Financial advice from your bank — hold on a minute!

I live in a small town and the bank isn’t terribly busy. Often times I can go into the manager’s office and talk to them. They always have some new product they are trying to sell me - usually under the guise of ‘it will be better for me.’

Now, often a bank is a good place to deal. I have a decent mortgage rate and a credit card only a few % above prime. But remember, they are there to make money, so you need to evaluate their advice carefully.

A popular thing banks try to do is say ‘Why rent when you can own?’ They often have posters up showing if you are paying a certain amount in rent, then you can afford a mortgage of a certain value. Yes, you can afford the mortgage. Not necessarily the numerous other expenses that go with a home (electricity, gas, taxes, maintenance). Keep those in mind before you dive in.

I bank with Scotiabank. They do a lot of things to hide their charges from me. When I purchase stocks online they give an ‘estimate’ of commission. When the transaction goes through I can’t tell how much I paid in commission. On my monthly statements my commission is not shown. I get a small confirmation slip in the mail that shows it. Very annoying in the world of online banking. Plus they own another brokerage firm (TradeFreedom) that charges $10 a trade, whereas the bank charges $25-$30 per trade.

My wife went into the bank and asked what our interest rate was on our credit card. They told us it was on the papers when we signed up for the card (two years ago).

I received a paper from them saying our mortgage payment had changed. They didn’t say if it went up, or down. They just told us the new % and our payment.

When my mortgage payment comes out, there is no indication of how much was principal and how much was interest.

Generally speaking, the bank does their utmost to know how much you are paying them.

Just keep in mind who is giving you the advice. The person in the bank is possibly getting a commission, or is required to make a certain number of sales. Sure, consolidating a bunch of high interest credit cards with a lower bank loan is a good idea.

Foreign currency transactions are another big one. If you deal with another currency the bank may get you for a few % points each time. My retirement plan is in Canadian dollars, but I purchase some US stocks in it. Each time I buy and sell them I lose money to the bank. May or may not be worth it.

Only you have your best interests at heart.

And by all means, shop around. Other banks have people on commission or who are required to make a certain number of sales too. They might give you a better deal.