Survey suggests most Canadians bank in ‘ad hoc’ fashion
Waterloo- Almost half of Canadians say they do not have a strategy when they apply for a new bank product, according to a national survey for Manulife Bank of Canada. When asked what best represented their approach to banking, 48 per cent said they simply open an account or apply for a banking service as they need it.
Not surprisingly, the survey also found the typical Canadian has at least eight different banking products, spread among one or more financial institutions.
“Having so many different banking products can be more expensive than most people realize,” says J. Roman Fedchyshyn, President and CEO of Manulife Bank. “Each one of these products most likely costs consumers money and fees, so it could be very cost effective for consumers to follow a banking strategy to reduce or consolidate accounts.”
Previous research in 2005 for Manulife Bank by Moshe Milevsky, Associate Professor of Finance at the Schulich School of Business, York University, found the ad-hoc approach to handling finances is costing Canadians money.
In his analysis of debt habits, Professor Milevsky concluded Canadian families lose an average of $1,000 a year by not effectively managing their debts and short-term assets.
The latest survey, conducted in late March and early April, also found little has changed from a similar poll in 2002 when it comes to banking habits.
The recent omnibus survey found that of 87 per cent of respondents who have a chequing account, 96 per cent also have a high interest savings account. While the average number of bank credit cards per respondent was just over one, 93 per cent of those also held department store or gas company cards. Of the 30 per cent who said they have a mortgage, 45 per cent also have a line of credit.
“This is exactly why Manulife introduced an ‘all-in-one’ account, to provide Canadians with a potentially less expensive alternative to their traditional banking,” added Mr. Fedchyshyn.
“Manulife One, essentially, consolidates all your debt into a single account and then operates as your banking account. Your short-term savings and your income are deposited into the account to immediately lower your debt. Then you draw on this account for day-to-day expenses. But every day that even a dollar of your income is in the account, it is reducing your debt. Since interest is based on your daily balance, every day that you have less debt, you pay less interest.”
Already popular in Britain and Australia, benefits of consolidated flexible accounts are still being discovered by many Canadians. When asked if they had heard of an “all-in-one” account, almost two-thirds of those surveyed said they had not.
However, when told that such an account could potentially save them money and reduce their debts sooner, almost four in 10 said they would be willing to change the way they bank and consider an all-in-one account.
“We believe it is simply a matter of people just not knowing that there is a realistic and affordable alternative to traditional banking,” added Mr. Fedchyshyn. “I would encourage anyone who would like to see their potential savings to visit the Manulife One website (manulifeone.ca) and run their numbers on our interactive calculator. I can assure them, they’ll likely be surprised.”
The Maritz Research telephone omnibus poll between March 29 and April 3, 2007 included interviews with 1,003 Canadians. The margin of error for a sample of that size is +/- three per cent, 19 times out of 20.
To find out more about the benefits and potential savings from Manulife One, please visit our online calculator at www.manulifeone.ca . For more information about Manulife Bank, please visit www.manulifebank.ca
About Manulife Bank of Canada
Manulife Financial established Manulife Bank of Canada in 1993 as the first federally regulated bank to be opened by a life insurance company following Canada’s financial reform legislation of 1992.
Manulife Bank was created to support the sale of the parent’s core products and assist financial advisors in providing fully integrated financial plans to their clients. Today, Manulife Bank is Canada’s eighth largest domestic bank with more than $8 billion in assets, serving clients across Canada in all provinces and territories. To see Manulife Bank’s most recent financial statement, visit the OSFI website at www.osfi-bsif.gc.ca
About Manulife Financial
Manulife Financial is a leading Canadian-based financial services group serving millions of customers in 19 countries and territories worldwide. Operating as Manulife Financial in Canada and Asia, and primarily through John Hancock in the United States, the Company offers clients a diverse range of financial protection products and wealth management services through its extensive network of employees, agents and distribution partners. Funds under management by Manulife Financial and its subsidiaries were Cdn$426 billion (US$370 billion) as at March 31, 2007.
Manulife Financial Corporation trades as ‘MFC’ on the TSX, NYSE and PSE, and under ‘0945’ on the SEHK. Manulife Financial can be found on the Internet at www.manulife.com.
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