My readers often get into trouble dealing with transactions that are unfamiliar to them. They learned that if you cancel a credit card, make sure to let the credit bureaus know. Gord paid off his mortgage as quickly as he could, but was hit with a big penalty. Stan opened a margin account to trade stocks, but paid more interest than anticipated. He discovered that if you hold Canadian and U. Things are more complex than they used to be. So, read the tips from Sue, Gord and Stan below and thank them for trying to help you avoid costly errors.
Our credit scores should have been near-perfect. We discharged our mortgage two years ago, paid off our car loan 9 years ago it still runs great and always pay our bills in full on the day they arrive. We live well within our modest means on one income. However, when we went online with Equifax recently, my husband and I were dismayed to see that our FICO scores were not perfect at all: What we did wrong was to change credit cards quite a few times over the past 10 years, chasing better air miles deals or in-store promotions.
Many of these old cards remained on our reports, even though they were cancelled by us using the phone years ago. More available credit equals a lower FICO score. We also foolishly allowed the 3 cards we do use to keep bumping up our credit limits, way beyond what we need or would ever use.
We took care of that immediately. They should write to Equifax and TransUnion when they close any credit card accounts, with a copy of a confirming letter from the card issuer attached.
Royal Bank Visa was the only exception. TD Visa let it drag on for 6 years until we caught it. HBC insisted they sent Equifax the information years ago, but were glad to send another letter. I just spent 17 days gathering up 6 letters from various credit card issuers to confirm that the accounts are closed.
Only HBC admitted the account was closed 6 years ago in their recent letter. All the other letters dated the account closure on the day they wrote the letter. This was false, but good enough for our purposes, I suppose. It took another two hours to copy and put all this information together for Equifax. Quite the hassle, but hopefully worth doing. I found myself in a position where I had the funds to pay off a substantial mortgage with Bank of Nova Scotia. So it appeared to me that I was able to simply increase those weekly payments until the point where my mortgage was nearly paid off.
The conspiratorial side of me believes the bank would love to encourage individuals to increase payments online so they can collect obscene penalties down the road. I am at a loss on what to do. I thought they would also tell you if penalties applied when increasing weekly payments.
I opened a direct investing account margin account with RBC about a year ago, initially using credit line funds. I have only ONE margin account with them, with one account number. I am hoping that this makes some sense to you and that you can perhaps share this dilemma with other unsuspecting investors. Hopefully this will clarify your questions. Upon opening a margin account, every RBC Direct Investing client must sign a margin account agreement, which outlines all of the details on how a margin account works.
Below is a summary of the disclosures that a client receives regarding our margin policy and debit interest. The client would have also received monthly statements that would have included the interest charges. It is also clearly outlined on monthly statements that clients should notify us of any concerns about their statements within 45 days of receipt.
Further to the above, if a client is carrying a debit on the USD side, we would not automatically convert the CAD funds into USD funds because we do not know if the client is speculating on the direction of the CAD dollar. The below sources of information collectively summarize disclosures to the client regarding our margin policy and debit interest charges:.
I expressly acknowledge, agree to and ratify the terms and conditions of an Operation of Account Agreement governing the Accounts which agreement was provided to me upon opening my account. This agreement explains how your cash account works as well as how additional optional services such as margin and Automated Services work. We will deduct from your account any interest you owe us.
Our rate of interest will be the rate shown on your monthly or quarterly statement. We may change the interest rate at any time. We do not pay interest on credit balances below certain amounts. Our current interest rates and the minimum credit balance required to earn interest is available upon request or on our website at http: Investment accounts can contain Canadian and U. This is standard practice among all brokerages and there is a very good reason behind it.
It is hard for me to agree with Stan that RBC Direct did not provide enough disclosure and is somehow at fault here. The agreement also outlines why this is so. It is hard to argue that RBC Direct put in this rule simply to line its pockets when there is a clear benefit to clients wanting to avoid currency conversions.
DIY investors opting for a self-directed discount brokerage account are taking on responsibility to stay on top of their investments.
That includes everything from learning how to operate their accounts to monitoring them for any discrepancies. Perhaps, this is a good idea for a column on how separate USD-CAD accounts can trap the unwary investor into buying stocks on margin. I agree that the ultimate responsibility for understanding my investment account is entirely my own.
Canadian Capitalist is obviously well-versed in the investment field and is aware of practices that the novice investor is not. However, RBC Direct and others were not implemented to serve the knowledgeable investor, in my opinion.
In fact, as I read Art. I recently cancelled one of my credit cards and wanted to make sure it was properly reflected on my credit report. When you apply for credit, the SIN number is enough to pull the credit file. OK, I get it. If you want to feel my pain, you might want to go to their site and call the number they posted online. They make so much money out of Canadians and Canadian businesses and they should provide a reasonable service. My classmate works for a major bank and his clients faced the same issue, I heard.
While Stan may have been caught flat-footed by the margin rules at RBC and inadvertently speculated on the CAD, it looks to have worked out for him: Therefore, closing credit cards can adversely affect your credit score. Therefore, having a higher credit limit would also help reduce your utilization percentage.
One other point — credit history is important as well. You have to be kidding me! What are you looking for? The impossibly perfect score of that no one gets? With your paltry , you only get the best rates and any credit you want.
What else do you need? You must be logged in to post a comment. What people are saying: Advice my readers want to share April 29 by Ellen Roseman.
Not bad scores, I know. But they should have been better. Gord Apr 29 I found myself in a position where I had the funds to pay off a substantial mortgage with Bank of Nova Scotia.
Stan Apr 29 I opened a direct investing account margin account with RBC about a year ago, initially using credit line funds. I find this ludicrous, if not fraudulent. The debit interest against the US side of an account is standard industry practice.
Disclosures to the client regarding margin policy and debit interest: The below sources of information collectively summarize disclosures to the client regarding our margin policy and debit interest charges: Operation of Account Agreement, Section 1.
After all, the only person monitoring a self-directed acount is the investor himself. My challenge is simple. LnewMan Apr 29 I recently cancelled one of my credit cards and wanted to make sure it was properly reflected on my credit report.
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