Canadian banks are out of control

Just went to a CIBC deposit $400 USD in travellers cheques to give some funds to Sunir as he heads off to BarCampOrlando. Somehow my $400 USD turned into ~$382 USD. Unconscionable.

There are really only five banks in Canada. Oligopolies are bad.
On a somewhat related note for anyone out there building web applications. A similar kind of levy may be exacted if you are collecting dollars in your non-native currency. If that’s you, you may want to have a look at this post I wrote about service to currency exchange and web services. Bit of a plug for a service provider we use, but also a smart way to save some money.

6 thoughts on “Canadian banks are out of control

  1. I share your feeling about Canadian Banks. My own perspective is shaped by almost 25 year of dealing with banks in New Zealand after emigrating there from Canada in 1982. Last year (2007) I returned to Canada and re-established a banking ‘presence’.

    Canadian banks charge outrageous fees compared to the much smaller New Zealand banks which are mainly Australian-owned. The charge for using another bank’s ATM is NZ$0.50 (C$0.35), not the C$1.50. In New Zealand you can deposit money into ANY bank account with any bank in New Zealand via Internet or phone banking for the same price as writng a cheque. If I owe you $50, you give me your bank account number and I trasfer the funds into your account (overnight) for either nothing or NZ$0.25 (C$0.19). In Canada, “Interac e-mail” *may* perform the same function in a much more cumbersome way….if your bank will allow you to do it. The Canadian banks charge $1.50 for each such transaction.

    In September last year I was in Starbucks and my Interac purchase of a coffee was declined. Turns out the RBC had frozen all my accounts and refused to free them until I turned up in a branch with 2 pieces of ID. They feared fraud on my account. They refused to explain how or why and didn’t care I was embarrassed by their actions and placed in an awkward situation.

    No surprise. It’s all those mafia-infested, corner store ATMs stealing your account info. In New Zealand, there are NO non-bank ATMs and thus there is much less worry about account security.

    Canadian banks ARE our of control. When the same thing began to happen in New Zealand, the government started up “Kiwibank” as a retail banking company. It’s government owned. Fees and interest rates are kept low as are costs. It became profitable years ahead of schedule and has returned a dividend to taxpayers ever since. Even better, Kiwibank is used by the government to maintain competition and has saved ALL customers of any bank an estimated total of $200 million….through holding fees down.

    I’ve come full circle on governments running businesses. They can do it well and greatly benefit all taxpayers both through profits and savings as described above.

    Maybe the Canadian banks need a government-owned “Canuckbank” to keep them honest. Competition has to be better than regulation.

  2. Thanks for sounding off Steve…pretty neat idea though I have to admit I am awfully dubious about the gov’t being any good at banking and I don’t know if I’d count government as competition :)

    But dammit does the oligopoly need to die. I see more American banks coming up here – like Wells Fargo – and I welcome the competition.

  3. Hey Mike,

    I think Steve holds a valid point and govt aint doing good.

    Thanks for insights.

  4. I agree with Steve :)

  5. Hmmm…a government run bank is an interesting idea. But there already is competition in the banking industry. ING has offered lower-fee, higher-interest accounts in Canada for years (and has forced the big banks to offer competing products), and some credit unions have better rates/fees/service. I think some of the blame has to go to the consumer who is simply not willing to do the work of looking for a competing bank. Perhaps they assume they’re all the same, but it’s not always so. Not sure regulation or government banks are really the answer.

    At any rate, as long as banks are raking in the cash, why not get your piece of the pie? Buying shares in Canadian banks has been very, very profitable over the long term. For tips on when to invest, check out my blog http://cdnbankstock.blogspot.com/.

  6. One of the early employees at Skype (employee number one) has just recently launched his service http://www.transferwise.com/ you can exchange as much as you want at ‘true interbank rate’ for 1 Euro.

    I’m really looking forward to the day that they’re able to manage more than just EU to GBP and back again. Apparently the roadmap is USD, CHF then … who knows? Maybe CAD in a few years.

    I think it seems a really disruptive business model though. Someone should see if that can be done here in Canada / US.

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