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How can a non-borrower open a high interest savings account?
May 20, 2019
2:55 pm
GICinvestor
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R

Michael Allan said
Recently I applied for a Savvy Savings Account at Motive Financial. After hearing no word for two weeks, I called and spoke to an agent. He put me on hold, then came back and said, "Your application does not meet our profile."

They had rejected me - for a savings account! -. When I pressed him for a reason, he finally said, "I suggest you speak to Equifax."

Wouldn’t it be an option to ask to speak to a manager at Motive and ask why “Your application does not meet our profile."? The buck was passed to you to figure it out by contacting Equifax. Yet MOTIVE, allegedly, turned you down from that report. Have some questions written down. Ie, Why was my application refused? What do I have to do to meet your profile? What was lacking in my references?

May 20, 2019
4:00 pm
Doug
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savemoresaveoften said
slightly off topic but are we saying for an 18 years old (which I believe is the min age requirement for someone to open online account), its not possible to open an account due to 99% chance a 18-years-old wont have a credit history either ?
Talking in general not just Motive (since I think all banks have credit check when opening online accounts).  

Yes, in all likelihood, that's the case, if the age of majority is 19 in the province of the financial institution's head office. That's why Tangerine promotes its Children's Savings Account, which acts more like an informal trust account operated by the parent for their child.

However, if the financial institution provides for alternative methods of verifying identity (i.e., other than a credit bureau), then someone under the age of majority would be able to open an account.

Hope that helps,
Doug

May 20, 2019
5:09 pm
Bill
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From the link I provided, "In Canada, you have the right to open a bank account at a bank or a federally regulated credit union as long as you show proper identification." End of story, no reference to credit history.

The link also indicates the reasons they can refuse are:
- it believes you plan to use the account for illegal or fraudulent purposes
- you have a history of illegal or fraudulent activity with financial service providers during the past seven years
- it believes you knowingly made false statements in the information you gave
- it believes you might cause physical harm to, harass or abuse other customers or its employees
- you don’t already have an account and it only offers accounts which must be linked to an existing account with another financial institution
- you don’t allow it to take steps to verify that the identification you presented is valid

Again, no reference to credit history, it's not a reason to turn you down. So seems to me Equifax has nothing to do with it, unless that's what they use to confirm your id. In that case, as this appears to be a verifying your id issue, I'd call them and discuss what other form of id will they accept in a case like this where there's no credit history.

Unless of course they're turning you down because you don't have an account at another fi that can be linked to your online account at Motive. In that case, as they fully have the right to turn you down for that reason, then your only recourse is to open an account at another fi that can be linked to your Motive account. A telephone conversation with the right person at Motive would be my preferred way of resolving this.

May 20, 2019
5:32 pm
Michael Allan
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Bill said:

Link below might be helpful. ...
https://www.canada.ca/en/financial-consumer-agency/services/banking/opening-bank-account.html#toc0

Yes thanks, there it is in plain English: "In Canada, you have the right to open a bank account" if you "go in person".

(I think it has to be face-to-face, Bill, at least for guaranteed service.)

Doug said:

Have you thought of either Alexandre's suggestion of an Oaken 1-year GIC at 2.85%, possibly paired with an Oaken Savings account at 2.30%?

Right, because Oaken takes applications in person. "Step into its new retail space in downtown Toronto and you'll be surrounded by green leaf motifs, and images of mighty oak trees". https://www.thestar.com/business/2015/05/11/oaken-financial-aims-to-make-saving-a-walk-in-the-woods.html

I'll try that tomorrow. At the very least it's a temporary solution till I hear back from Motive.

Thanks for suggesting this, Alexandre.

Mike

May 21, 2019
6:44 pm
Norman1
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Doug said

Most virtual financial institutions use a dual process method, though, Norman. That is, a credit bureau plus a cleared cheque drawn on a Canadian financial institution in Canadian funds. It's still a dual process method even though it's a non-face-to-face ID verification.

That's beyond what FINTRAC requires to verify identity. The financial institution will want do more than what FINTRAC requires. For example, FINTRAC doesn't require verification that the linked account actually belongs to the client. But, the financial institution may wish to do so to avoid pulling money from an account the client has no legal authority over.

As far as "last three years" though for the sole process method, what, then, would that represent if they're not looking at credit accounts, in your interpretation?

That would be the date the credit reporting agency initially created the file for the person.

May 21, 2019
7:12 pm
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Michael Allan said

Norman - The credit report shows my address from 17 years ago. I've moved since then. Equifax gave me a form to correct the address. From what you're saying, I'd better make use of it. Even if the report won't ever be active enough to identify me, at least it won't be mis-identifying me.

That's a significant detail! Your credit record is 17+ years old.

Being at least three years old, it could have been used on its own to meet FINTRAC guidelines, confirming name, address, and birthdate. Unfortunately, the address on the record doesn't agree. sf-frown

Still, being more than six months old, the record can be used to confirm name and date of birth, as one part of a FINTRAC dual process verification (Table 5, Column B). A cheque drawn on your account that successfully clears would have verified name and a financial account (Table 5, Column C), as the second part of a FINTRAC dual process verification. sf-smile

I think the challenge now is confirming your address. Motive may not be comfortable with verifying just name, date of birth, and account at another financial institution. Supplying correct name, date of birth, and account at another financial institution with a mismatched address looks like a textbook identity theft attempt.

Doug and Loonie - I think I found that legal requirement in the Bank Act (and now I see Norman's looking there, too). The Act does refer to the Access to Basic Banking Services Regulations in the same context, but the basic requirement is written into the Act itself; subsection 448.1 says that "a member bank shall, at any prescribed point of service in Canada or any branch in Canada at which it opens retail deposit accounts through a natural person, open a retail deposit account for an individual who meets the prescribed conditions at his or her request made there in person."

Normally I would be *entitled* to open an account. A bank could not simply say, as Motive said to me, "Your application does not meet our profile." But it seems this entitlement only applies if I present myself "in person". Online only banks may be exempt.

The applicant also has to, in the words of section 448.1, meet "the prescribed conditions" that are prescribed by those regulations.

May 22, 2019
11:38 am
Doug
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Agreed, Norman. As I speculated, the problem for Michael is the age of his credit report and the fact that his residential address on said credit report does not jive with his current address (and what he submitted on the application form). I do think Motive Financial could've provided with him a more fulsome explanation instead of saying it had to do with their "credit profile".

He's certainly welcome to see if they might be able to verify him through any means, but the only other methods they might be able to consider would be using an agent. However, they aren't specifically set up with Canada Post and have no branches.

So, I do think the best solution is as I proposed at post # 2, I believe, for Michael to re-establish his credit profile by getting a secured credit facility of some sort. It certainly sounds like he has the capital to put into a bank GIC to establish a secured line of credit or credit card. Capital One will verify with Canada Post; not sure about Home Trust, but they might. Nice thing with Home Trust is there's a no annual fee option for their secured credit card.

When he then applies for and subsequently opens that credit card product, his new address will be updated on his credit report. His date last updated will also be updated and, all around, will be easier to verify in non-face-to-face situations.

Cheers,
Doug

June 12, 2019
1:48 am
Michael Allan
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Oaken came through with a savings account. After I applied, the office wanted better proof of my address. Rather than simply ignore my application as Motive did, they explained the problem in an email and gave me options to resolve it. I sent the proof they wanted online, May 28, and got a letter of acceptance June 5.

Next I'll look at their GICs, as Alexandre suggested.

Then I'll apply for a secured Visa card from Home Trust, as Doug suggested. Not only to please the likes of Motive - I agree with Norman that proof of address through the credit agency is what Motive wanted, though they refused to tell me - but also as an alternative to Visa Debit for buying stuff online. Only the big banks have Visa Debit and I want to be free of them.

Oaken Financial I've learned is a trademark of Home Bank, a subsidiary of Home Trust, so it all turns out to be the same outfit.

June 12, 2019
5:22 am
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I don't think you have a bad credit history. How about seeing if you qualify for Home Trust's Preferred Visa Card? It won't cost anything. No security deposit. 1% cash back even! sf-smile

In contrast, their Secured Visa Card requires a security deposit. Used to be $59 annual fee. Now, there is a no-annual-fee option if one agrees to a 19.99% interest rate on purchases.

June 12, 2019
6:01 am
Doug
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Michael Allan said
Oaken came through with a savings account. After I applied, the office wanted better proof of my address. Rather than simply ignore my application as Motive did, they explained the problem in an email and gave me options to resolve it. I sent the proof they wanted online, May 28, and got a letter of acceptance June 5.

Next I'll look at their GICs, as Alexandre suggested.

Then I'll apply for a secured Visa card from Home Trust, as Doug suggested. Not only to please the likes of Motive - I agree with Norman that proof of address through the credit agency is what Motive wanted, though they refused to tell me - but also as an alternative to Visa Debit for buying stuff online. Only the big banks have Visa Debit and I want to be free of them.

Oaken Financial I've learned is a trademark of Home Bank, a subsidiary of Home Trust, so it all turns out to be the same outfit.  

That's good, Michael, that Oaken was willing to work with you to accept an alternate, manual second method of identity authentication. Motive Financial could have as well, though for clarity, like Norman, my earlier posts mentioned that as well.

As to Norman's post subsequent to your reply, indeed, Home Trust's Secured Visa has no annual fee with a higher rate of interest. Since I suspect you will be diligent in paying it off in full on or before the statement due date each month, this is not a detraction from the product, in my view, as you will pay no interest. And, until identity authentication methods change in non-face-to-face methods, it's pretty much essential that you establish a new credit product so you can get your address and identity information updated on your credit report. (Oaken's soft pull of your credit report will not effect any update to your personal information.) Many other virtual banks, like EQ Bank and Motus Bank, are like Motive Financial in that they will not deviate from their established methods of validating customers' identities.

You could try first applying for the Home Trust Preferred Visa, but since your address isn't up-to-date on your credit report, it probably will be declined. As well, because you have no active credit products, your credit score has likely decayed back to being a 600 credit score (equivalent to no credit history). I would recommend just going with the Secured Visa from Home Trust @ 19.99% interest (you can even set up an automatic PAD to pay it off in full each month, to be assured you pay no interest) and then in 6-12 months, phone Home Trust up and ask to convert it over to a Preferred Visa. At that point, they'll pull a new bureau and then, if approved, likely even offer you a higher credit limit (which you might as well accept since it will reduce your credit utilization ratio and improve your score even further). In tandem with that, they'll be able to release the security (i.e., the GIC). And then, you've also got a great Visa credit card with full 1% cash back rewards and no foreign exchange markup fee on FX purchases. sf-cool

As for Oaken Financial, indeed, they are the same company as Home Trust, which will issue your Visa credit card. Essentially, they are just a different department and have different back office and contact centre staff that service your account.

Cheers,
Doug

June 12, 2019
3:18 pm
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I'm glad to hear you have made progress in securing a high interest savings account with Oaken. The rate isn't quite as good as Motive, but I guess the latter can afford to be picky.
I have found Oaken easy to deal with. I always prefer to deal with a FI which has a physical presence where I can go in and talk to someone - all things being equal - and Oaken meets that criterion for me.
Don't forget too that Oaken offers CDic insurance up to 200,000 because of its two entities, Home Trust and Home Bank. This may be useful if the settlement you have received is over 100K or could grow to be that size.

Also, remember that it's not just inflation per se that you need to be wary of in order to maintain your nest egg. You also need to deduct any income tax you pay on the interest. I doubt it's possible to match inflation and CRA with savings accounts only. However, if you have TFSA room, you could put it there and still keep pace.

Perhaps these issues have already been addressed. I've been away from the forum for a few weeks and will not be reading everything that has been posted in the interim.

June 13, 2019
6:52 am
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Doug said

You could try first applying for the Home Trust Preferred Visa, but since your address isn't up-to-date on your credit report, it probably will be declined. As well, because you have no active credit products, your credit score has likely decayed back to being a 600 credit score (equivalent to no credit history). …

Having no credit history is not the same as having a bad credit history. A 17+ year long record with no accounts (tradelines) and no negative info will have no score instead of a low score. It is up to the lender how such applicants are handled.

Home Trust is a lender that knows how to asses the credit worthiness of such no-history applicants. Mortgage lending to such applicants is one of their specialties.

One doesn't need a credit history to obtain a credit card. I didn't have any credit history when I was approved for my first credit card by one of the Big 5 banks. It was a regular credit card. I didn't know back then that there was such a thing as a secured card.

With no derogatory items in the credit history, there is a good chance that Michael will be approved for a regular Home Trust Preferred Visa based on verified employment. Home Trust has already confirmed his current address in onboarding him for his Oaken saving account.

June 13, 2019
9:02 am
Doug
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Norman1 said

Doug said

You could try first applying for the Home Trust Preferred Visa, but since your address isn't up-to-date on your credit report, it probably will be declined. As well, because you have no active credit products, your credit score has likely decayed back to being a 600 credit score (equivalent to no credit history). …

Having no credit history is not the same as having a bad credit history. A 17+ year long record with no accounts (tradelines) and no negative info will have no score instead of a low score. It is up to the lender how such applicants are handled.

Home Trust is a lender that knows how to asses the credit worthiness of such no-history applicants. Mortgage lending to such applicants is one of their specialties.

One doesn't need a credit history to obtain a credit card. I didn't have any credit history when I was approved for my first credit card by one of the Big 5 banks. It was a regular credit card. I didn't know back then that there was such a thing as a secured card.

With no derogatory items in the credit history, there is a good chance that Michael will be approved for a regular Home Trust Preferred Visa based on verified employment. Home Trust has already confirmed his current address in onboarding him for his Oaken saving account.  

That's true, but if the address doesn't match, they're not able to authenticate him automatically for the purposes of PCAMLTF legislation compliance. Keep in mind that Home Trust's broker and credit card divisions are completely separate and use separate systems, staffing, and processes from that of Oaken Financial. With his consent, they may be able to have Oaken Financial share his information for verification, but would still require manual verification.

It really depends on whether or not they're willing to do a manual identity verification process, as Oaken Financial did (and they might). So, yes, it's worth a try. They might even do a cash secured Home Trust Preferred Visa even though they don't offer it on their website.

Another option to consider is a National Bank MasterCard, but again it would depend on whether they are willing to do a manual identity verification due to non-matching residential address on the credit report. It's unsecured and has no annual fee and they'll approve you with limited (possibly no) credit history and a $500 limit even if you have no income to report (as a student, I had no employment income and only modest annual investment income - well below $15,000 - and they approved me no problem).

Cheers,
Doug

June 14, 2019
8:22 pm
Norman1
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Doug said

That's true, but if the address doesn't match, they're not able to authenticate him automatically for the purposes of PCAMLTF legislation compliance. Keep in mind that Home Trust's broker and credit card divisions are completely separate and use separate systems, staffing, and processes from that of Oaken Financial. With his consent, they may be able to have Oaken Financial share his information for verification, but would still require manual verification.

It really depends on whether or not they're willing to do a manual identity verification process, as Oaken Financial did (and they might). …

"Oaken Financial" is just a trade name used by the two financial institutions Home Trust Company and Home Bank. "Oaken Financial" is not a third financial institution.

Consequently, Michael's onboarding for an Oaken-branded savings account means his identity has been verified by Home Trust Company and maybe even by Home Bank as well.

Financial institutions are not required by FINTRAC's rules to verify client's identity with each additional product. So, Home Trust Company won't need to verify Michael's identity again for another product, like one of their Home Trust branded Visa credit cards. sf-smile

June 15, 2019
1:36 am
Doug
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Norman1 said

Doug said

That's true, but if the address doesn't match, they're not able to authenticate him automatically for the purposes of PCAMLTF legislation compliance. Keep in mind that Home Trust's broker and credit card divisions are completely separate and use separate systems, staffing, and processes from that of Oaken Financial. With his consent, they may be able to have Oaken Financial share his information for verification, but would still require manual verification.

It really depends on whether or not they're willing to do a manual identity verification process, as Oaken Financial did (and they might). …

"Oaken Financial" is just a trade name used by the two financial institutions Home Trust Company and Home Bank. "Oaken Financial" is not a third financial institution.

Consequently, Michael's onboarding for an Oaken-branded savings account means his identity has been verified by Home Trust Company and maybe even by Home Bank as well.

Financial institutions are not required by FINTRAC's rules to verify client's identity with each additional product. So, Home Trust Company won't need to verify Michael's identity again for another product, like one of their Home Trust branded Visa credit cards. sf-smile  

For clarity, I'm aware of, and understand, all this Norman, but in actuality, often there is a divergence between what financial institutions are required to do and what they actually do. For example, Simplii Financial, being a virtual banking operation, would technically not be required to re-verify a CIBC customer's identity despite CIBC already having re-authenticated them; however, since they are treated as a separate operation independent of CIBC's branch network, that's not the case.

I believe a similar process applies here in that, despite being a Home Trust customer through the Oaken Financial division, Home Trust's credit card division would still have internal policies that necessitate him being re-authenticated.

As I said, though, given that they are the same company, their collective corporate culture may be such that they, like Oaken, might be willing to re-verify Michael through an alternative, non-publicly identified manual verification process, so they're definitely worth considering.

As a side note, that National Bank credit card I mentioned above was the National Bank MC1 MasterCard, if Michael is interested.

Cheers,
Doug

June 15, 2019
5:58 am
Michael Allan
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Thanks for your generous advice folks, I'll look into these things.

Mike

June 15, 2019
9:49 am
Norman1
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As well, consider the possibility of applying for a credit card at the big bank branch where you currently have your chequing account.

You are known there. If needed, you would be able to refresh your identity with them easily by presenting government photo ID in person. If your pay has been sent to the account by direct deposit, then they can easily confirm the income you report on your application.

The credit card market in Canada is so saturated now that it is easy to find a credit card at the big banks with no annual fee. When I applied for my first Visa card decades ago, Central Guaranty Trust was the only financial institution in Canada that offered a no annual fee Visa credit card.

Now, many of the tellers at the big bank branches have product quotas. One of them would be very happy to upsell you one of their credit cards to meet their quota. sf-laugh

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