Advantage of banking with a large bank?

[nwwong]

I've had a Royal Bank account since I was a teen but as a student, switching to PCF was for my banking was an obvious choice because of zero fees. I still have my RBC account that's is rarely used on a "pay per use" type account so I don't have to pay any monthly fees. The advantages of PCF vs the big banks (RBC, TD, BMO, Scotia) are pretty clear: low fees, high interest. But I have read here and there that there are advantages of banking with a big bank. I'll be entering the work force in a year and may end up buying a car, or getting a house etc soon after.

With this in mind, what are the advantages of banking with a big bank versus sticking with PCF.

[Caillo]

I've had a Royal Bank account since I was a teen but as a student, switching to PCF was for my banking was an obvious choice because of zero fees. I still have my RBC account that's is rarely used on a "pay per use" type account so I don't have to pay any monthly fees. The advantages of PCF vs the big banks (RBC, TD, BMO, Scotia) are pretty clear: low fees, high interest. But I have read here and there that there are advantages of banking with a big bank. I'll be entering the work force in a year and may end up buying a car, or getting a house etc soon after.

With this in mind, what are the advantages of banking with a big bank versus sticking with PCF.

Unless you have really unique transaction needs, which PCF can't meet or can't meet cheaply, or run a business, there are zero advantages in my point of view.

The whole argument of: "You need to build a relationship with your bank to get a good mortgage rate" is totally over-rated: if you have good credit and have a decent job (i.e. can show your ability to repay), you're gonna be able to get a mortgage anywhere at their low rates. PERIOD.

[Whitedart]

I've had a Royal Bank account since I was a teen but as a student, switching to PCF was for my banking was an obvious choice because of zero fees. I still have my RBC account that's is rarely used on a "pay per use" type account so I don't have to pay any monthly fees. The advantages of PCF vs the big banks (RBC, TD, BMO, Scotia) are pretty clear: low fees, high interest. But I have read here and there that there are advantages of banking with a big bank. I'll be entering the work force in a year and may end up buying a car, or getting a house etc soon after.

With this in mind, what are the advantages of banking with a big bank versus sticking with PCF.

You do know that PC Financial is a division of CIBC don't you?

[nwwong]

You do know that PC Financial is a division of CIBC don't you?

Not quite a division. It's a joint venture between CIBC and Loblaws. However I wouldn't be able to get CIBC products through PCF so I consider them separate.

I was thinking along the lines of whether a relationship with large full service bank has any benefits.

[angel_wing0]

With this in mind, what are the advantages of banking with a big bank versus sticking with PCF.

there are zero advantages in my point of view.

The whole argument of: "You need to build a relationship with your bank to get a good mortgage rate" is totally over-rated: if you have good credit and have a decent job (i.e. can show your ability to repay), you're gonna be able to get a mortgage anywhere at their low rates. PERIOD.

nicely said, as i believe the exact same thing as well.

The only adv i would say is the long hours of td branch, and that it's easier to fine one than the other banks.

[YYZFA]

It must be the end of the month, because this topic comes up like clockwork. There are many people who see many advantages to both types of banking. If you are with a no-frills bank and haven't missed anything, then you're with the right bank.

There is no shortage of opinion on this debate in this forum. For a quick answer do a search and you'll find just about every opinion possible on the subject.

[CCCC3333]

I was a teen but as a student, switching to PCF was for my banking was an obvious choice because of zero fees
Most of the big banks have free student accounts.

[Billwill]

Most of the big banks have free student accounts.

Big banks offer a feeling of security.

We'll likely see a bunch of US bank runs, so knowing you are with the Royal or whatever can be a psychological advantage.

[angel_wing0]

Big banks offer a feeling of security.

WHAT feeling of security if i may ask? it's not like the smaller banks are not insured by cdic. Or is it just sacarasm?

[the_unknown]

WHAT feeling of security if i may ask? it's not like the smaller banks are not insured by cdic.

Exactly what I'm thinking. If you're really freaked out, then just don't put over $100K in anyways.

I don't use PC, ING or the like for personal reasons. I prefer personal service, visit the branch more often than an average person and have extended financial needs (like foreign currency, international banking)

[Billwill]

Only psychological.

A feeling of support from BIG brother.

Nothing more.

[ns_guy]

I would agree with the majority of the posts here. If you don't miss any of the banking services that the "Big Banks" offer, then stay with what you have. I've never had a PCF or similar type of free bank account, can those of you that have had problems with them tell me how quickly they got resolved and how easy it is dealing with a problem on the phone/by internet? The main upside I see of the bigger banks are:

-Financial advice in person, I don't like talking business over the phone that much (personal preference). Plus, once you find somebody you can deal with well, you can stick with them.
-Problem resolution; much easier to deal with problems with a single person at a branch, as opposed to getting somebody else everytime on the phone who doesn't know what's happening.
-Complex transactions easier to do in branch I'm thinking - I imagine sending wires, foreign exchange, drafts/money orders etc. easier to do.
-When you need credit quickly, branch is probably a bit quicker. Anybody have experience getting a secured line of credit over the phone with PCF or some other "free" bank? How long did it take, was the process easy etc.?
-Tie-in to other bank services, ie: brokerage accounts, mutual fund accounts, so you can transfer money between bank account and investment accounts and get your "full-service banking" at one place only.

Obvious downside: interest rates (bank accounts, GICs etc. generally lower).

[the_unknown]

I would agree with the majority of the posts here. If you don't miss any of the banking services that the "Big Banks" offer, then stay with what you have. I've never had a PCF or similar type of free bank account, can those of you that have had problems with them tell me how quickly they got resolved and how easy it is dealing with a problem on the phone/by internet? The main upside I see of the bigger banks are:

[...]

Obvious downside: interest rates (bank accounts, GICs etc. generally lower).

You've hit the nail on the head with most of these points. I prefer a one-stop financial solution, but I guess I can't really use this excuse as I bank with more than one of the big 5.

I mean, more power to those who PC meets their needs well- but some need to realize it isn't for everyone, and that people who don't bank with PC are not money-wasting morons (for the most part). With RBC I get GIC rates that are better than virtual banks based on the "relationship value", I pay no service charges and get the full-service package. It's just a personal preference talking to a human being in person rather than some call centre.

Some people have said PCF's service is crap, but the benefit of no fees outweigh the small possibility you will have a problem and have to call customer service. One thing often complained about are the limits and holds that PCF has. For the average person who just gets their payroll, only uses an ATM, Direct Payment or CC has no need for anything else other than PC.

[Caillo]

I would agree with the majority of the posts here. If you don't miss any of the banking services that the "Big Banks" offer, then stay with what you have. I've never had a PCF or similar type of free bank account, can those of you that have had problems with them tell me how quickly they got resolved and how easy it is dealing with a problem on the phone/by internet? The main upside I see of the bigger banks are:

-Financial advice in person, I don't like talking business over the phone that much (personal preference). Plus, once you find somebody you can deal with well, you can stick with them.
-Problem resolution; much easier to deal with problems with a single person at a branch, as opposed to getting somebody else everytime on the phone who doesn't know what's happening.
-Complex transactions easier to do in branch I'm thinking - I imagine sending wires, foreign exchange, drafts/money orders etc. easier to do.
-When you need credit quickly, branch is probably a bit quicker. Anybody have experience getting a secured line of credit over the phone with PCF or some other "free" bank? How long did it take, was the process easy etc.?
-Tie-in to other bank services, ie: brokerage accounts, mutual fund accounts, so you can transfer money between bank account and investment accounts and get your "full-service banking" at one place only.

Obvious downside: interest rates (bank accounts, GICs etc. generally lower).

I'm gonna give my opinion on each of the points you raised:

1. By financial advice do you mean investment advice? If so, you don't need to bank with TD, RBC, etc. in order to take advantage of their investment services.

2. Problem resolution: I'm not really sure with this one. I've been with PC for about 2 years and haven't had a problem yet so I'm not familiar with how quickly they would resolve issues. However, I will say this, I had a question about my savings account once and when I called PCF they were quick, courteous and very professional. Furthermore, the person I was talking to wasn't sitting at some desk in India.

3. Completely agree with you. When it comes to the types of things you mentioned, PCF completely sux. No doubt about it. However, I, nor most people using banks, will almost never undertake such transactions.

4. Agreed with the length of time involving credit. You could probably get credit a few days quicker then with a brick and mortar bank. But, in general, you are also going to pay higher interest on that credit. Not worth the extra interest payments for me to get credit more quickly.

5. I guess I agree with you on this one. But at what price does this come at? Transaction fees, minimum balance requirements, terrible interest rates. Is that really worth it, just to have all of your financing under one roof??? I personally do my banking with PCF and investing with another institution and have had no problems whatsoever.

6. Agreed. The rates are much better

[coolspot]

WHAT feeling of security if i may ask? it's not like the smaller banks are not insured by cdic. Or is it just sacarasm?

But the chance of a Big 5 bank failing in Canada is very slim. Who wants to go through the hassle of a bank collapse (not that it's likely in Canada... but still).

If you have a good relationship with the PBO, you can get things done very quickly. i.e. Mutual Fund withdraws, cash transfers, new account openings, etc. the paper work can be done in a blink because the PBO knows who you are and doesn't need to verify every single detail.

Also, you have someone accountable; if things go wrong, you can pin it on the PBO :D With a virtual bank, who are you going to complain to? John/Jane Doe CSR? :D

[pitz]

If you ever want to move to the United States or to Latin America, having a relationship with some of the bigger Canadian banks could be beneficial.

Move to San Jose, Costa Rica, for instance, and they have Scotiabank branches there. RBC is quite active in Georgia and North Carolina. TD has a pretty big presence in NY, Vermont, Mass, etc. I suspect the Canadian banks will eventually even gain a California presence as banks there go under and are bought up for cheap by the Canadians.

I won't claim that transferring your stuff from a Canadian branch to a foreign branch will be easy.... But its much easier than starting over completely from scratch. And RBC is getting better all the time at making RBC Centura services available to cross-border migrants all the time.

[ns_guy]

I'm gonna give my opinion on each of the points you raised:

1. By financial advice do you mean investment advice? If so, you don't need to bank with TD, RBC, etc. in order to take advantage of their investment services.

4. Agreed with the length of time involving credit. You could probably get credit a few days quicker then with a brick and mortar bank. But, in general, you are also going to pay higher interest on that credit. Not worth the extra interest payments for me to get credit more quickly.

5. I guess I agree with you on this one. But at what price does this come at? Transaction fees, minimum balance requirements, terrible interest rates. Is that really worth it, just to have all of your financing under one roof??? I personally do my banking with PCF and investing with another institution and have had no problems whatsoever.



1. My point was more aimed at the "personal touch" of banking. When it comes to talking about debt (credit), different mortgage options, mutual fund returns, holdings etc. I like to do it in person. I know you can invest in mutual funds over the phone, but when it comes to know-your-client and say, picking a mutual fund, I prefer being able to talk to someone face to face.

4. Not sure what the interest rates on lines of credit at PCF vs say BMO/CIBC/TD are like. Are they actually lower in general? I imagine underwriting is much the same at PCF and CIBC so I would think the difference is minimal?

5. Agreed, you have to weigh convenience with cost. For me, the small cost of banking/year isn't large enough for me to be put off. If I pay $120/year in banking, that equates to me not being able to buy 24 $5 Starbuck coffees a year or 12 McDonald meals...not the end of the world for me :)

I think the end conclusion is that people should try the free banking at PCF or elsewhere, see how it goes for a while and then switch entirely if they are happy. I think a good solution might be to maintain a very low fee account at one of the big 5 (or no fee savings account) and then also have PCF for the day to day stuff.

[dealtacular]

1. My point was more aimed at the "personal touch" of banking. When it comes to talking about debt (credit), different mortgage options, mutual fund returns, holdings etc. I like to do it in person. I know you can invest in mutual funds over the phone, but when it comes to know-your-client and say, picking a mutual fund, I prefer being able to talk to someone face to face.

4. Not sure what the interest rates on lines of credit at PCF vs say BMO/CIBC/TD are like. Are they actually lower in general? I imagine underwriting is much the same at PCF and CIBC so I would think the difference is minimal?

I think the end conclusion is that people should try the free banking at PCF or elsewhere, see how it goes for a while and then switch entirely if they are happy. I think a good solution might be to maintain a very low fee account at one of the big 5 (or no fee savings account) and then also have PCF for the day to day stuff.

1. Even if you're not a customer of that bank, you can still discuss most of these things in person, except for your holdings (obviously).

4. Interest rates will generally be better with a virtual bank, but sometimes you can negotiate a better rate with a B&M bank.

Your solution is, IMO, the best approach. Why this topic is always such a debate is beyond me, as you can take advantage of the best of both options (except for the consolidation benefit, which has uncertain results) by maintaining a no-monthly fee account at a B&M bank. Use the B&M bank when you absolutely need it, which for the majority, is rarely. Otherwise, use a virtual bank.

And as YYZFA mentioned, a search can be done on this topic for past debates which cover all of the benefits and drawbacks of each side.

[angel_wing0]

But the chance of a Big 5 bank failing in Canada is very slim. Who wants to go through the hassle of a bank collapse (not that it's likely in Canada... but still).

Whats the chance of a virtual or a so called smaller bank failing then? PCF is with CIBC so unless CIBC fails nothing will happen to PCF. HSBC and ICICI are international banks that are much much bigger than the big 5 but are just limited in presence in canada thanks to the government.

Lastly, even if it does fail, it is protected by the CDIC, so what you really say is a moot pt.

[coolspot]

Whats the chance of a virtual or a so called smaller bank failing then? PCF is with CIBC so unless CIBC fails nothing will happen to PCF. HSBC and ICICI are international banks that are much much bigger than the big 5 but are just limited in presence in canada thanks to the government.

Lastly, even if it does fail, it is protected by the CDIC, so what you really say is a moot pt.

Canadian banks are very conservative when you compare it to many other international banks. For example, several American banks are on shaky territory because of subprime, 1 UK bank collapsed, and 1 French bank was near collapse due to a rouge trader.

As for CDIC, yes, it'll protect your deposits, but many of us have more than the 100K it protects. Also, who wants to go through the hassle, paperwork, etc to get your money back? It'll probably take weeks if not months to get access to your money from CDIC.

But in general, I'm happy with my bank. My PBO offers unparallelled service that cannot be matched by a Virtual bank. That doesn't mean i don't use a virtual bank - I use ING as a basic savings account :)

[Caillo]

1. My point was more aimed at the "personal touch" of banking. When it comes to talking about debt (credit), different mortgage options, mutual fund returns, holdings etc. I like to do it in person. I know you can invest in mutual funds over the phone, but when it comes to know-your-client and say, picking a mutual fund, I prefer being able to talk to someone face to face.

4. Not sure what the interest rates on lines of credit at PCF vs say BMO/CIBC/TD are like. Are they actually lower in general? I imagine underwriting is much the same at PCF and CIBC so I would think the difference is minimal?



1. Like I said, you don't need to bank with RBC, TD and Scotia to take advantage of their investment and lending arms. I bank with PCF and do some of my investing with TD. It's the best of both worlds: No fee banking and I have the personal investing resources, that you mentioned, of TD.

4. From personal experience, the big banks can't compete with the virtual banks on LOC (perhaps due to all the overhead expenses they have?) When I went shopping around last year for a LOC, I went to Scotia, TD and RBC and the best rate I got from all 3 was from Scotia and it was .25% more then PCF. And that was after some serious haggling from myself... I even told all of them the PCF rate and that I wouldn't do business with them unless they could at least match it.... All 3 said they couldn't/would not offer the same rate. My credit score at the time was 755 (low risk lender), and they still would not match!

[jchanq]

4. From personal experience, the big banks can't compete with the virtual banks on LOC (perhaps due to all the overhead expenses they have?) When I went shopping around last year for a LOC, I went to Scotia, TD and RBC and the best rate I got from all 3 was from Scotia and it was .25% more then PCF. And that was after some serious haggling from myself... I even told all of them the PCF rate and that I wouldn't do business with them unless they could at least match it.... All 3 said they couldn't/would not offer the same rate. My credit score at the time was 755 (low risk lender), and they still would not match!

I think it's because you don't have much relationship with the bank. That's why they wouldn't budge. But it's just my guess, it could be other factors too.

[Caillo]

I think it's because you don't have much relationship with the bank. That's why they wouldn't budge. But it's just my guess, it could be other factors too.

If you read my entire post, I have an investment account with TD. Been dealing with them for years. They still couldn't match PCF.

[coolspot]

If you read my entire post, I have an investment account with TD. Been dealing with them for years. They still couldn't match PCF.

TD seems to have some issues between divisions. Seems like their investment arm doesn't talk to their retail arm and vice versa. I found Scotiabank is much more integrated and provides better service.

[jchanq]

TD seems to have some issues between divisions. Seems like their investment arm doesn't talk to their retail arm and vice versa. I found Scotiabank is much more integrated and provides better service.

I second that. As most of my banking is from TD, their VISA department, investment department and retail are like seperate entities.

If you have good retail product with them, it gives you a higher chance they will be able to match the LOC rate for you. Also it will help if you have a account manager in a TD branch that knows about you.

[Just Confused]

I would say you're doing exactly the best thing for yourself right now. You don't need to change anything.

You're going for the low fees at a virtual bank for your normal routine banking activities, while retaining a low cost fee-based account at a bricks & mortar bank in case some out-of-the-ordinary event requires some personal face-to-face attention... several examples have been mentioned.

There is no rule that says you have to close any particular account and put all your eggs in one basket. Anyone who suggests that just hasn't lived long enough to know any better.

[Fox]

You do know that PC Financial is a division of CIBC don't you?

This is not true. The chequing/savings/other core banking is a joint venture between Loblaws and CIBC.

The Mastercard, Insurance etc. have nothing to do with CIBC.

[gman]

If your bank does what you need, that is what you need.
If there is another bank does better, that is what you want more.

I bank in CIBC. A lot of people hate it. It has worse Business hour than TD. BTW, the CIBC in Markville Mall opens on Sunday. Does TD open on Sunday?

Anyway, I do like it because of personal touch.

When I need extra cheque book, I can email or call my bank Rep or leave a voice mail to get it for me without telling them my account number, full name, postal code, my birthday, etc.

When I need a mortgage certificate, I just call my bank Rep to give it me. Oh! You need to sign some papers. No problem! They courier to my office. They put all these 'Sign here' post-it. I sign it and drop it off to any CIBC branch.

I want to renew a mortgage. "Hey! You can come over to our branch". "Well, your branch office is in downtown and I live and work uptown". "Okay, that's fine. How about I come to your office and walk through the documents?"