Your bank is not your buddy

I’m being contacted by banks a bit more lately.

To give you the background: I keep my chequing account and most of my RRSP money with one bank – call it Bank A. I keep my charge card with a separate bank – call it Bank B – so that it can’t take money from my chequing account if there is a problem with my credit card. (I also keep a savings account and some RRSP money with ING Direct, but they’re not part of this story.)

At Bank A, I keep all of my (not particularly large) RRSP in GICs, not mutual funds or stocks, as I don’t trust the stock market. The GICs, being time limited deposits, expire at regular intervals. I have discovered that I don’t need to remember when a GIC is about to expire, as I usually get at least one and sometimes several calls from junior financial representatives employed by Bank A, who are no doubt trying to earn some commission by attempting to persuade me to move my money out of GICs and into fee-generating funds. I feel sorry for them – how much fun can it be to spend evenings cold-calling customers? – so I always politely tell them that I plan to re-invest my money online, and they reluctantly go away. So far, so good.

It’s Bank B that is annoying me the most. This week, I got a flyer in the mail advertising “credit card cheques”. The flyer bears this header:

5.99%
Start saving
today

Credit card cheques, according to this flyer, “are another way to access your credit card account, pay down your current higher interest rate balances, or to take care of the things you’ve been dreaming of doing: a room renovation, fresh landscaping, a new deck or gas grill.” (Aside: somehow, I have wound up on Bank B’s “homeowners” mailing list, even though I live in a high rise and would never be able to do any of the above. Presumably, it’s a demographic thing: they have my date of birth, and most people my age own their own home.) It’s only on the back of the flyer, in smaller print, that Bank B points out that a credit card cheque is equivalent to a cash advance on your credit card, on which you are obliged to start paying interest right away. The “saving” refers to the relatively lower rate of interest on these cheques as compared to their normal credit card interest rate – but even this rate is higher than the rate being paid on GICs, let alone on savings and chequing accounts. Hmph.

As author Walter Stewart once put it, “Your bank is not your buddy.”