How did we get to this point?

We just bank just the way the bankers want us to bank

In recent articles I have referred to more efficient ways of managing money. The truth is, at least in my opinion, that the so-called traditional ways that most Canadians conduct their banking, debt management, etc. is convoluted and inefficient. In fact when you really look at it, it hardly makes sense — especially considering that there are more sensible alternatives.

I often wonder how we got to this point.

To begin with, I think it is a misnomer to refer to a “traditional way” of doing banking.

Banks, in the modern sense of the word, have been around since the 14th century. The way we bank, on the other hand, has morphed into something completely different only within the last few decades.

Credit cards (as we know them today) only gained widespread use in the 1970s. At the time ATMs did not exist. That and the debit card did not come until the ‘80s, with online banking later still.

Even more recent has been the unprecedented expansion of credit we have seen since the turn of the century. In the U.S. this trend has reversed itself, but in Canada household debt continues to rise — to a point where our average household debt has surpassed that of the United States.

How did we get here?

In my opinion it has a lot to do with our financial institutions.

We bank the way they want us to bank. They make the rules. And unfortunately, the rules usually benefit them more than they do us.

They want us to be in debt. They like it when we pay exorbitant interest rates on credit cards. It is profitable for them.

To understand my point, consider this: the credit card was a great invention. In the days before credit cards the alternative was to carry cash around. And to get cash, you would have to go to your bank, during banking hours, wait in line, then make a withdrawal. Credit cards brought us convenience and security.

But now we have ATMs and debit cards.

There is really little if anything you can do with a credit card that you can’t do with these.

So I ask you this: why do we still have credit cards?

I can only think of these answers: so that we can spend money we don’t have; so we can buy things we can’t afford; and so our institutions can charge us interest rates as high as 20 per cent or more.

For more on this be sure to register for our upcoming presentation entitled Money Myths — an informative and entertaining look at what is wrong with how we manage money.

 

 

 

Jim Grant, CFP (Certified Financial Planner) is a Financial Advisor with Raymond James Ltd (RJL). This article is for information only.  Securities are offered through Raymond James Ltd., member Canadian Investor Protection Fund. Insurance and estate planning offered through Raymond James Financial Planning Ltd., not member Canadian Investor Protection Fund.  For more information feel free to call Jim at (250) 594-1100, or email at jim.grant@raymondjames.ca. and/or visit www.jimgrant.ca.

 

 

Just Posted

The Parksville Civic and Technology Centre at 100 Jensen Ave. (PQB News file photo)
Parksville 2020 annual report now ready for public feedback

Documents can be viewed online; comments or questions to be submitted before noon on July 5, 2021

FILE – Perry Bellegarde, National Chief of the Assembly of First Nations, takes part in an event on Parliament Hill in Ottawa on Tuesday, July 7, 2020. THE CANADIAN PRESS/Sean Kilpatrick
Indigenous Peoples Day must be a ‘call to action’, says Assembly of First Nations chief

Discovery of children at Kamloops residential school site must lead to change, Perry Bellegarde says

A Lotto 6/49 ticket purchased in Parksville for the June 19, 2021 draw is a $3M winner. (Submitted photo)
Winning Lotto 6/49 ticket worth $3M purchased in Parksville

Lottery prize winners have 52 weeks to claim jackpot

The border crossing into the United States is seen during the COVID-19 pandemic in Lacolle, Que. on February 12, 2021. THE CANADIAN PRESS/Paul Chiasson
VIDEO: Border quarantine to soon lift for fully vaccinated Canadians

Eligible travellers must still take multiple COVID-19 tests

Chilliwack secondary school’s principal is apologizing after a quote equating graduation with the end of slavery in the U.S. was included in the 2020-2021 yearbook. (Screenshot from submitted SnapChat)
B.C. student’s yearbook quote equates grad to end of slavery; principal cites editing error

Black former student ‘disgusted’ as CSS principal apologizes for what is called an editing error

Skeena MLA Ellis Ross. (Photo by Peter Versteege)
BC Liberal leadership candidate condemns ‘senseless violence’ of Okanagan church fires

Skeena MLA Ellis Ross says reconciliation isn’t about revenge for past tragedies

A coroner’s inquest will be taking place at the Capitol Theatre in Port Alberni for the next week. (ELENA RARDON / ALBERNI VALLEY NEWS)
Teen B.C. mom who died following police custody recalled as ‘friend to many’

Police sent Jocelyn George to hospital after intoxication had gone ‘beyond the realm’ of normal detox

FILE - In this Nov. 29, 2020, file photo, Las Vegas Raiders defensive end Carl Nassib leaves the field after an NFL football game against the Atlanta Falcons in Atlanta. Nassib on Monday, June 21, 2021, became the first active NFL player to come out as gay. Nassib announced the news on Instagram, saying he was not doing it for the attention but because “I just think that representation and visibility are so important.” (AP Photo/John Bazemore, File)
Nassib becomes first active NFL player to come out as gay

More than a dozen NFL players have come out as gay after their careers were over

Penticton Indian Band Chief Greg Gabriel speaks to the Sacred Hearts Catholic Church burning down early Monday morning, June 21, 2021. (Monique Tamminga Western News)
Penticton band chief condemns suspicious burning of 2 Catholic churches

Both Catholic church fires are deemed suspicious, says RCMP

COVID-19 daily cases reported to B.C. public health, seven-day moving average to June 17, 2021. (B.C. Centre for Disease Control)
B.C.’s COVID-19 infections drop to 90 on Sunday, 45 Monday

Pandemic spread dwindles as 77% of adults receive vaccine

Emergency vehicles are parked outside of the Wintergreen Apartments on Fourth Avenue. (SUSAN QUINN / Alberni Valley News)
Port Alberni RCMP investigate stabbing on Fourth Avenue

Two men were found with ‘significant’ injuries near Wintergreen Apartments

By protesting uninvited in First Nations’ territories, conservationists are acting in a neocolonial or paternalistic manner, says Huu-ay-aht Chief Robert Dennis. Photo by Heather Thomson
A closer look: do Vancouver Island First Nations support the war in the woods?

First Nations/environmentalist old growth alliance uneasy, if it exists at all

Most Read