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.

[fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][icon name=”share” class=””] Related: 9 Fees to cut from your daily life

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.

bank secrets

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.

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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.

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31 Comments

  1. Patricia Gass on November 17, 2014 at 12:40 PM

    Good article. Many people should be able to structure their accounts to pay little/no fees. Your comments regarding financial advice/knowledge are exactly what I have experienced. For example, after doing my own research, I wanted to purchase a (rather common) bank investment product that the front line branch staff was not even aware of.

    • Barry Choi on November 17, 2014 at 12:53 PM

      Thanks Patricia,

      I’ve got my accounts set up so I have zero fees. It does require me to keep a minimum balance but I consider that my “emergency fund” so at least it does serve a purpose, well that and getting my fees waived.

      Honestly, bank tellers don’t know a whole lot. I had a similar experience where I was telling them the advantages of certain products that they offered over others.

  2. Dan @ Our Big Fat Wallet on November 17, 2014 at 8:37 PM

    In my opinion bank fees are something no one should pay. Aside from an unusual transaction like a cash withdrawal from a foreign country there really is no justification for them. You can always tell a fee is BS when you can have it reversed simply by asking

    • Barry Choi on November 17, 2014 at 8:51 PM

      Dan,

      Ha good point about reversing fees. I totally agree, they are all BS.

  3. Brian So on November 18, 2014 at 12:49 AM

    So true about the difficulty to switch banks once you have 3 or more products with them. Once people find comfort and familiarity, it’s unlikely they will go to a competitor, even if it offers more incentives and switching will be better off for them.

    • Barry Choi on November 18, 2014 at 1:27 AM

      Brian,

      My investments are with TD Waterhouse and even though I know it would be cheaper if I switched to Questrade, I’ve been too lazy to make the switch.

  4. Kathy on November 20, 2014 at 9:18 AM

    We have no-fee checking simply by having our pension check direct deposited into the bank, which we would do also. We also get our HELOC fee waived every year. It’s only $20 but why pay that if we will be paying interest also if we use it.

    • Barry Choi on November 20, 2014 at 9:37 AM

      Kathy,

      Exactly, so many little fees are pointless but of course the banks will charge it. I’d rather keep the $20 than give it to the bank.

  5. free2pursue on November 20, 2014 at 2:13 PM

    It’s Tangerine all the way for me. I love online banking!

    • Barry Choi on November 20, 2014 at 3:19 PM

      I use Tangerine for most of my day-to-day savings. As for investments I use a discount brokerage.

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  7. resaw on November 21, 2014 at 12:50 PM

    “Tangerine even offers low cost mutual funds which are much cheaper to own than your traditional mutual fund.” True, but the one big bank exception that everyone should be aware of is TD’s e-series of index mutual funds. Most TD Canada Trust staff don’t know a thing about this product and are unable to recommend it, but you can set it up with an online TD Mutual Funds account or buy them via TD Direct Investing (formerly TD Waterhouse).

    • Barry Choi on November 21, 2014 at 12:53 PM

      resaw,

      Yes agreed, I use TD e-series myself but I do still recommend Tangerine funds to people who don’t even want to rebalance once a year. Much better to be in Tangerine vs. a regular bank mutual fund.

  8. Sean Cooper, Financial Journalist on November 21, 2014 at 5:57 PM

    “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”
    This very situation happened to me with PC Financial. I accidentally let my bank account go overdraft. PC Financial hit me with a $65 NSF charge, but I was able to convince them to waive it this time. The lesson is the squeaky wheel gets the grease.

    • Barry Choi on November 21, 2014 at 6:09 PM

      Sean,

      I admit it’s happened to me too, they are pretty forgiving the first time but after that they have no mercy.

  9. Sierra on November 22, 2014 at 9:55 AM

    I really do get tired of people dissing bank tellers- that’s all they are, tellers; they do your deposits and withdrawals and pay your bills; they are low man on the totem pole. They might have to suggest certain products/accounts as part of their jobs, but they are not allowed to ‘sell’ investments. I have a ‘financial service representative’ at the branch, whom I use for branch level transactions (GICs, information on various account types); I don’t expect her to know the ins and outs of long-term investing; she is cleared only for branch level activities. For that information, I use the Certified Financial Planner who is located in the nearest city and to whom we travel twice a year.

    All institutions are bureaucratic and one is expected to perform within one’s level of training and pay grade. If you don’t expect more than that individual can offer, then you don’t get stung or disappointed. Your money handling is your responsibility.

    • Barry Choi on November 22, 2014 at 10:48 AM

      Sierra,

      I think they problem is that a majority of people just assume that people who work at banks can provide solid financial advice. So when a random person walks into a bank and the teller suggest they increase their credit limit, they may think that’s solid advice.

      You’re totally right and people should use a real financial advisor or go DIY for long-term investments.

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  11. DealForALiving on December 10, 2014 at 6:03 AM

    This was a real eye opener for me. I have been lucky to not spend much time in banks and found a good mortgage broker to take care of things. I really need to find a good credit union.

    • Barry Choi on December 10, 2014 at 9:21 AM

      DealForALiving,

      The small things do add up. I remember when I was younger I would just go to any bank machine. That was $2 I was paying EVERY time.

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  14. Brian on March 31, 2015 at 10:03 PM

    Exactly right, most fees can be waived and brokers are usually able to get better rates.

    • Barry Choi on March 31, 2015 at 10:51 PM

      Brian,

      You know it, saving every dollar counts!

  15. Susan on July 21, 2017 at 6:56 PM

    Apparently CIBC is getting rid of waiving fees if you have minimum balance $2000. I use PC Financial for most everything but I like Visa Debit and PC doesn’t offer that. Also I have my kids accounts set up under mine which makes monitoring and transferring easier.

    • Brian G on August 13, 2017 at 12:09 PM

      Hi Susan, you can switch to their Smart account where you can get fees waived with minimum balance of $3000 and some pre-authorized entries.

  16. Susan on November 24, 2017 at 8:28 PM

    I love how they can’t put the cheque through without charging an overdraft fee but there is always room for the fee itself.

  17. Susan on November 24, 2017 at 8:34 PM

    I had kids accounts set up at CIBC. They charge and then reverse the monthly fee until they are 18 or until they are out of school. when the oldest turned 18 and was not attending school his account was automatically changed to a “basic” account which has fees for every little thing. His fed were over $50 every month and the only way to get it changed is he had to go into the branch in person. Can you smell sales pitch. Of course he didn’t go for the longest time. Finally yesterday I was in the bank and tried to get it changed to the account that caps fees at 14.95. I couldn’t do it but the rep made an appointment for him to come today and said tell him we will reverse the last 2 months of fees $120!!!! So he went (begrudgingly). But my question is why don’t they change the student account to the everyday capped account automatically? Do they really need the money that badly?

  18. Cris T on October 14, 2018 at 1:08 PM

    Hi. Solid piece B! It’s true about getting fees waived, I’ve done it before!

  19. Robert St. Cyr on November 12, 2018 at 5:24 PM

    Deal with a credit union – they’re generally far better. We deal with one of the big banks for some investment stuff that the credit union does not offer but mostly we deal with a local credit union. Yes we move money into our “big bank” account when we travel in Europe so we have access, but the credit union wins hands down for customer service. I deal with another big bank for some of my mom’s stuff and another credit union that she has dealt with and it’s the same story – credit union is way better. I’ve dealt with a third big bank as executor for my sister – horrible experience, they don’t seem to know what or how to deal with relatively simple estate issues. They wanted paper work that both my lawyer and accountant said was unnecessary.

    • Barry Choi on November 12, 2018 at 7:27 PM

      Every day there seems to be another reason to use credit unions. Their customer service and low fees should be reason enough.

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