Tag Archives: bonus

PC Financial Joint Accounts are NOT Joint: One Person Will Have All of the Control

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I’ve mentioned before that PC Financial treats our joint accounts as if they are two separate accounts. If I set up bill payments, for example, under my PC Financial card, I can see and pay them when I sign in. My husband, though, can neither see them nor pay them. Similarly, our joint PC Financial chequing account is linked to our joint Big 5 Canadian bank chequing account. The link to transfer funds between the two accounts was set up by my husband. If he signs in using his PC Financial card online, he can see the external bank account and move money between the two chequing accounts. I can’t. In order to see the external account, I would have to apply all over again! Tonight’s problem was even worse, although it’s very funny in an exasperating computers-are-incredible way. It proved yet again that PC Financial joint accounts are NOT joint; one person has all of the control.

PC Financial is Offering Another Short Term Bonus Interest Rate

Today I found out on RedFlagDeals that PC Financial has just begun another short-term bonus interest rate promotion. The deal runs from November 1 – January 31, 2013. For new deposits that increase the total in all of your savings and chequing accounts above the total amount you had in the bank on October 31, 2013, you will earn a higher rate of interest. So any combined balance up to and including the amount you had on October 31 will earn 1.35% (less on the chequing account) and any amount above that will earn 2.25%.

We have some money sitting around at the Big 5 bank that needs to be kept in cash because it’s earmarked for certain upcoming bills. It seemed sensible to move it for a month or two to PCF to get the extra 0.9%, especially since it’s not even earning 1.35% at the Big Bank. (At that rate, it’s only $7.50 per month, per $10,000 deposited, but still every bit helps.)

This promotion is not automatic. You have to phone in to get it.

So I phoned. I answered the security questions. We both agreed that I am me, and that I have joint accounts with PCF.

BUT I can’t get the promotion.

Why Can’t I Enroll in the PC Financial Bonus Interest Promotion? Because Secondary Means Second Class

The only reason I can’t enroll the accounts in the promotion is that I am not the “Primary” account holder. My husband is. He has to phone in and ask for the rate.

For our JOINT accounts.

Yes, that’s right. I can take out every cent in the accounts. I can put a million dollars into the accounts. But I can’t increase the interest rate.

Why Are Secondary Account Holders So Insignificant?

Even my polite and courteous telephone representative wasn’t quite sure why I couldn’t enroll. She put my on hold and went to check on it.

Apparently it’s the computer system that is at fault.

Believe it or not, the way the system is set up, we could get TWICE the bonus interest if I (or any other secondary account holder) was allowed to apply for the promotion.
That’s right: the system doesn’t just have ONE place to check off to start the bonus calculation. It has one on EACH cardholder’s profile. So if she changed my profile to allow me to earn the bonus interest, and THEN my husband phoned in and asked for the promotion, we’d be enrolled twice and get twice the interest.

Cool!

To avoid this problem, the powers that be decreed that only the primary cardholder can request to be enrolled for the promotion.

Too bad my husband is way, way, way too busy at work to be bothered phoning banks.

Too bad for PCF that is. I’ll simply move the money to an ING Direct account I have that’s currently paying 2.27%.

PS The customer service rep did offer to open a brand new account just for me so that I could get the bonus interest. I give her full marks for trying to be helpful, even if she was hobbled by system constraints.

The Moral of the Story: Don’t Let Your Computers Run Your Business

Computers should do what people want them to. People shouldn’t have to do what computers constrain them to do.

PC Financial should consider taking a few $$$ and using it to upgrade their computer program rather than paying it out in interest. In the long run, it will keep customers happier and their money rolling in to their bank’s coffers.

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Have you ever been forced to do silly things by a computer program? Please share your frustrating, but admittedly funny, escapades with a comment.

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In general, I don’t have anything against PC Financial. I love the fact that I can get all of the cheques I want and need for free. It makes paying all these tiny bills from our kids schools cost much less. Unfortunately, PC Financial doesn’t offer any sign up bonuses, though, so I can’t add a bonus sign up link here. If you want to sign up, just visit their website or a kiosk. They won’t ask if I sent you.

Part 2: I Know Market Timing is for Suckers, so Why Am I Trying to Time the Market?

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Part 1 I explained what Stock Appreciation Rights are and why companies sometimes use them as performance incentives or employee bonuses. I also mentioned how SARs can backfire: they are based on the assumption that the underlying stock price will rise. Ha! Obviously my upper management fell for that one. (Or else they were very cunning at devising an apparent bonus which actually costs them nothing….Hmmm….) Which is why I’m now stuck trying to time the market, even though market timing is a losing game.

Stock Appreciation Rights: Use Them or Lose Them

Most SARs come with an expiry date. This can make it very tricky if a stock is underwater near the time the options will expire.

For example, say stock options in Goldcorp were awarded with a stock price of $40 in 2012 with an expiry date of December 31, 2013. Here it is September of 2013 and the stock is trying to break the $33 barrier. Not the best time to have options expiring!

If the employee exercises the option to use the stock appreciation rights today, nothing will happen. There is no increase in value of the underlying stock so no money will be received by the employee. While a stock is trading for less than the award price, the decision to do nothing and just wait is simple.

What to Do When SARs are Just Breaking the Surface

Now let’s imagine there’s an employee of another big Canadian company: Bank of Nova Scotia. Say he was awarded 1000 stock appreciation rights at $59 in February 2011. They expire December 31, 2013.

As you may know if you track BNS, it behaves a lot like a Blue Whale. It rises to the surface to breathe, then sounds deep and long searching the bottom for some mysterious object. So since February 2011, BNS has been above $59 for 20 days in 2011, 0 days in 2012, and 44 days in 2013 to the end of August. Its high this year was $61.84, with a highest daily close of $61.43 which is more relevant to SARs. (Many SARs can be exercised only at the price at the close of the last trading day.)

Last week the price for a share of BNS climbed to $60. What should our employee do? Should he exercise his stock appreciation rights now, to lock in an amazing $1000 (before tax) profit? Or should he wait and hope it goes up a bit more. Remember, if the stock price rises to $61, the employee makes a $2000 (before tax) bonus. That’s a big difference for a small change in the stock price.

Of course, if the stock dips to $59, the employee makes nothing. Zip. Nada. Even the tax man gets nothing.

Why Exercising SARs Reminds Me of a Radio Game Show

My own situation is pretty similar to the BNS example. I could exercise all of my stock appreciation rights today and make about $1 a piece (before tax) for each unit. Or I could wait one more day and see if I make more than $1 a piece. But I could lose everything if the stock drifts down again.

It’s like one of those radio shows where the caller can keep what’s in the first envelope, or open a second. They could find more money in the second, or they could find it’s empty. I hate those shows! I don’t like suspense and I don’t like gambling. I’m always shouting at the radio telling them to be happy with what they’ve won and not risk losing it all.

You can bet I’m not thrilled trying to choose when to exercise my SARs. But time is running out so some kind of decision has to be made.

Why and How I’m Trying to Time the Market: the Wishy-Washy Approach to Stock Appreciation Rights

Being essentially greedy and also nervous and conservative is a bad combination. It’s led me to a wishy-washy approach to exercising my stock appreciation rights.

I’ve mentally divided the number of units I can exercise into several bundles. Each bundle gets exercised immediately if the price reaches a certain point, or it gets exercised by a deadline, providing it will at least make anything.

It’s risky though. Like BNS, the underlying stock has a bad habit of going down and staying down for lengthy amounts of time. And there’s only a few months left before the SARs expire. I could deeply regret not exercising today and getting the $1 per share.

Wish me luck. I have a feeling I’m going to need it.

P.S. Yes, I also own shares in BNS. I think I’ve mentioned before that you don’t want to copy my investing decisions!

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Do you think I should stop waffling and exercise the whole lot for $1 each before tax? Do you think a multiple exercise scheme is a good idea? What would you do? Please share your experiences and expertise with a comment.