The average income in Canada works out to a little less than $1000 per week. Take off some deductions and you’re still left with enough $20 bills to choke most wallets. I realize that most people don’t want to carry a week’s take-home pay around in cash, but those who choose to do so should be able to do it without bursting their wallets.
Many people prefer to make all their purchases with credit and debit cards. That’s fine. To each his or her own. For those of us who prefer to make some cash purchases, it would be nice to be able to get a few $50 bills from bank machines.
There was a time when it was more difficult to spend fifties and hundreds, but this was always overstated. It’s fairly rare to have a problem with fifties now, but you need to hold a couple of twenties just in case. I’ve never had a large retailer or grocery store even bat an eye at a fifty or hundred dollar bill.
It’s possible to get cash in the denominations you want from a teller, but this is inconvenient. I’d be happy if bank machines defaulted to giving me the first $120 to $200 in twenties and the rest in fifties. I’m told that there are some bank machines that give fifties, but I’ve never received anything but twenties from a BMO bank machine.
A further annoyance is that on those rare occasions when I want more than $500, I have to make two separate withdrawals and get hit with two withdrawal fees of a dollar each. Even paying a dollar for every withdrawal, I’m better off than if I pay for some banking package. But this fee annoyance is making me think more about getting a Tangerine chequing account.
It’s hard to tell to what extent banks are trying to steer people toward plastic transactions instead of using cash, and to what extent they are just reacting to people’s choice to use less cash. No doubt some people would be annoyed to receive a fifty from a bank machine. But these people probably take out money in smaller amounts anyway. So, I’m thinking that my idea to give the first $120 to $200 in twenties and the rest in fifties might work reasonably well.
My bank machines seem to only give $20's. I recall that HP captured a huge chunk of the ATM market by "optimizing" cash management. It seems reducing everything to $20s was one way.
ReplyDeleteIn contrast, visiting a TD bank in MA or FL the ATM's are older, and actually ask me what denominations I want ... $5s? $10's? 20's or 50's, they offered them all. My choice.
@Eric: I can see the logic of dropping fives and tens to save money, but dropping fifties seems to increase costs.
DeleteBanks cut costs by limiting denominations, but one can always get any banknotes at a grocery store through cash back. The problem is not the 20-dollar-limitation, the problem is lack of competition between banks.
ReplyDeleteI much more annoyed with the design of protective cover around the numeric pad at Scotia's ATMs - it seems being designed for 4ft tall people, the rest have to bend over or step back.
@AnatoliN: The is a fine line between reducing costs and increasing revenue. Steering people away from paying with cash is a likely goal.
DeleteATMs get built low for accessibility reasons. I've never had too much problem with them myself.
I'm always surprised to hear personal finance bloggers talking about paying for bank packages and ATM withdrawal fees. I've been using PC financial since the '90s and haven't paid a cent for ATM withdrawals, account fees or checks.
ReplyDeleteI also have an ancient grandfathered fee free free Royal Bank account (where checks aren't free by the way) that I use once a decade for more convenient bank drafts from tellers. This is more convenient than ordering them through PC financial, in spite of having to drag my butt into the bank when it is open and stand in line.
What value do you get from paying bank fees?
@Greg: I'm with you on minimizing bank fees. I don't actually pay anything for ATM withdrawals directly. My InvestorLine account treats the cash portion like a regular bank account and they give me 2 free withdrawals per month, and each one after that costs a dollar. I pay about $20/year on excess withdrawals.
DeleteThere may be some BMO machines with 50 CAD out there but I have not seen them myself anywhere. BMO still pretty much sticks to 20 CAD for all machines.
ReplyDeleteCIBC and RBC added 50 CAD to many of their machines years ago. Some have all three, 20 CAD, 50 CAD, and 20 USD.
@David: I wasn't aware that some machine have USD. That would be convenient.
DeleteYes, some CIBC have USD. Lots of CIBC branch ABMs dispense 50s. Back when our neighbourhood was flooded with fake 50s it got tricky figuring out how to maximize a withdrawal and still only get 20s. For now the new 50s have the stores accepting them again, although one retailer was telling me that they have already received an alert about a new fake 50 that's been spotted. Sigh.
ReplyDeletePersonally, I use debit for everything from an account that's only used to pay bills and which is not electronically linked to anything. It makes it easier to track our spending. The account is so old it pays interest (though it's a chequing account) and charges no fees for anything with a minimum balance of $1500. It's too fun to keep just to see the teller's faces when they check the rules....I always keep a bit of cash though for power outages and because the school system is a non-plastic-friendly environment. Now that I think of it, we also use cash for a bunch of other child-related activities.
There's also one Tangerine ABM in each of Toronto, Calgary, Montreal and Vancouver where you can withdraw USD. (Otherwise you'd basically have to link your Tangerine USD account with one at the big banks and transfer to the big bank to take out USD.)
My grandfather used to get his entire cheque cashed in $1s with one $10 for the outside. He liked to see clerk's faces when he pulled his money clip out of his pocket to count out a purchase. : )
Ha! That's great, one $10 bill and a huge stack of ones.
DeleteYeah, I agree the school system and sports/activities are generally only friendly to cheques and cash.
I've been leery about trying to spend 50 dollar bills, and was just thinking of depositing them all and withdrawing 20 dollar bills. Maybe that's not necessary after all.
@BetCrooks: The story about your granfather reminded me of when I was very young and playing Monopoly. I used to put a $50 in the bank and take a stack of $1 bills. Then I'd offer to purchase a property from another player with the large stack of bills. This seemed to work on very young kids.
DeleteI keep an undisclosed amount of cash in an undisclosed secure safe in an undisclosed building. Makes me feel like a big shot. Still, I'm one of those guys that rarely uses anything other than a credit card, though I should be nicer and use cash to minimize fees for the stores where I shop. I'm sure I cost stores money all the time, as I'll use plastic for purchases under $5.
ReplyDeleteIf you're ever really hard up for a post, you can talk about the asymmetrical incentives on cash-back credit cards. On a $2.00 purchase, I save two cents by using a credit card, but the retailer probably gets dinged for a large percentage of that transaction in merchant fees. I don't know how much they pay, but it must be a lot more than two cents.
Regarding 50 dollar bills, I can see your point, but I imagine they use 20s to keep things simple and to cater to your average customer, as you say, who takes out money in perhaps $60 increments. I used to like RBC machines that would dispense $5 bills. That was back in the early 1990s, don't know if they still do that. I bank mainly at a fee-free bank now.
Thanks as always for your perspective, Michael.
@Gene: The time when paying with cash shines is at a restaurant for lunch when the is a line up to pay. For buffets where the price is fixed, I can just go to the head of the line and set down my cash and walk out. All those with plastic are stuck waiting.
DeleteI once got two 50's and a 20 back when taking out 120$ at a BMO ATM, so I think it just depends on the machine and the timing; that's my usual ATM and that's the only time that ever happened, though.
ReplyDeleteI am sufficiently long of tooth that I remember when CC's first came out and the merchant would ask "Will that be cash or credit card". I knew then that the merchant was paying a percentage to the CC company for the "privilege" of using the card in order to get people to buy more product or a more expensive product as the customer did not have to carry around a wad of cash. My response was "What is my discount if I pay cash?" None would ever offer me anything for hard cash, so I stopped carrying copious amounts of cash.
ReplyDeleteI am sure that merchants have factored in the cost of CC's into their pricing by now so I feel little pity for them. It was their own doing.
Now we have debit cards which transfer money directly from your bank account to the merchant's bank account. Are any of them offering a discount for using a DC over a CC?
@Anonymous: As I understand it, credit card companies have used their contracts with retailers to put roadblocks in the way of charging different amounts based on method of payment.
DeleteI quite agree. That is what I was told by some merchants way back when. Never the less, I would still wager that the cost of doing business is being factored in to the list price.
DeleteI just bought a vehicle this past spring. When I said I would pay cash (all those nice dividends paid off) they did not like that. I will not divulge the reason here, but by taking the financing I actually saved approx. $500. Do I still owe the bank any money? NO
There are always ways for hard cash to benefit you, either by the front door or by the back door.
I actually go the other way on this - I hate bank machines that shoot out $50s unexpectedly. I don't withdraw hundreds of dollars at a time, maybe a hundred and I'd rather not have to get it broken. I guess there is no pleasing everyone ;)
ReplyDelete@Anonymous: I think there's an easy way to satisfy both of us. Just make all withdrawals $200 or less entirely with twenties and only use some fifties for larger withdrawals.
DeleteAnother consideration is the worth of the cash in hte machines. For fun let us say that each machine can hold 500 of whatever paper currency. Now at $20 per bill that makes $10K in 20's Now change that to all 50's and you get $25K. Not a small sum for some wayward individual to knock over. Why go to jail when for a measly 10K? might as well go big time for 25K. After all it is the same effort and the same penalty (a slap on the wrist).
DeleteAnd since the bills are even thinner now (How thin? You can even see through them ROFL - I couldn't help myself) they can probably jam more in making it even more worthwhile to knock over a fifty $ machine. All this to help us walk up to that merchant and turn the tables around and ask :Will that be cash or credit?"
I would think that the banks and other ATM operators would keep the big bills close to home where there is more security rather than in a bar someplace.
Another small but worthwhile consideration is that for those video terminal addicts they will not be able to burn through their cash so fast. The gaming commissions won't like that last one.
@Anonymous: Banks can choose how much money to place in a bank machine independently of which bills to use. If they want to limit them to $10k, then they can use half 50s and half 20s, or they can use all 20s. The fact that the machine will never be completely full when 50s are used is not important. The frequency of refilling is driven by the total dollar amount of each fill, not the physical volume of the bills.
DeleteThere was a HSBC ATM in Toronto that would spit out a combination of $50s and $20s. Not sure if it is still there. I guess the other consideration is refilling of the machine. Having only one bank note available removes some of the work from the guy filling the ATM. Only one bag of bills to fill, one slot to put them in, etc, etc. Removes the stupid factor. Imagine if a stack of $50s got slipped into the $20's slot 'accidentally'...
ReplyDelete@Unknown: I don't doubt that using only 20s saves bank money. They'd save even more if they didn't allow withdrawals at all :-)
DeleteSome expenses are worth incurring to provide better service.
On the issue of mixing up 20 and 50s, I'd think that the machine ought to be able to sense which bills it is spitting out.
I happen to know that the "DCBank" bank machine in the Kanata (Ottawa) Costco favours 50's. If you withdraw $100, it gives you 2 x $50. It has a $1 convenience fee, which is low compared to most machines, and this suits me fine since my banking package refunds up to $1.50 per withdrawal (unlimited withdrawals) of bank machine fees.
ReplyDeleteI prefer 50's as well, so I tend to withdraw cash there if it is convenient.
I don't know if this is typical with bank machines at other Costco locations.