Tragedy averted

More reminders pour in with every passing day to reinforce my conviction that PC Financial > Canada's Big Banks.

After switching to PC Financial from Royal for my everyday chequing account a few months ago, I was pleased to discover there's a CIBC bank machine in the lobby of my office. Since CIBC essentially runs PC's banking division, this ATM has essentially become the place where I do 90% of my banking.

On my way out of work on Friday, I hit up the ATM for some cash (the boys and I enjoy a few non-alcoholic beers from time to time....) I asked for $60 from the machine, thinking that would be enough to fuel my weekend. This seems like a good time to note that whenever presented with the option, I decline the option of getting a receipt from the ATM, as I don't use them to track my finances, they end up in the garbage a few hours later, so as such, they just seem like a waste of paper.

So after asking for $60 and declining a receipt of the transaction, the hamster in the wheel inside the machine starts making some very abnormal sounds. A few seconds pass, before the machine spits out my card and says "Your transaction has been processed -- don't forget to take your cash." One problem: it didn't spit out any cash.

I'm wracking my brain trying to decide how to proceed here. Essentially, this bank machine has just taken $60 out of my chequing account, not given me the cash, but debited my account for that amount. Since I don't know PC Financial's phone number offhand (and really, this seems like and error on CIBC's part anyway) I call the CIBC phone number printed on the ATM. After 10 minutes on hold, a very unhelpful man informs me, essentially, that I'm short out of luck. He confirms that the transaction went through and he sees no evidence that cash wasn't actually presented, so my beef is with PC Financial, not CIBC, I'm told. It seems I would be best served by calling them. Thanks for nothing.

At this point, I'm a good 20 minutes late and in a bit of a sour mood, so I decide to head to the bar opera house to meet my friends and resolve to put my tab on VISA and deal with this in the morning.

Next day, I log on bright and early to see that the good folks at PC have already taken the bull by the horns and reversed the transaction -- reinserting $60 into my account. I didn't even have to call them to get this entire fiasco fixed without my involvement. Good on them for that.

Now, technically, I have no idea how one of the conventional banks would respond to a situation like this. But based on my brief dealings with CIBC (and the 20 years before that sidestepping Royal Bank's nickeling and diming) I suspect it would have been nowhere near as painless.

What can I say? Make the switch. You'll be glad you did.

Changing banks -- update

Ever since RBC made the mistake of denying me their multiproduct rebate for customers with multiple accounts, I've been working towards moving my accounts away from them, or switching to no-fee versions of the accounts I choose to keep with them -- for now.

Things are progressing nicely on all fronts. I opened a no-fee President's Choice chequing account a few weeks ago, and I've been diligently transferring paycheques and automatic bill payments over to that account for the past month or so. Once I knew everything was kosher on that end, I set about cutting the fee-taps on my existing RBC chequing account. I decided there's no point in officially closing it altogether, but I've switched it to what they call a Day-to-Day Savings account in the interim. The account will pretty much be dormant, although it is there if I ever want to fire it up again for some new promotion they're offering me. In the meantime, there's no charge to put money into it via ATMs, and I get one free debit per month (which I'll probably use to pay my Royal VISA with.)

And speaking of VISA, I went ahead and switched from the RBC Platinum Avion card (with an annual fee of $120) to a lesser card that has no annual fee and accumulates points twice as slowly. The key component here is the no annual fee part.

Add it all up, and Royal no longer gets a penny from me in bank fees or VISA charges (since I pay my balance in full every month.) I'm quite pleased with myself for following through with this. There's simply no reason to pay bank fees in this day and age, because it's such a competitive marketplace. The minute I realized this, RBC's goose was cooked.

I should also mention I'd be more than happy to switch back if they'd simply give me what I wanted in the first place -- to not have to pay monthly fees for having a basic chequing account.

My last remaining account with RBC is my investment account, which I'm currently talking myself into changing. It's the last hassle, really, but after having come this far, there's no point in stopping here.

As always, I'll keep you posted.

This just in -- banks like money

Regular readers will recall my post last month about how I finagled my way to a free chequing account at RBC. Through their multiproduct fee rebate, anyone who holds an RBC chequing account and at least two other qualifying RBC accounts has their regular bank fees on the chequing account waived.

I thought I qualified because I have an RBC Visa card and my self-directed online brokerage is RBC Direct Investing, but alas, the latter didn't qualify under the program since it was a different division of RBC. Undeterred, I sat though a 20 minute phone call with RBC, and after eventually getting transfered to the right person and pleading my case, I was assured I qualified for the rebate.

Or so I thought. It's been more than a month since that call and I recently got my monthly statement where (surprise surprise) I'm still being charged monthly fees. I've called RBC numerous times trying to get it sorted out, but the response is always the same -- "anyone who said she'd bend the rules for you to apply shouldn't have said that, because I don't qualify for this promotion. Please buy one of our crappy GICs instead."

Bad move. I haven't quite pulled the chute on RBC yet (the logistics of transfering my Visa Card with tens of thousands of RBC points, not to mention registered and unregistered investment accounts to another broker make me queasy) but I have gone out and signed up for a President's Choice No-Fee Chequing account. I already park my savings in a PC high-interest savings account, so signing up was a snap. 10 minutes at the kiosk across from my office, and I was done. Free cheques, no monthly fees. Beauty.

At the moment, it's sort of an insurance policy. I want to be 100% sure RBC isn't going to play ball before I play the "close my account" card with them, but even if they accede there's no harm done. The PC account has no fees, so I'll probably just transfer some money into it and collect points when I buy groceries, since I go to Loblaws for groceries to begin with.

I suppose there' s a slim chance this is all a misunderstanding and the RBC's recent fee was simply the last month before they'll be waived from now on, but since I don't have the name or phone number of the person at RBC who said she'd credit my account, I have no way of tracking that person down to make sure that's the case. As I said, in all my dealings since then, I've been given the distinct impression that I'm SOL.

I still shudder at the thought of having to transfer all sorts of accounts and bill payments away from RBC, but the satisfaction I'd get in the end may be worth it. There's simply no reason to pay bank fees in this day and age and there's simply no reason to put up with crappy service when others are only too happy to do business with you.

I'll keep you all posted on how this plays out. And RBC, you're on notice.

More bank notes

Since my experience with PC Financial's high-interest savings account has been largely positive, I've been mulling over switching to their no-fee daily bank account for my everyday chequing account.

I currently have a chequing account with RBC, a Visa card there too, and I keep my investments in an RBC Directinvesting account. That didn't really happen by design, but over the years I've grown to appreciate the convenience of having all my accounts in one place and being able to transfer money easily. I'm certainly not with RBC because they're the cheapest. I pay $4 per month to maintain my chequing account there, and $0 for the Visa because I pay my bill on time in full every month. In the past few years I've moved from about 20-30 debit transactions per month to less than 5 as I've been very diligent about putting absolutely everything I can on Visa for the points.

I usually say savings trump other factors , but part of me appreciates that I benefit from their size and heft when it comes to things like customer service when something goes wrong or having to find a bank machine somewhere nearby. If I were to count the advantages of keeping my everyday cash with RBC, I'd have to say they are the proximity to bank machines, ability to make same-day transactions (for paying off Visa or moving money into my investment account when an opportunity presents itself. Taking money out of my PC Financial savings, for example, would currently take at least two business days while I transfer it online to RBC and then find a bank machine to get it out.)

To me, $4 a month ($48 a year) seems a reasonable price for that. But let's do a little more detailed cost-benefit analysis here.

The obvious advantage of the no-fee chequing account at PC Financial? As the name implies, it's the 'no fee' part. That's a $48 annual savings right off the bat. But there's more. PC Financial offers 250 PC points every month for keeping $1000 in the account. Assuming I moved $1000 float from savings into the account to get that reward, I'd accrue 3000 PC points per year -- assuming I didn't use the account at all for things like buying groceries, which would boost my points. How much is 3000 PC points worth? As far as I can tell, about $3 worth of groceries. So my total savings in this scenario are now $48 worth of annual fees saved, plus $3 in benefits. I'm going to assume that things like customer service and prevalence of CIBC bank machines (who run PC's finance division) are a wash, so they don't enter into it.

Is $51 enough to make the switch? Honestly, I don't think so, but there are a few more factors to consider. Like the interest I lose from moving that $1000 out of my 4.25% savings and into effectively, an account that pays me 0% interest. That's $42.50 a year on the other side of the ledger. The benefits are getting smaller.

From where I sit, the only way this makes sense financially is if I play for keeps -- don't use the PC account merely as a "points-generating" mechanism, but actually use if for everyday use. I'd really start racking up some grocery points then. But I really like my RBC Visa card and would want to keep it. My plan to get free rewards from it is working perfectly. If that were the case, and I was going to use a PC account for things like my paycheque and debit transactions, but keep my RBC Visa and investment accounts open, I'd be well-served to keep the RBC chequing account open in some manner as an intermediary to them. Maybe converting it into a pay-as-you-go account would be best, where I'd pay $0 in principle, but a nominal fee (I think it's 50 cents) every time I made a transaction like paying my Visa bill or moving money into savings.

Forgive the jumbled structure of my thoughts on this one, but it's an insight into how my brain works. I'd love any insights from people who've done what I'm thinking of doing.

Essentially, my concerns boil down to this: Can you actually function without in some way being a customer of the big banks, and only use the fringe discount products? Or is that getting too cute by half?

I'd hate to go to the hassle of switching all those accounts over only to figure out the savings I accrued were nowhere near the cost in hassle I paid to get them.

Bank Notes

In a move that clearly demonstrates they're on the cutting edge of the 19th Century, Royal Bank manned up this week and announced they were lowering their online investing commissions to a more reasonable $9.95 for users with $100,000 in their account or who make more than 30 trades in a quarter.

That's some nice window dressing, but I see this as largely a symbolic act. Cutting prices for customers who A) already have the most assets and B) are more likely to recompense your losses by using the service far more frequently is not what I'd call forward-thinking customer service. The discount for active traders is particularly irksome to me because it really looks like RBC is trying to rope people into being day-traders by offering them 'savings'. But I digress. RBC and the other big banks can get away with doing stuff like this because Canada's banking system is an oligopoly, and people like me will more often than not keep our business with them -- especially when I hear about the headaches people have have with the actual discount players like Questrade, Etrade and Credential Direct. As a Big Bank shareholder, bring on the screw-job, I say.

On the opposite end of the spectrum, PC Financial, where I keep my emergency fund/condo downpayment, has very quietly raised their rate on their savings account. It's now at 4.25% for people with more than $1,000 in the account, like me. By my count, this keeps them a full 0.5% ahead of the granddaddy of them all, ING Direct.

What can I say, besides, "I'm glad I made the switch." I'm tempted to open up a no-fee chequing account there and keeping $1,000 in it just to rack up some free grocery points, but I haven't crunched the numbers to see if the money I'd lose in interest would be replaced by the amount of free groceries that would buy me.