exchange cash ahead of time, buy travellers cheques, use your debit card overseas, or use an unused Amazon Visa that you've prepaid ahead of time ... then the choice is obvious. The last one will cost you a flat $5 fee and you can take out say, $500 at the prevailing FAIR exchange rate with no extra costs.

When Zenbanx says it has "no forex" it is actually baking in some spread, so if you pay a $3 fee and they make $2 on you on the spread on $500 you are still coming out even with the Visa method.

Tangerine might charge "no forex fee" either but it's going to rip you off on the actual exchange rate ... you are getting bank rates which have a 2-3% fee baked into the spread.

A $500 withdrawal will cost you $2 in fee + $10 in ripoff FX rate.
POLL: How frequent is your RRSP-matching?
Plastiq: Pay any bill with credit card for 0-2.5% fee (help meet min spending and keep old cards active!)
Rewards program transfer times (e.g. SPG->Aeroplan, Marriott->SPG, Amex MR->SPG...)
Deal Addict
User avatar
Aug 16, 2009
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ace604 wrote: If your alternatives for cash on your next trip are: exchange cash ahead of time, buy travellers cheques, use your debit card overseas, or use an unused Amazon Visa that you've prepaid ahead of time ... then the choice is obvious. The last one will cost you a flat $5 fee and you can take out say, $500 at the prevailing FAIR exchange rate with no extra costs.

When Zenbanx says it has "no forex" it is actually baking in some spread, so if you pay a $3 fee and they make $2 on you on the spread on $500 you are still coming out even with the Visa method.

Tangerine might charge "no forex fee" either but it's going to rip you off on the actual exchange rate ... you are getting bank rates which have a 2-3% fee baked into the spread.

A $500 withdrawal will cost you $2 in fee + $10 in ripoff FX rate.
So what do you suggest one uses for foreign transactions? No matter what method I use (banks, credit cards, independent forex stores) to exchange currency I going to get ripped off on the flip. It seems like Zen banx is the lesser of all evils.
Deal Guru
User avatar
Aug 8, 2012
10198 posts
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BC
smokescreen15 wrote: So what do you suggest one uses for foreign transactions? No matter what method I use (banks, credit cards, independent forex stores) to exchange currency I going to get ripped off on the flip. It seems like Zen banx is the lesser of all evils.
If you look up the forwards and reverse currency exchange rates on MasterCard's site here: https://www.mastercard.com/global/currencyconversion/
... you will see that they actually have VERY tight spreads .. you might lose 2-3 pips total on a round trip implying they are only off the theoretical mid-market by 1-2 pips. This is NOTHING.

So the best rate would probably be Rogers Platinum MC for 0% FX fee and MasterCard's excellent non-rip-off exchange rates.

The banks will rip you off ... e.g. for theoretical 1.3000 exchange, I'd expect mastercard to be 1.3001 to buy USD with CAD and 1.2999 to sell USD.
The bank I'd expect to be 1.3325 to buy and 1.2675 to sell (that's conservative 2.5% "hidden fee", could be worse).

If you took out $200 USD cash, it would cost you $266.50 CAD + ATM fees (let's say $5 ATM fee + $5 native home bank fee).
$276.50 CAD to get you that $200 USD cash.

If you paid $300 towards your Rogers MC before you left on your trip (and that card was a $0 balance to start, or you paid if off COMPLETELY including transactions not yet on a statement) then you could take out a "cash advance" from your credit balance and not incur any interest. They'd ding you a $5 fee.

There might also be an ABM fee. Maybe not?

You'd pay $260.02 at 1.3001, and lose $10 to fees? (say $5 cash adv + $5 ATM)
$270.02 total.

You saved $6.50 CAD on $200 USD.
This would be >$16 savings on $500.
POLL: How frequent is your RRSP-matching?
Plastiq: Pay any bill with credit card for 0-2.5% fee (help meet min spending and keep old cards active!)
Rewards program transfer times (e.g. SPG->Aeroplan, Marriott->SPG, Amex MR->SPG...)
Deal Guru
User avatar
Aug 8, 2012
10198 posts
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BC
smokescreen15 wrote: So what do you suggest one uses for foreign transactions? No matter what method I use (banks, credit cards, independent forex stores) to exchange currency I going to get ripped off on the flip. It seems like Zen banx is the lesser of all evils.
re: zenbanx ...

If I go to http://www.zenbanx.com/zenrate/ (US flag clicked) it lists $1.2695 CAD for USD base currency.
If I go to http://www.zenbanx.com/DUCA/zenrate/ (CAD flag clicked) it lists $0.764 for USD (CAD base currency).

1 / 0.764 = 1.3089

(1.3089 + 1.2695) / 2 = average mid-market of 1.2892.
The spread from that is 0.0197, and as a % that is 1.528%

(e.g. you'd lose over 3% on a round-trip, and Zenbanx is baking in a hidden fee of over 1.5%)

This *is* almost 1% better than most banks, but 1.5% worse than a 0% FX fee MasterCard.

EDIT: My ranking of lesser evils:
1) 0% FX fee Rogers MC + 1.75% rewards earned
2) 0% FX fee Chase Visa (Amazon.ca 1% rewards or Marriott earn points) (Visa not as good FX rates as MC usually)
3) 1.5% FX fee Tangerine MC w/1% earnings (or 2% if category matches (4% during promo))
4a) using (1) or (2) to take out cash and use that (sometimes you just need cash - no rewards earned though)
4b) using a GOOD forex conversion place to send money from CAN to USA and take out the USD from your USA bank (only applicable if you have a US bank with free ATM access, otherwise 4b better probably ... unless you want to carry cash??)
--- I consider above so far, non-evil btw :) ---
5) Using any other credit card that charges 2.5% FX fee and earns you >1% cashback (net <1.5% loss)
6) Using any other credit card that charges 2.5% FX fee and earns you 1% cashback (net 1.5% loss)
7) Zenbanx to convert cash at over 1.5% hidden fee and then 0% rewards earned on cash spending
8) Using your debit card to take out cash and use that (2.5% + bank fees)

Zenbanx is the lesser of 1 evil ;-)
POLL: How frequent is your RRSP-matching?
Plastiq: Pay any bill with credit card for 0-2.5% fee (help meet min spending and keep old cards active!)
Rewards program transfer times (e.g. SPG->Aeroplan, Marriott->SPG, Amex MR->SPG...)
[OP]
Sr. Member
May 18, 2007
667 posts
992 upvotes
Toronto
Fjr2005 wrote: YES!...I retired early from BNS after 25 yrs ..it got to the point where no one from managers to VP level gave a shite about customers or staff...only the bottom line...as a share holder , I get that...but it just got beyond ridiculous....every week, a new way to screw staff and screw customers came down the pipe....it got to the point that Branch Managers would just tell staff in weekly meetings to get over it ..nothing anyone can do about it..WTF??
Wow... almost like they were taken over by an American firm! ;) Nice that you've retired... like the commercial says... "no more meetings about meetings"
Deal Addict
Mar 1, 2016
1092 posts
397 upvotes
toronto
ace604 wrote: re: zenbanx ...

If I go to http://www.zenbanx.com/zenrate/ (US flag clicked) it lists $1.2695 CAD for USD base currency.
If I go to http://www.zenbanx.com/DUCA/zenrate/ (CAD flag clicked) it lists $0.764 for USD (CAD base currency).

1 / 0.764 = 1.3089

(1.3089 + 1.2695) / 2 = average mid-market of 1.2892.
The spread from that is 0.0197, and as a % that is 1.528%

(e.g. you'd lose over 3% on a round-trip, and Zenbanx is baking in a hidden fee of over 1.5%)

This *is* almost 1% better than most banks, but 1.5% worse than a 0% FX fee MasterCard.

EDIT: My ranking of lesser evils:
1) 0% FX fee Rogers MC + 1.75% rewards earned
2) 0% FX fee Chase Visa (Amazon.ca 1% rewards or Marriott earn points) (Visa not as good FX rates as MC usually)
3) 1.5% FX fee Tangerine MC w/1% earnings (or 2% if category matches (4% during promo))
4a) using (1) or (2) to take out cash and use that (sometimes you just need cash - no rewards earned though)
4b) using a GOOD forex conversion place to send money from CAN to USA and take out the USD from your USA bank (only applicable if you have a US bank with free ATM access, otherwise 4b better probably ... unless you want to carry cash??)
--- I consider above so far, non-evil btw :) ---
5) Using any other credit card that charges 2.5% FX fee and earns you >1% cashback (net <1.5% loss)
6) Using any other credit card that charges 2.5% FX fee and earns you 1% cashback (net 1.5% loss)
7) Zenbanx to convert cash at over 1.5% hidden fee and then 0% rewards earned on cash spending
8) Using your debit card to take out cash and use that (2.5% + bank fees)

Zenbanx is the lesser of 1 evil ;-)

nice list.

i guess 7 and 8 could have some variances with small withdrawals, if you include Debit cards with no withdrawals fees (eg.Tangerine at partner banks, and TD all-inclusive).

Plus you also have to consider some countries where you will get charges for using credit cards, which makes your indifference points between options more interesting.

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