An ‘Interesting Dilemma

Robert Corbin
Guest Contributor

he purpose for using banks as a means of storing money

traditionally used to be for the added security provided
by an institution housing your money, preventing anyone
from being able to pick it up and leave without a trace. This
added security created several different job openings in the
form of security guards as well as bank robbers. In the
current era of technological marvels, bank robbers have
been forced to become computer hackers due to the high
input cost of bank heists and the low chance of success.
Since the world financial crisis of 2008, banks have become
less and less customer centred, while increasing fees to
higher and higher levels. The customers have for the most
part accepted these changes without questioning at what
point enough will be enough.

In 2006, and with the assistance of a Scotiabank “high
interest savings account” which at the time provided 3%
annual interest, a mere $500,000 in the bank would provide
enough interest to pay rent, car insurance and buy a
significant portion of a year’s worth of groceries. Since 2008
with lending rates falling quickly while interest charged has
skyrocketed, the average savings account nets the customer
anywhere from 0% to 0.05% interest. This however must

be taken with the facts that banks have invented new
charges with the sole purpose of gouging customers. With
the fees added on, it no longer makes financial sense to
have a basic savings account if the balance is less than one
hundred million dollars, since even a cold hard million

in the bank will only net $41.66 in interest per month.

RRSPs are constantly being thrust on people left
right and centre, without the public being made
aware that a basic RRSP is based on market
conditions, and if the market falls, your principal
investment is not guaranteed.

The meaning behind this is that if the market decreases
in value, the money you invested can shrink, or in severe
situations disappear. The closest fix to this situation was
the introduction several years ago of the tax free savings
accounts. In a TFSA, any tax earned is not taxed ever,
and the money invested is guaranteed to never drop
below the amount put in, unless the TFSA investment

is switched over to a high risk investment portfolio

which has the same risks as an RRSP but without the
penalties for removing the money before retirement.

Student loans as of the last check were charging 7% interest,
with the possibility of it increasing if the Bank of Canada
raises their lending rates. Similarly most credit cards that

are aggressively marketed towards students as a population
have interest rates set at or near 29%. With these thoughts
in mind, and with banks constantly posting large earnings
reports and high fiving themselves for raking in so much
money investing the money of others, the purpose of a bank
has fallen from a financial institution that would pay back its
customers with a portion of their investment every year, to
suit wearing criminals that punish you for seeking to have
some security for your money.

It is sad that the meme that states “in capitalist America,
bank robs you!” is so valid today, while no regulations at any
level of government are trying to fix this fractured system.

The province of Newfoundland and Labrador has made
some preliminary efforts to rectify the situation by
completely eliminating student loans and replacing them
with student grants. As the very soft voiced student loans
advocacy groups say at the bottom of their lungs “education
shouldn’t be a debt sentence” even though supporting these

rabble.ca

student groups has led to consecutive tuition increases
across the province every year since 2009. The way that
financial systems should be run is to adjust fees, prices,
and interest paid based not only on the availability of
jobs in an area paying a living wage, but also based on the
economic performance of the country and province.

Credit card companies should not be able to charge
an interest rate above the interest paid on a basic
savings account, or that charged on a basic mortgage.
This is a system that would decrease national

debt, while also decreasing national stress.

UNBC Life 9

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