Banks are a necessary evil, we all need to use them but there are many bank secrets that they try to keep from us. They want us to believe that they are helping us, but there’s quite a few things going on behind the scenes that we need to know about.
Here’s 6 bank secrets to be aware of:
Fees can be waived – Monthly bank fees will usually be waived if you keep a minimum amount in your account, but did you know you can get your credit card interest and overdraft fees waived too?
If you’re a long time client of the bank and you accidentally paid your credit card a day late, or you went into the red in your chequing account, you can ask for the fees to be waived. Call customer service and explain to them you made an honest mistake and you’re hoping to get the charges dropped. If you have a good standing with your bank, they’ll probably refund the charges– just don’t make those mistakes again.
Employees are salespeople – All banks have “sales revenues” (SR) goals. Although tellers and financial sales representatives don’t get a direct commission from these SRs, their performance bonuses and reviews definitely depend on how much SR they bring in. Like any salesperson, they have sales goals, so it’s not uncommon for tellers to recommend a service or account that doesn’t benefit the client just so they can meet their sales quota.
Their mortgages kind of suck – A former bank insider told me the following about applying for a mortgage at the bank.
“(The) big difference between a mortgage broker and a rep in the branch is that the mortgage broker simply offers the mortgage at a competitive rate, refers it to a bank, bank pays him/her cash. Only a bank rep actually tries to negotiate the rate upward for their own “SR”. This is why walking into a bank branch looking for a mortgage is just about one of the stupidest financial decisions anyone can make.”
The most annoying thing is that the banks will almost always match any rate your mortgage broker can get you so why play this game with clients?
Their financial knowledge is limited – Seriously, there’s a good chance you might know more about personal finance than the people working at banks. The only qualification you need to become a bank teller is a high school diploma. Financial sales representatives are a step above tellers and they also don’t require any formal training/schooling. Okay I’m sure they are trained to know all about the different products that their employer offers, but their knowledge about how to help you achieve financial success is most likely limited.
I should note that banks do employ financial advisors that have formal training e.g. certified financial planners and some of them are great.Related: Money terms you need to know
They make it difficult for you to leave – The banks refer to this as client stickiness. If we have just one product/service with the bank then it’s really not that difficult for us to jump ship if we so desire. With two products/services e.g. chequing account and visa, it’s a bit more difficult for us to change banks but not impossible. Once we get to 3+ services it’s unlikely we’ll switch banks at all.
Think about it, if we have a chequing/savings account, credit card, line of credit, direct deposit, RRSP, and TFSA setup then we’re going to need a really good reason to switch. The banks encourage us to add products/services not just to meet their sales revenues but also to decrease the odds of us leaving them.
Your money is better off somewhere else – To put it simply, our money is better off somewhere else. The interest rates offered at our local banks is basically nothing, we’re much better off parking our money at an online bank like Tangerine or PC Financial. Tangerine even offers low cost mutual funds which are much cheaper to own than your traditional mutual fund.