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Pound Wise, Penny Foolish?
Aug. 12th, 2009 10:44 amAt the intersection Bureaucracy and computers lies a spot where silly things occur that a human being should have overridden.
My mortgage used to be with TDCT, but I moved it to RBC. Because I moved it from one bank to another there was a lot of paperwork and the amount of money to be transferred wasn't known exactly. The interest needed to be calculated at the very last minute and due to the timing of banks opening and closing across the country, combined with the fact that my mortgage term ended on a holiday, no one really knew exactly what the amount would be.
Which is not to say it was a great discrepancy - less then a dollar on a 95K loan is pretty good. You'd be the God of Petroleum Engineers if you could get this kind of accuracy out of an oil reservoir.
Turns out that RBC overpaid TDCT. By six cents. So TDCT dutifully sent me a cheque for $0.06 which I have lying around the house somewhere waiting for my next trip to the bank.
Now I can see why TDCT would do this, even though the physical cheque, cover letter, envelope and postage probably cost them more then the six cents. If they didn't do - if they just kept my six cents - somebody would sue. Or they'd seem miserly and arbitrary with people's money and that's bad PR.
But here's the thing, they had other options: I have a savings account with TDCT. The savings account, my line of credit and my (now defunct) mortgage are all linked to each other under my name. They could have simply transferred the six cents to that account and made a note of it on my next account statement. Doesn't that make a lot more sense.
In other news, I used my TDCT line of credit a few months ago to make a big purchase. I almost immediately paid it all off again, because I hate paying more interest then I have to. There was some lingering interest calculated after the fact that I had to pay the next month, which I did. I got another statement this month telling me that there was some lingering interest on the lingering interest. My total amount due? One cent.
So this Saturday, in addition to making my bi-monthly deposit to my savings account, I'll be depositing a cheque for $0.06 and making a payment to my line of credit for $0.01. It's better sometimes to just play along with the bureaucracy then to dig your heels against a dumb idea and have it skyrocket. I've seen too many Fark headlines about people losing their houses over microscopic debts that exploded through a combination of missed-payment fines and interest.
There's a thing that Revenue Canada does (That's Canada's tax department for you Yanks) that I've always thought showed good sense. If, after calculating your federal tax, you discover that you owe $2 or less, you don't have to pay it. The government has simply decided that the amount it costs to process a tax payment that small isn't worth the effort. Conversely, if they owe you $2 or less, you're just going to have to accept that you're not getting a refund.
In a perfect world, the banks would do something similar. I suspect that there'd be some yahoos out there that tried to game the system though, so I can see why they're excruciatingly correct even when it costs everyone more in the long run.
My mortgage used to be with TDCT, but I moved it to RBC. Because I moved it from one bank to another there was a lot of paperwork and the amount of money to be transferred wasn't known exactly. The interest needed to be calculated at the very last minute and due to the timing of banks opening and closing across the country, combined with the fact that my mortgage term ended on a holiday, no one really knew exactly what the amount would be.
Which is not to say it was a great discrepancy - less then a dollar on a 95K loan is pretty good. You'd be the God of Petroleum Engineers if you could get this kind of accuracy out of an oil reservoir.
Turns out that RBC overpaid TDCT. By six cents. So TDCT dutifully sent me a cheque for $0.06 which I have lying around the house somewhere waiting for my next trip to the bank.
Now I can see why TDCT would do this, even though the physical cheque, cover letter, envelope and postage probably cost them more then the six cents. If they didn't do - if they just kept my six cents - somebody would sue. Or they'd seem miserly and arbitrary with people's money and that's bad PR.
But here's the thing, they had other options: I have a savings account with TDCT. The savings account, my line of credit and my (now defunct) mortgage are all linked to each other under my name. They could have simply transferred the six cents to that account and made a note of it on my next account statement. Doesn't that make a lot more sense.
In other news, I used my TDCT line of credit a few months ago to make a big purchase. I almost immediately paid it all off again, because I hate paying more interest then I have to. There was some lingering interest calculated after the fact that I had to pay the next month, which I did. I got another statement this month telling me that there was some lingering interest on the lingering interest. My total amount due? One cent.
So this Saturday, in addition to making my bi-monthly deposit to my savings account, I'll be depositing a cheque for $0.06 and making a payment to my line of credit for $0.01. It's better sometimes to just play along with the bureaucracy then to dig your heels against a dumb idea and have it skyrocket. I've seen too many Fark headlines about people losing their houses over microscopic debts that exploded through a combination of missed-payment fines and interest.
There's a thing that Revenue Canada does (That's Canada's tax department for you Yanks) that I've always thought showed good sense. If, after calculating your federal tax, you discover that you owe $2 or less, you don't have to pay it. The government has simply decided that the amount it costs to process a tax payment that small isn't worth the effort. Conversely, if they owe you $2 or less, you're just going to have to accept that you're not getting a refund.
In a perfect world, the banks would do something similar. I suspect that there'd be some yahoos out there that tried to game the system though, so I can see why they're excruciatingly correct even when it costs everyone more in the long run.
