The Lifestyle Digs

Is taking an RSP Loan from Tangerine Bank a Good Idea?

Is taking an RSP Loan from Tangerine Bank a Good Idea_

I’ve had an account with Tangerine Bank for a long time. Well…. I hate to say way over 20 years because Tangerine hasn’t been around that long. There was a name change a few years ago from ING or ING Direct, and that’s the one I’ve been a client of since the 1990s.

Tangerine Bank log in sucks!

I just went along for the ride when the name changed to Tangerine Bank, though I rarely deal with them anymore. Their log in page is awful. The log in is using your client number and a password and there’s a “remember me” function to check off so that when you return to do online banking it will remember your client number and you just type in your password.

Unfortunately, the ING/Tangerine “remember me” feature has amnesia. If it’s been more than 4 or 5 weeks since I’ve last logged on, I have to start all over. Which means I have to go to where I keep my banking information to find my client number so I can type it in again and start all over, renaming my account, etc. I can remember my password, but not my client number.

It got so aggravating that I moved most of my money out and I rarely deal with Tangerine anymore.

What do clients want from banks?

There’s a little something that should be obvious to most banks, but they just don’t get it. I’m not just pointing fingers at Tangerine Bank here.

Here it is.

Here’s what real people know that banks don’t seem “to get”.

Customer loyalty is a thing of the past.

Did any of you bankers out there get it?

Let me say it again.

Customer loyalty is a thing of the past!

Let’s keep it simple.

Customers go where they get the best deal and the least amount of hassle.

A concept that Tangerine Bank doesn’t seem “to get”.

But Tangerine Bank isn’t the only bank that doesn’t “get it”.

We – us, the customers – go where we get the best deal and the least amount of hassle.

That place sure ain’t Tangerine Bank!

Who wants a Tangerine Bank credit card? Not me!

About twice a year Tangerine Bank annoys me by sending an application for a pre-approved credit card for $14,000.

Who asked you?

I have three rarely used credit cards with higher limits than Tangerine wants to give me. Do I really need another credit card I’ll rarely use? There are no benefits on the credit card Tangerine wants to give me that excite me. Just the same old, same old.

Yawn.

Is taking an RSP Loan from Tangerine Bank a Good Idea_

Why don’t you try offering some credit card benefits that would be useful to me, Tangerine Bank?

In keeping with their theme of sending me emails for stuff I don’t want, Tangerine Bank seems to think I’d like to take a loan out to purchase an RRSP. That’s a Canadian financial product – Registered Retirement Savings Plan.

Here’s a snip of the email Tangerine Bank sent the first week in January, 2019 to entice me:

Is taking an RSP Loan from Tangerine Bank a Good Idea?

If you want to read the whole email, click on the above snippet where I save it on PDF.

The interest rate on the loan is 2.75%.

Now check out the Tangering Bank RSP account where you can earn a whopping 1.25% interest on your savings. Do you see that button that says “sign me up”. LOL! Yeah where can I sign up for a great deal like that! LOL!

Do you need more debt?

Many of us struggle with debt. Not because we’re spenders, but just to make ends meet. I’ve written some posts about getting out of debt, that mainly deal with credit cards.

Read Never Buy Food on Credit and How to Save Money and Bust Debt for some great reminders and tips.

Quit eating your way into debt.Besides credit cards, people take on debt when they get a car loan, a mortgage to buy a house, or a personal loan for any number of things.

Maybe even a loan to pay off all your credit card debt.

That one might not be such a bad thing if the interest rate on your loan is lower than the interest rate on your credit card. And you promise to leave your credit card alone!

How much debt are you carrying? Canadian consumer debt just keeps growing. Not counting mortgages, many Canadians have more than $20,000 in debt.

Do you need more debt in the form of an RSP loan from Tangerine Bank?

Do you need to take on debt to fund your retirement savings, or should you be putting money aside from each pay period to fund your retirement?

Do you need to take on more debt from Tangerine Bank or any other bank?

Is taking an RSP Loan from Tangerine Bank a Good Idea?Do you need to take on more debt by taking out a loan to fund your RSP?

Under $100,000?

Let’s get back to your annual income and if it’s over or under $100,000. If it’s under, you don’t need to be dealing with an RRSP because it’s of no financial benefit to you. And don’t even get me started on the sheer stupidity of taking out a $15,000 loan to fund your RRSP.

Put your retirement money in a Tax Free Savings Account TFSA instead. You don’t get hit with 20% withholding fee when you take your money out the way you do with you withdraw money from your RRSP.

Over $100,000?

If you make over $100,000/year and need to lower your taxable income, then an RRSP is a good financial decision and you can probably afford to pay back a $15,000 loan.

Keeping in mind Tangerine Bank gives you 12 months to repay that $15,000 loan. With interest, that’s about $1270/month to repay the loan.

$1270 a month? YIKES!

That’s right folks! Nearly $1300/month for the next year to repay Tangerine Bank if you take out this RSP loan. I don’t know about the rest of you, but I don’t have $1270 to put into retirement account each month, so what makes Tangerine Bank think I have that much money left over once my basic daily living expenses are met to repay their stupid loan?

The “Secret” banks don’t want you to know

Here’s a dirty little secret that banks don’t want you to know.

When it comes to your RRSP there are other options available besides a money savings account. Who thinks they can do better than 1.25% interest Tangerine Bank wants to offer you?

Besides having a cash account, you can put other financial products inside an RRSP including mutual funds, GICs, stocks, and more!

Hell! Tangerine Bank knows this. Take me for example. At Tangerine Bank I have mutual funds held inside an RRSP. The product used to be called Streetwise when the bank was known as ING.

I’m not sure what the name of it is now. It is extremely hard to find the mutual funds information on Tangerine Bank’s web page. Go on! I dare you to try!

Is taking an RSP Loan from Tangerine Bank a Good Idea?I’m also not sure how much money I have in whatever the new name of the mutual funds is now. Around $5,000 is my guess.

Remember? I can’t log on to find out because Tangerine Bank’s log on page SUCKS!

And I can hear all of you yelling at me – just go to your filing cabinet and pull out your client number. All the information you need to log in can be found there.

True. But these days the financial institutions that have the bulk of my money have log in pages that actually do remember me.

Why?

I guess we should look at why banks don’t want you to know their dirty little secret that you can use your RRSP account to hold other financial products besides a plain vanilla savings account.

It’s because they’re a business. Banks make most of their money off big businesses. Not us little people. The financial products that banks offer can’t meet most people’s goals of saving for their retirement. Surely not off piddly little 1.5% interest on RSP savings accounts.

And when you’re a single woman who doesn’t make a lot of money? Financial institutions don’t want to waste their time at all on you. Single women are mostly ignored by financial experts so we have to rely on each other for assistance.

All people, not just women, need a higher rate of return than 1.5% on their investing dollars if their retirement needs are going to be met.

Is taking an RSP loan from Tangerine Bank a good idea? A $15,000 loan that has to be paid back in 12 months? At a higher interest rate to pay back than the interest rate that money is earning sitting inside the Tangerine RSP account?

Hell no!

That sucks even worse than Tangerine’s log in page!

So stick that in your hat and smoke it Tangerine Bank!

Is taking an RSP Loan from Tangerine Bank a Good Idea?

2 thoughts on “Is taking an RSP Loan from Tangerine Bank a Good Idea?

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