Rubina Ahmed-Haq

Personal Finance Expert

Always Save Money

Five Things You Should Know About Your Bank

A recent story by CBC Go Public reveals banks are using pressure tactics to get customers to sign up for financial products they don’t want or need. In some cases bank employees told the program they did it without the customer’s knowledge. All to reach sales targets and keep their job.

Being enrolled in a program you didn’t ask for is wrong and you should report that. But sometimes you may be agreeing to something you don’t understand because you felt pressure to do so. Here's how to deal with that and what you should know about your bank.

The bank is a business

Somewhere along the way Canadians started treating banks the way we treat Service Canada (a government body that is there to serve us). We feel like the bank is our friend, on our side and ready to help. Nothing is further from the truth. Banks are a business, they are there to make money off you the consumer. That profit is generated in many forms, bank fees, interest charged on mortgages, management expense ratios (MER) attached to your investment products and money in your account used for their lending requirements. All of it is for the benefit of the bank’s bottom line. When you’re in a bank, imagine you’re in a department store, and everything you see around you is for sale.

You have a right to ask about fees

It’s in the bank's best interest to charge you fees on your accounts and investment products, that’s how they make money. But you as the consumer have the right to ask what those fees are, and how they can be removed. Many of us will call our bank if we see a charge we don’t understand. Take steps to understand what fees your account is subject to before you sign up. In my opinion you should never pay a fee for a daily chequing account, when there are great no fee banks out there. The other option to ask is what minimum balance do you have to maintain to avoid fees. When it comes to mutual funds for an example, ask your advisor to see the “Fund Facts,” document, it will outline all the fees you are paying to have that investment managed.

You can change banks

Whether it’s your investments, your mortgage or your plain old savings account, you have options. In Canada there are five major banks, TD Bank, BMO Bank of Montreal, Scotiabank, RBC and CIBC. You can shop around at all five of these to get the best deal on whatever product you need. But don’t forget about online banks, like PC Financial and Tangerine that offer great products at low cost. Also Credit Unions and mortgage companies may also offer financial products that suit you.

Nothing is free at the bank

Banks love to give you the impression that you are getting free advice. You are not. The way you are paying for that advice is through deposits you have made in that bank and the fees that are embedded in funds that you don’t see. The mortgage specialist is paid once you start making regular payments. There is absolutely nothing wrong with seeking the advice of any professional at the bank but always knows you the consumer and are going to pay for it.

The CBC Go Public story revealed what many of us have already experienced at the bank. I know I have been asked, if I would like to sign up for a credit card, or a line of credit or that I have been pre-qualified for a certain lending protect. The tellers are simply doing their job. Our job is to make sure we don’t say yes to anything we don’t need. Just like a waitress's job is to try to up-sell you on our meal, by offering a better bottle of wine or an appetizer you never wanted. But it’s your job to say “no thank you.” If you have a financial product you did not agree to call the Financial Consumer Agency of Canada. They have already launched an investigation into business tactics at banks, and they would be more than happy to hear your story.

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