SOMETIMES YOU JUST HAVE TO ACCEPT YOUR SLIP-UP WITH A SMILE
A bank error and oversight can happen to anyone and if it hasn’t happened to you the consequences can be a devastating financial blow.
Imagine the sun is shining, you’re enjoying your first cup of coffee for the day and all seems to be going well. Then you sign into your banking app only to see a negative number flash before your eyes when you know you have money in the bank.
How could this be?
What is going on?
The questions start rolling through your head like thunder and a take-charge attitude ensues.
You might be the best of the best when it comes to your finances but even the pros make mistakes and so do the banks as we recently learned from a simple bank error and oversight on our part.
This mistake almost cost us near $200 in Non-sufficient fund fees which at the time was a huge blow to our perfect score of never paying a lick of interest to a credit card company let alone being hit with bouncing funds.
Before I get into the story I want to let all of you know out there that making an error with your money happens and instead of pretending it didn’t it’s important to own up to it and make a plan so it never happens again. This is what this post is about today because we like to be transparent and hope that our financial journey inspires and educates our followers along the way.
We have NEGATIVE $11 in our Chequing ACCOUNT
I’m pretty certain I’ve never seen Mrs. CBB jump as fast as she did after doing a double-take at our account balance and then saying, “Oh my Goodness our investments bounced”. It was at that very moment panic set in because all sorts of things were going through her mind. Chaos is probably a good word to describe it.
- Did someone hack into our bank?
- Where did the money go?
- Did I move money like I was supposed to?
- Where is the overdraft?
Then, she noticed the NSF (Non-Sufficient Funds) charges and LOST.HER.MIND. but that was only the beginning of the bank error from hell. The bank charged us $45.00 for each returned per-authorized payment that bounced in the account.
If you are someone who is used to this and sweep it under the rug as no big deal you really need to up your financial game. A bank error like this is no laughing matter especially if you are already struggling to make ends meet.
Should We Automate Bills or Not?
NSF charges are a BIG DEAL and it costs Canadians BIG TIME cash every year when bank accounts lack the funds to pay for automated bills. This was the main reason we did NOT want to automate our bills and never had unless we had to as in the case with our financial advisor to pay for our investments.
Ever since I can remember we’ve always waited for our monthly bills to come in the mail and then we would manually pay them online. It was a simple process that caused us no issues and we never paid a lick of interest or any type of fees for late payments let alone bounced payments.
Death changed everything
It wasn’t until this year when my father-in-law passed away and we had to take over their finances where we went through and still go through daily struggles. I don’t wish POA (Power of Attorney) on anyone especially when you are dealing with someone who is very ill or someone who has dementia like we do as it can tear you apart.
Becoming a POA can dominate your life and if you’re not ready for it you might see your world crumble while you try to pick up the pieces of someone who is already gone. Your walls start breaking down and you really start looking for the easiest way out to make daily living simple for you and for the person(s) you are caring for.
This is sort of what has happened to us even though we are not the POA listed on the legal WILL but are doing our part as family to help out with the overwhelming task given the situation. After numerous meetings with banks and having learned that a bank account can be frozen if both the husband and wife are not listed on the account life took its toll on us.
Doting all the Financial I’s and T’s
We started to think about our life moving forward and the things we hadn’t done not because we were lazy about it but because we had no idea.
First and foremost we made sure to hire the best lawyer in our city to do our legal will the right way which cost us just under $1000 because there are so many ramifications for not having a proper will complete. That is now done and safe in a vault for when it is needed.
Next we needed to tackle the bank and our vehicle.
For example, If you don’t have both your names on your vehicles it’s a process in a half to get a family vehicle swapped over into the surviving spouses name.
There is red tape and lots of hoop jumping ramifications if you don’t which requires legal documents, banking documents and someone to have the time to do it all when a spouse dies.
We wanted to avoid that so we planned to make sure that my truck included Mrs. CBB’s name. Sadly, this was swept under the rug but something we will be sorting out very soon. You can’t wait until something happens. I’m marking it on the calendar right now, no more waiting.
Organizing our Finances
After returning home after the funeral for my father-in-law and learning as much as we did from meetings with everyone from the coroner to the doctors, lawyers, funeral home, cemetery, banks, Ministry of Transportation (MOT) we had brain overload.
One thing we knew for sure was that with over $130,000 sitting the bank cash we had to sort that situation out before something went wrong. Our bank accounts were all secured under the CDIC (Canadian Deposit Insurance Corp) which meant we made sure that we had no more than $100,000 in one person’s name per account so it was covered by insurance in case something happened.
The main reason for having joint and separate bank accounts had to do with my immigration to Canada and obtaining a credit score in my name. It was all done for reasons pertaining to building financial strength in Canada which I had done over the past 10 years.
I went from having a credit card with a $500 limit to being offered a $25,000 platinum PC World Elite MasterCard over the years which helped me secure a healthy credit report. In those years we were able to buy a house and pay it off with-in 5 years which also boosted our credit availability although we never increase the limit because we don’t need it.
Our bank account has always had an overdraft protection on it that we never paid for unless we used it but never had. The cost to use our overdraft was $4.95 a month if used. That seems reasonable to pay to make sure your behind is covered. The purpose of having it was just in case of a bank error or oversight which can happen to anyone. Regrettably, something went wrong for us recently and we learned the hard way.
As mentioned the first financial task we wanted to tackle was to sort out bank accounts so both of our names were on each account. Before the changes we were covered by CDIC in the event something should happen. By doing this that meant that if we had over $100,000 combined in the bank accounts that we may not be covered by CDIC.
We insure eligible deposits at each member institution up to a maximum of $100,000 (principal and interest combined) per depositor per insured category. To be eligible for deposit insurance, deposits must be payable in Canada and in Canadian currency. We do not cover foreign currency deposits including US dollars.
Currently we have $39,000 over the limit in the bank but that will be going towards renovations but that still doesn’t make it secure in the event something should happen. We are also going to be moving the money to other investments with our advisor just to use up some of the money so it’s not earning simple bank interest.
Although the CDIC will be amending their By-law with greater flexibility to modernize banking insurance although this won’t affect the amount insured per depositor.
(Although the amendments have passed into legislation, no date has been announced by the federal government for the rules to come into force.)
These changes include an extension of CDIC coverage to deposits with terms longer than five years and to deposits denominated in foreign currency, such as U.S. dollar accounts, held in CDIC-member institutions. Previously, only GICs with terms of five years or less and accounts denominated in Canadian dollars were eligible for CDIC coverage. – Investment Executive
The Bank Error of Hell
After her small freak out session Mrs. CBB calmly called Simplii Financial to find out what had happened since we were supposed to have bank overdraft protection. This NEVER should have happened especially to a couple who seems to be on their toes when it comes to finance. We are supposed to be financial experts but even the pros make mistakes.
It turns out that when Mrs. CBB and I called the bank to add each other’s names to our bank accounts for some reason the bank overdraft protection was removed from our chequing account. Had it of been there than we would have saved the dreaded $45 NSF fees for two bounced payments.
Great. Thanks for letting us know. Now we know.
That was when Mrs. CBB intercepted the conversation to ask if the banking officer could remove the NSF charges since it wasn’t our fault (kind of) that they took the protection off the account.
After reviewing our bank account and seeing that we’ve been customers for a hundred years and that we had over $100,000 in there he agreed to take one NSF charge off.
BIG WOOP! Mrs. CBB argued the toss and finally got her way and he took both the charges off. PHEW!! Thankfully the guy was VERY understanding and owned up to the bank error from their perspective.
That didn’t make it right on our part though because what we thought was a bullet-proof bill paying system for us ended up failing but it was our system that needed tweaking. We got lucky, kind of.
What we did wrong?
- Believed we had overdraft and didn’t follow-up with our bank (now we will do this semi-annually) to make sure nothing has changed under our noses
- Forgot to move more money over to the chequing account for when the investments went through
It gets worse. Ugh!
Two days later we get a phone call from our financial investment firm to advise us that our investments were returned and that we had to manually pay for the now missed TFSA and RRSP payments for Mrs. CBB’s account. It didn’t affect mine per-say as they made it through the bank but my name is still on there.
Oh, and by the way he says you are being charged $45 for each NSF return that you had. WHAT? AGAIN? TWICE? NO NO NO no no no. That is shitty in every sense of the situation because you get it from the front-end and the back-end and you can’t really do a damn thing about it.
Their advice after explaining what had happened was to talk to the bank to see if they would pay for the charges. Honestly, we were spent and just couldn’t do it. We had a hard enough time convincing them that we should not get the NSF charges since it was a bank error on their part for not letting us know they removed the overdraft protection.
In the end Mrs. CBB and I just said, sod it we made a mistake as well even though it should have been covered by the overdraft but we will walk away from this as a learning experience. We are out $90 but it could have been far worse.
What we learned from this experience is that you can negotiate with your bank if THEY made an error which we did but sometimes you have to examine the situation and accept that you were part of the problem, which we did. Don’t make the same mistake as us. Always review with your bank when any changes to your bank account is made to make sure everything you need is serviced.
Most of all, don’t beat yourself up about it. No one is perfect.
Discussion: Have you made a bank error before? What happened? Any extra charges? Share your comments below.