Not All Borrowers get the advertised rate
The Energy Credit Union believes in being transparent with our members. Although members at The Energy Credit Union benefit from democratic principles and have an equal vote, not all things are created equal. When The Energy Credit Union advertises a loan rate promotion, the fine print will generally indicate the qualification standards to be eligible for that rate. In addition, the Credit Union utilizes rate matrixes (think of it like a mathematical formula) established by the Board of Directors when determining interest rate offered at all other times. These matrixes help keep all rates offered to members fair. Another guiding principle for Credit Unions is a Member’s Economic Participation, where Credit Union Loyalty is rewarded, full-service banking at the Credit Union usually results in additional free products and services, as well as rate discounts.
Some Insurance is useless
Let’s be frank, all insurance can be viewed by some as useless until you have a need for it. A recent article published by CP24 indicated a homeowner was out of pocket $425,000, all because they chose not to purchase home insurance on the cottage they were building. They were using their own out of pocket funds, so they didn’t think they needed insurance. If they had been using borrowed mortgage funds, the financial institution would have required home insurance as part of the contract deal. The cottage burned to the ground due to arson and with no home insurance, the homeowners were left with a pile of burning rubble. Insurance is a heavy front-end expense, especially if we don’t end up making a claim. Seeing cash disappear from your account each month may seem to some to be throwing money away, especially if you don’t suffer a loss that requires you to make a claim against your insurance. However, insurance is used to protect an asset or earning potential. At the Credit Union, we never make Creditor Insurance mandatory in the same way that we would require Home Insurance to protect the home used as security in the case of a mortgage; we simply inform our members what is available to them to help make an informed decision to protect their asset and provide peace of mind. We don’t want you to have to pay for something you may not think you need. We have to be honest here and let you know, that over the years we have seen the benefits of insurance firsthand. We have also seen the heartache that not having insurance or not having enough insurance can cause to a family. At the Credit Union we have different forms of insurance available to cover you and your family in a variety of different ways. Whether you want coverage to protect you against Critical Illness and Accidental Death or travel insurance to protect your vacation from cancellations. We’d be happy to go over your needs with regards to insurance anytime.
Post-dated cheques aren’t foolproof
I can hear Generation Z and Alpha members right now…what is a cheque? A cheque is a document that orders a Financial Institution to pay a specific amount of money from a person’s account (the payor) to the person in whose name the cheque has been issued (the payee). To be perfectly honest, cheques are quickly becoming a thing of the past, with most members moving towards eTransfers, Automatic Withdrawals and Wire transfers.
It is best practice to ensure that members only write a cheque when they know they have the funds available to cover the cheque in the account. However, sometimes it is necessary to post-date a cheque (like when you have to give your landlord post-dated cheques for rent). As clearing settlements have moved away from manual human intervention in favour of automation, it is not always possible to verify the date on a cheque, which may result in a cheque being put through your account prior to the date written on the cheque. We would encourage our members to enrol in our free service of Transaction Alerts so that you can be notified when a transaction clears your account or when the balance falls below a predetermined threshold. This way if a post-dated cheque does manage to squeeze through the system, you have a safety net in place to make sure that this cheque does not get returned to your payee as Insufficient Funds (NSF)or put through your account before the date you intended it to. If you think you’d like to take the plunge and get started with Digital Payments, contact us and we will work with you to help you become more comfortable with this technology.
Bank employees have targets to reach
What sets us apart from the Big Guys is that CU staff are not compensated for selling a product or service to our members. Yes, there are targets we would like our staff to meet for the benefit of the continued success of the Credit Union and our members, but you can rest assured when our staff are recommending a product or service to you, they are doing so because they believe it may be beneficial to you and improve your financial position. In addition, the Credit Union is increasing profits for shareholders. THAT’S YOU! Our members! All income earned is returned to our member shareholders in the form of free products and services or increasing our financial reserves.
Businesses also have to pay fees when you use your debit card
Have you ever tried to pay for something, and the merchant lets you know that there is a minimum purchase amount needed in order to use Credit? Ever wonder why your favourite retailer only accepts Debit? Merchants including the Credit Union pay fees for our members to use their Debit Card. If you’re asking yourself why you are paying a fee to the Credit Union each time you make an ATM withdrawal or POS purchase, just know that there is another entity in the background that has its hand in the cookie jar. If you are a full-service member, you may find that you don’t pay ATM or POS fees – this is because the Credit Union is absorbing these costs as a cost of business to reward members that are meeting minimum participation values. If you’d like to see how you can avoid pesky fees, we’d love to show you how you can maximize your account potential.
Bank employees are seriously stressed
There was a recent ‘expose’ of Bank employees in the media. These Bank employees felt that oppressive Sales Targets were causing health issues including anxiety, stress, depression, and sleep disorders. Bank clients also suffered, but in a different way, as clients found themselves put into products and services that didn’t necessarily benefit them and separated them from their hard-earned money. Most Canadians would acknowledge that they are feeling stressed by external factors like their job and family commitments. Not to mention the ongoing pandemic and concerns over health and finances. The Energy Credit Union encourages our staff to disconnect at the end of the workday. This allows our staff a chance to recharge. And this in turn allows our staff to be fresh each day to assist our members in navigating the daily stresses of their lives and keeping their financial position on track. We provide our staff with wellness days, access to 24/7 online health professionals and a culture where staff are free to express ideas, suggestions, and personal feelings without the fear of reprisal.
Your bank may not be the best place to invest your money
You may also want to consider investing it under your mattress. In all seriousness, the financial sector is growing at rapid pace with daily new entrants offering Financial Services. These new Fintech’s may be able to offer higher rates and less fees; but at what cost? Will they be able to guide you through your life events with your own financial best interests in mind? Yes, there may be a better rate out there but do you know the full story? Is the rate promotional to get you to bring your business? Do you lose access to funds for an extended time in order to get this rate? If you have questions, can you easily speak to a knowledgeable employee who can handle any inquiry? Are you prepared to pass up on the human connection with a staff member who has known you and your family situation for years? Our Generation Z and Alpha members may say yes, but Millennials to Boomers will probably say “not on your life”! Let us find a happy medium so there is a win-win. Talk to us about any concerns that you might have and see what we can do to find a great solution!
Bankers work for their bank—not you
This one is quick and sweet; our members are the owners of the Credit Union and therefore our employees work for YOU our members! Does this mean that you get to tell our staff what to do? In a roundabout way YES! Each member has a vote as to how the Credit Union is governed by voting for our Board of Directors. It also means that you have a say in the direction of your Credit Union, and does mean that our staff are looking out for your best interests.
By the end of your mortgage, you will have paid a huge amount of interest
We aren’t going to sugar coat this, interest on a mortgage is A LOT OF MONEY. What we are seeing is that more members are taking longer amortizations in order to lower payments to increase their buying power to have the home of their dreams. Let me be clear…longer amortization = higher interest paid. In life everything comes at the cost of something else. We work our entire lives so that we can comfortably relax in retirement. We pay a mortgage, as opposed to rent, so that we can benefit from Market Appreciation. We spend less so that we can save more. We have a few options when it comes to having a roof over our heads: we can live with a nice relative or friend, rent or own. There have long been debates on the benefits of renting vs owning. If you factor in $2,000/month in rent for 12 months this equals $24,000/year. If you pay this over 25 years to mirror a standard mortgage you would have paid $600,000; although payments stop once the Mortgage is paid out, this $24,000/year will continue beyond 25 years if you are renting. Chances are also very good that your landlord will increase the monthly rent owed over 25 years too. We are also seeing members opting to consolidating loans or line of credits into their Mortgage due to lower rates; however, this loan/loc debt is now being extended to 25 years, are you factoring in the cost of interest over this long haul as opposed to paying it out over a traditional loan term of 5 years? We can offer you options to reducing your overall interest costs, feel free to reach out to us.
If you’re wondering how much of this interest goes into the Credit Union’s pockets, the answer is, surprisingly very little. Keep in mind that money put on Deposit by members at the Credit Union is then lent out to other members. The Credit Union earns interest on the funds loaned out… but then the Credit Union will need to pay interest to our members who have funds on deposit, and in this low rate environment a significant portion of interest earned is paid out as interest owed. In addition, there are operational costs, lease costs, insurance, subsidized products and services, regulatory and compliance costs.
Selling your home? You might have to pay a penalty
A Mortgage is a contract. When you purchase a home with a fixed rate product, you are agreeing to pay that interest until the end of the Mortgage term, the Credit Union has already accounted for this interest income in various financial forecasting necessary to continue to meet our expenses and remain in compliance with regulators expectations. Now with that said, we are always willing to work with our members if you are looking to sell and purchase a new home. Maybe you are wanting to purchase something bigger as your family is growing, or maybe downsizing as your kids have now moved out. Whatever the case may be, a penalty will apply if you pay out your Mortgage prior to the end of the term. The Credit Union may be able to offer a rate blend if you are closing the purchase and the sale on the same day (or within reasonable timeframe). We would always suggest contacting us prior to deciding to sell your home so that you are aware of any penalties that may be applicable so that there are no surprises; it is also important to note that just because you have an existing Mortgage with the Credit Union, this does not guarantee a Mortgage on the new property. Your financial position may have changed or there may be new Government mandated underwriting requirements that impact eligibility. We can usually provide a Mortgage Pre-Approval within 1 business day provided we receive all requested supporting documents.
Mortgage insurance might not be the best option
As already communicated, the Credit Union does not mandate Creditor Mortgage Insurance. We will provide our members access to Creditor Protection to help give you and your family peace of mind. How does our insurer differ from other Insurance Providers? Underwriting of Mortgage Insurance takes place prior to coverage coming into effect. What this means is that provided you answered your questions honestly, this will speed up the claims process and you can rest assured that your claim will be paid out. Some insurance providers will approve a policy without underwriting…why is this dangerous? If the underwriting takes place at the time of a claim, it may not be paid out and as a result, your family may be faced with this financial burden. In addition, claims are paid out to the Credit Union to be applied directly against the debt. One of the biggest misconceptions is that ‘I have enough insurance’; however, have you factored in the loss of salary of the deceased loved one? How old was the deceased and how many more working years did they have ahead of them, what does this result to in terms of loss of earnings? Can my family still afford to make these Mortgage payments for the remaining life of the mortgage or will they have to sell the property and move to make ends meet?
Our primary concern is that you and your family are taken care of. If you find more affordable Creditor Mortgage Insurance elsewhere and you are confident that the claim will be paid out and your family will apply it towards the debt and can still cover family expenses, that is all that matters to us. The Credit Union is happy to work out a needs analysis for all members when applying for Creditor Mortgage Insurance to help paint you a more accurate picture for your specific needs.
Bankers aren’t always honest
Media reports exposed the pressure bank employees felt. Unattainable targets meant that sometimes clients were pushed into products and services that not only didn’t benefit them, but it may also have even cost them money in the long run with needless fees and charges. It can often be difficult to measure a person’s level of integrity. Although article points to Bankers, employee theft and fraud can happen at any business, in any industry. Sometimes a thief is a good person that fell onto hard times, and other times a thief is a person that makes a living out of defrauding others. The Credit Union has multiple forces in effect to mitigate any risk. There are multiple levels of control in place to monitor activities that may result in financial and data losses. The Credit Union also undergoes External, Internal, Regulatory and IT Audits throughout the year. We employ fully bonded individuals that have demonstrated strong work ethics and have spent their careers in the Credit Union system, people helping people.
Using your debit card while travelling can be costly
As mentioned earlier, there are costs that the Credit Union pays for its members to use their debit card, these costs become higher when you factor in out of country spending. It may be easier (and cheaper!) to use your credit card when making foreign purchases. You can then use your Credit Union funds to make a payment to your Credit Card’s balance. The Credit Union can also give you access to foreign currency with advanced notice. This includes U.S. dollars and most other exotic currencies. Just contact us in advance of your trip and we can provide you with a quote.
Your assets can be frozen without telling you
There may be times where the Credit Union has no alternative but to freeze your account. This may be a result of a CRA Requirement to Pay where we are required to forward available funds to the CRA and failure to comply may result in recourse against the Credit Union. There may be additional reasons such as to comply with Court Orders or to minimize financial risks to the Credit Union that may impact the overall membership such as a potential loss. With that said, the Credit Union will make every effort to contact you to discuss how we might be able to assist you overcome this current obstacle in your life. We would suggest you contact us prior to events in your life leading you down this path, as it can be easier to resolve prior to legal mandates which often bring additional fees and interest. We are here for you!
No credit history is not necessarily a good idea
We would encourage you to use your credit cards and lines of credits on a responsible, regular basis. Best case would mean that you are in a position to pay these credit cards off on a monthly basis. Credit History Reported on your Credit Report is a good thing because it shows that you can manage your debt obligations in a timely manner. Financial Institutions will often put a lot of emphasis on your credit report when determining if you are eligible for a loan or mortgage. High-Ratio providers on Mortgages will also heavily scrutinize your credit report and often looking for active trades.
The Credit Union often looks beyond the credit report. We understand that everyone can go through life events that impacts our reports, but these events are not a true depiction of our level of integrity to pay. The Credit Union will look at your overall financial situation and history of payments with the Credit Union in addition to the credit report. We also offer both unsecured and secured Visas if you are looking to establish or rebuild your credit.
