NDP Calls For Ban

ClearWest · January 26, 2007

I support this. I'm not happy doing my own banking and then getting charged for it. I'm saving the bank work, they should give me a bonus for them not having to have people behind a desk doing it for me. But I doubt very much if government will do anything to p.o. the banks. I hope that I might be pleasantly surprised by government for once.

ATM's provide a service to you. It costs money to provide that service. If banks cannot charge for their service they will have to either pay for it another way (higher interest on loans for example) - or simply stop offering the service where it is not cost-efficient.

You are saving the teller work by using the ATM, and that's great - it's one of the reasons why banks offer ATM service. However, there are still running costs, installation, repair, etc. in order to keep the ATM's running. It's not free.

Banks are a business - they need to keep their balance sheet out of the red. Thank goodness they do, because it means that we can continue to receive this service. If we implement this policy it will place further restrictions and services will have to be cut down, or costs will be increased in other ways.

Also, this may be looking to the negative, but there may also be long-term adverse effects that can result from this. In order to pay for the upkeep of their ATM machines, banks may have to increase interest rates on their loans. It will make borrowing money less desirable, which in the long-run means that less businesses will be started, less jobs being created by these new businesses, ultimately less employment.

This is a terrible move. I give it a big 'Absolutely not'.

Of course, the NDP would love for more unemployment to exist because they know that people will turn to the government to solve that problem too - and what do you know - the NDP will be there to save the day after causing the mess in the first place.

geoffrey · January 26, 2007

And except they pay real interest. Doesn't matter how much is in your account.

Currently savings is around 3.1%

Still, I don't keep any large amounts of money in short term accounts.

Exactly. Anyone that lets over a month's salary sit in S/T accounts are doing a poor job of making their money work for them. 3.1% isn't anything to hoot and holler over either... you money is still losing value against inflation, pretty pathetic.

A mutual generally can be sold after 90 days without penalty... especially the 'e-funds' types offered by TD... I speak of them only because it's what I've used, not because they are superior in any way. So stash a month's expenses for emergencies and load the rest into mutuals. There is no point in keep that huge of a balance in your account. Some of my shorter term investments made between 6.5% and 11% over the last year. Now that's actually gaining financial power... 3.1% is still a loss compared to just spending it today.

People that whine about the interest rates they get are 9 times out of 10 terrible managers of their money.

jdobbin · January 26, 2007

ATM's provide a service to you. It costs money to provide that service. If banks cannot charge for their service they will have to either pay for it another way (higher interest on loans for example) - or simply stop offering the service where it is not cost-efficient.
You are saving the teller work by using the ATM, and that's great - it's one of the reasons why banks offer ATM service. However, there are still running costs, installation, repair, etc. in order to keep the ATM's running. It's not free.

Why can U.S. and British banks not charge the ATM fee for using the network and still make big money?

Even the Flaherty is curious about that.

madmax · January 26, 2007

There is no point in keep that huge of a balance in your account. Some of my shorter term investments made between 6.5% and 11% over the last year. Now that's actually gaining financial power... 3.1% is still a loss compared to just spending it today.
People that whine about the interest rates they get are 9 times out of 10 terrible managers of their money.

Yes you are right. These people, go to work in various different jobs and some still have the old vision that you put your money in Banks and collect interest on your account, which really hasn't occurred since the early 80s. I made lots of money on little cash in the banks during a period of crazy inflation rates.

But today people whom work, and are not financial managers themselves, rely on professionals, including banks to aid them in investing their money. You seem to do really well. I can't say I have done as well, and my Wifes 6 figure investments have taken huge losses. She trusts the banking system, and it hasn't been all that wonderful. Finally, cutting losses, moved that money back into real estate.

But again, not everyone out there is going to be in your position. There are always going to be the low wage labourers whom are getting stung on bank fees. There money is usually under $1,000 and on individual terms doesn't make a hill of beans difference to a bank. Their money shouldn't be in a bank. The banks consider it an inconvience, which is why they don't charge people with more money in an account.

This inconvience needs to be removed from the banks, not banks profiting off low wage labourers, and people on fixed incomes.

Riverwind · January 26, 2007

Why can U.S. and British banks not charge the ATM fee for using the network and still make big money?

I travel in the US all of the time and every ATM there charges between 1.50 and 3.00US. So the statement that US banks don't charge is simply false.

madmax · January 26, 2007

Why can U.S. and British banks not charge the ATM fee for using the network and still make big money?
Even the Flaherty is curious about that.

Can you direct me toward Flaherties comments.

jdobbin · January 26, 2007

Can you direct me toward Flaherties comments.

http://ca.today.reuters.com/news/newsArtic...&archived=False

geoffrey · January 26, 2007

I actually wish they the would allow bank mergers and at the same time opened the entire Canadian banking system up to international competition. As I said, let Wal-Mart run a bank.

Me too. But both must go hand in hand. Canadian banks as they are today would be destroyed by international competition if they couldn't merge. And without international competition, a merger would not be benefical to Canadian consumers.

This inconvience needs to be removed from the banks, not banks profiting off low wage labourers, and people on fixed incomes.

Low wage earners and labourers don't make banks money, in many cases I'm sure they cost banks money, even with the fees in place.

Riverwind · January 26, 2007

Me too. But both must go hand in hand. Canadian banks as they are today would be destroyed by international competition if they couldn't merge. And without international competition, a merger would not be benefical to Canadian consumers.

Banks play an important role in the economy - as long as Canada has its own currency it should have banks owned by Canadians. Foreign banks like HSBC and ING have found a way to work with the current rules regarding ownership so I see no reason to change the rules.

Furthermore, I fail to understand all of whining about Canadian banks. We are spolied for choices when it comes to banking services in this country with numerous credit unions and even grocery stores. If you don't like Canadian banks then try one of these alternatives.

Chuck U. Farlie · January 26, 2007

I've been happy with pcfinancial...

no fees for debit, no fees at pcfinancial or cibc atms, free cheques, automatic enrollment into an overdraft protection, and a 4% interest rate on their savings account...

manulife bank is okay too, but not quite as convenient.

geoffrey · January 26, 2007

I've been happy with pcfinancial...
no fees for debit, no fees at pcfinancial or cibc atms, free cheques, automatic enrollment into an overdraft protection, and a 4% interest rate on their savings account...

manulife bank is okay too, but not quite as convenient.

PC financial is an interesting concept indeed, with Superstore soaking up the fees for you to essientially force you to come into their stores.

Brilliant marketing.

Chuck U. Farlie · January 26, 2007

That's just the thing though... I never have to go into the superstores. PCfinancial is owned by CIBC, so I can make deposits, withdrawals, transfers... whatever I need to do at CIBC branches - which are more numerous and convenient than the superstores.

M.Dancer · January 26, 2007

That's just the thing though... I never have to go into the superstores. PCfinancial is owned by CIBC, so I can make deposits, withdrawals, transfers... whatever I need to do at CIBC branches - which are more numerous and convenient than the superstores.

True.....

Now in general I am all in favour of measure to prevent the Banks from gouging a screwing Canadians...I am old enough to remember that at one time, service charges were rare...and you certainly never got one just for the privilege of having an account.

I opened an account 2 years ago with TD Canada Trust for my daughter and her piggy bank, ostensibly to teach her the joys of compound interest. Faithfully every for months she would deposit he dime and nickles and I would top it up. Last summer I had a look at the book, ready to show her how much she had made in savings. She had about $200. in the account, and I looked....I looked again....no interest had been accumulated....not a penny or a farthing.

So I asked. I was told the interest was in the neighbourhood of .009% , the benefit being there were no service charges, other than for withdrawals, atm usage, overdraft........

So I said, so basically the interest paid is about the same as what her piggy bank pays......?

Now my daughter is 7....she through me banks with ING.

Again though, I am all for measures restricting the banks ability to gouge and screw us. That ability rightly belongs to the government.

Saturn · January 26, 2007

There's a lot of banks and trusts right now.

I use ING, who do not charge a user fee

Do the ATMs you use to access your ING acount for cash charge a fee?

Do you avoid all fees everywhere? Or do you live primarily cash-free?

Curious to find out how it works and how convenient it is.

It's not very convenient at all. The ING bank does not have ATMs, so you have to use another bank's ATM to withdraw money. And of course, you have to pay a fee for that. The ING accounts are meant to be savings accounts.

Chuck U. Farlie · January 26, 2007

I haven't used a bank in years because of their gouging.

I allow them to use my money to lend out and in return they give me user fees and almost no interest? Not a very good deal by the sounds of it.

I used to use a credit union - years ago it also had nearly no fees and at least a percent or 2 of interest... now it is just like a bank.

It is to my benefit to keep my money under my mattress rather than in a bank - it will cost me less!

M.Dancer · January 26, 2007

There's a lot of banks and trusts right now.

I use ING, who do not charge a user fee

Do the ATMs you use to access your ING acount for cash charge a fee?

Do you avoid all fees everywhere? Or do you live primarily cash-free?

Curious to find out how it works and how convenient it is.

It's not very convenient at all. The ING bank does not have ATMs, so you have to use another bank's ATM to withdraw money. And of course, you have to pay a fee for that. The ING accounts are meant to be savings accounts.

That's not quite true.......

Or use any of the 36,000 Interac® connected automatic bank machines (ABM) in Canada to withdraw funds from your ING DIRECT account and we will pay your Interac® fees up to four transactions every month!

http://www.ingdirect.ca/en/isav5/isafaq.html#branches

Saturn · January 26, 2007

ATM's provide a service to you. It costs money to provide that service. If banks cannot charge for their service they will have to either pay for it another way (higher interest on loans for example) - or simply stop offering the service where it is not cost-efficient.

Let's look at the facts before we jump to conclusions. In 2006, the big banks made $19 billion in profit. Roughly 5% of that was made due to fees. That's roughly $950 million or $30 for every man, woman and child in this country or $120 for a family of four. I don't know what the cost of providing these services was, but the banks sure made a good profit on them.

In addition, roughly 80% or $15 billion of last year's profits were made domestically. That's roughly $500 for every man, woman and child in this country or $2000 for a family of four. Now any industry that can siphon away $500 in profits from every person in the country annually, is a very profitable one. Some may even consider these profits excessive (myself included).

Now, why do banks make excessive profits? Because they can. Consumers have no choice but to have an account (who gets paid in cash and makes all their payments in cash?). The majority of consumers don't care enough about the $50 fees annually to move to PC Financial for example (and if they did move in large numbers, PC Financial would undoubtedly stop offering no fee accounts). The big banks happily exist in an industry protected with huge barriers to entry. They can probably further increase their fees and make more profits without any significant consequences, which they probably will do unless the regulators step in. So, they charge excessive fees because the market and the regulators allow it.

Saturn · January 26, 2007

It's not very convenient at all. The ING bank does not have ATMs, so you have to use another bank's ATM to withdraw money. And of course, you have to pay a fee for that. The ING accounts are meant to be savings accounts.

That's not quite true.......

Or use any of the 36,000 Interac® connected automatic bank machines (ABM) in Canada to withdraw funds from your ING DIRECT account and we will pay your Interac® fees up to four transactions every month!

Four transactions a month may be enough for some consumers but is certainly not enough for most. In addition, funds electronically transfered into an ING account are placed on hold for a week. Can you write cheques? So, no, an ING account is really a savings account, which is not very convenient at all.

Riverwind · January 26, 2007

That's roughly $950 million or $30 for every man, woman and child in this country or $120 for a family of four.

A significant portion of the service charges come from retail businesses. I doubt the average family of 4 pays that much. Furthermore, many people pay these charges because they are too stupid to find alternatives. It is not the bank's fault that people are stupid.

Now any industry that can siphon away $500 in profits from every person in the country annually, is a very profitable one. Some may even consider these profits excessive (myself included).

Boohoo - a business makes a profit. So friggen what? Have you ever heard of return on equity? That is only real measure of whether a business is making 'excessive' profits. When it comes to return on equity Canadian Banks are not more profitable than their peers in the US.

Everyone needs banking services which means everyone has to pay something. Furthermore, a large percentage of these profits come from people who do not know how to manage their money (i.e. they run up huge debts on credit cards and end up shelling out tons of money in interest each year). If you want to reduce bank profits then the gov't should teach people how to manage their money properly.

The big banks happily exist in an industry protected with huge barriers to entry.

We are spoiled for choices in banking services in this country. The problem is not with the banks or the system - the problem is with the consumer. That is why changing the system won't fix anything other than send all of the profits to owners of some foreign bank instead of Canadians.

Saturn · January 26, 2007

That's roughly $950 million or $30 for every man, woman and child in this country or $120 for a family of four.
A significant portion of the service charges come from retail businesses. I doubt the average family of 4 pays that much. Furthermore, many people pay these charges because they are too stupid to find alternatives. It is not the bank's fault that people are stupid.

Scams flourish on stupid people, but that doesn't mean that they should be allowed. Stupidity, while harmful to the consumer, is part of life. It is also harmful to the economy, so regulators must ensure that stupidity and gouging is kept to a minimum.

Now any industry that can siphon away $500 in profits from every person in the country annually, is a very profitable one. Some may even consider these profits excessive (myself included).
Boohoo - a business makes a profit. So friggen what? Everyone needs banking services which means everyone has to pay something. Furthermore, a large percentage of these profits come from people who do not know how to manage their money (i.e. they run up huge debts on credit cards and end up shelling out tons of money in interest each year). If you want to reduce bank profits then the gov't should teach people how to manage their money properly.

You mean the government which has more debt than the average Canadian should teach us how to manage our finances?

The big banks happily exist in an industry protected with huge barriers to entry.
We are spoiled for choices in banking services in this country. The problem is not with the banks or the system - the problem is with the consumer.

The problem is both. The market allows gouging and the banks merely take advantage of the situation. That means that Canadians pay excessive banking fees, when the money should be going to something more productive.

GostHacked · January 26, 2007

Riverwind --> But I must also to work to complete the transaction. I don't just wave my magic wand and suddenly appear at one of their local branches. I have to drive there, and that costs money. So, I am in effect paying for both mine AND their costs of doing the transaction.
Do you think your hair stylist should pay you because you have to drive to the salon?
Incidently, I used to use ATMs all of the time until they started changing those transaction fees. Since then I have refused to use them because the cost is too high to justify the convience. Sometimes I am a bit short of cash but I can live with it. When I do need cash I simply use my debit card at Safeway and ask for extra cash back.

Bottom line: ATMs are not an essential service. The only people that pay these fees are people that are not capable of managing money. I don't think I should have to pay more in service charges because other people cannot manage their finances

You do realize that the bank or the Safeway you shop at charges a fee for you to withdraw money? Then the bank charges you money for when you go to another ATM.

Also I bank with Royal Bank. I get a charge when I want to deposit money through a lice teller person. But no charge on the ATM to deposit stuff. So this is all nickeling and diming me out of money. I get charged a 1.50 when using another ATM other than Royal's, the 3rd party AND Royal with BOTH charge me a 1.50 for these transactions. So how is that fair?

Riverwind · January 26, 2007

You do realize that the bank or the Safeway you shop at charges a fee for you to withdraw money?

They don't charge me.

I get charged a 1.50 when using another ATM other than Royal's, the 3rd party AND Royal with BOTH charge me a 1.50 for these transactions. So how is that fair?

Then don't use non-Royal ATMs. I have not paid one cent in ATM charges in years and I don't walk around with wads of cash nor do I keep huge balances in my accounts. That is why I have zero sympathy for people complaining about these charges.

margrace · January 26, 2007

The simple solution is to use the ATM of your own bank and keep money on hand. These machines are absoulutly no good when the hydro goes out.

madmax · January 27, 2007

Low wage earners and labourers don't make banks money, in many cases I'm sure they cost banks money, even with the fees in place.

Then their money needs to be removed from a Banking institution. If they cost the banks money even with the fees, the Banks will benefit from their non use of services. And if the money is out of the banks "ka ching ka ching" each time a low wage earner needs cash, then everyone will benefit. There is no point in having cash in the bank if you have to pay the fee and others don't. Poor people on fixed incomes should remove their money from the banks.

madmax · January 27, 2007

I haven't used a bank in years because of their gouging.
I allow them to use my money to lend out and in return they give me user fees and almost no interest? Not a very good deal by the sounds of it.

I used to use a credit union - years ago it also had nearly no fees and at least a percent or 2 of interest... now it is just like a bank.

It is to my benefit to keep my money under my mattress rather than in a bank - it will cost me less!

I knew I should have read further. Thanks Chuck U Farlie. Maybe I should pull my money out of the bank too