MACLEAN’S REPORTS

You might as well spend what little cash you’ve gotit’s going to he obsolete pretty soon anyhow

JACK BATTEN September 1 1968
MACLEAN’S REPORTS

You might as well spend what little cash you’ve gotit’s going to he obsolete pretty soon anyhow

JACK BATTEN September 1 1968

You might as well spend what little cash you’ve gotit’s going to he obsolete pretty soon anyhow

I HAD MY PICTURE taken in a bank the other day and I wasn’t caught in the act of holding up the place. I was merely getting in on the latest scheme dreamed up by Canadian banks to abolish cash. The photographic session took place in my local Bank of Nova Scotia branch, and my portrait — “in living color”, the smiling lady photographer assured me — will adorn a Scotiabank Cheque Guarantee Card, which will enable me, merely by flashing it at merchants anywhere in Canada, to write $100 cheques against my Nova Scotia current account, even when the account shows a balance of absolute flat zero.

Sounds good? Well, other Canadian banks think so, and they’re offering similar, or at least related, plans for all of us to spend money without really noticing. There’s Chargex and there’s Bancardchek and, if you care to step outside the bank scheme, there’s also Credico and something particularly appetizing called Savers Services Inc. The Canadian credit-card field, in short, has suddenly turned into an overcrowded buyer’s market (to mix financial metaphors). But there are special differences in each plan and there are points to be wary of in every one of them:

CHARGEX: It applies to people with accounts in the Toronto-Dominion, Canadian-Imperial and Royal banks and in the Banque Canadienne Nationale. The banks are distributing Chargex cards to an even one million of

their customers, and the cards will entitle the lucky million to purchase goods and services on credit from some 12,000 neighborhood merchants and dealers operating in about 250 goods and services categories in Toronto and Montreal. The shopkeepers must pay to get in on the game — $25 to join, $12 a year for Chargex equipment, four percent to six percent of the Chargex billings — while the lucky consumers with the Chargex cards are allowed in free — no membership fees, no service charges.

But. The banks confidently expect to make their profit through interest charges on their Chargex customers’ overdrafts. Suppose for example, you buy a $400 stereo set, and say you run up a $200 bill at your favorite go-go club (say you’re really a big spender) and you bill everything to your Chargex card. And say, finally, your bank account till then had a balance of 74 cents. Now comes the day of reckoning. Your bank will permit you 25 days to ante up a minimum of ten percent of your new overdraft ($600 less 74 cents), and then it will slap on interest charges of IV2 percent per month on the rest. That works out to 18 percent per year — almost double the interest rate on a conventional consumer bank loan. SCOTIABANK CHEQUE GUARANTEE

CARD: YOU must open a Nova Scotia current account or chequing account. You must pay two dollars to join the scheme. You must pay the regular

service charge for each cheque. Then you may write cheques in amounts of $100 or less (as long as you resemble the picture on your card, all merchants will honor your cheques) up to a figure that equals your gross monthly income or $1,000, whichever is less. Then the bank charges you one percent interest on your maximum overdraft for the month. BANCARDCHEK: This is the Bank of Montreal’s plan. You pay no initiation fee and you receive — surprise! — an identity card, plus a series of “personalized,” guaranteed cheques in values of $25, $50 and $100 up to a total of $2,000. They function rather like travellers’ cheques and any sensible merchant will accept them. The catch? When you hand out cheques that exceed the balance in your account, the bank automatically credits

you with a loan and proceeds to charge you one percent interest per month on your loan. CREDICO: A Montreal - based firm

that operates like Chargex without a bank account but with 1 Vi percent interest charges per month. SAVERS SERVICES INC: Another private outfit in Montreal with plans for expansion to other cities, this one has adopted a revolutionary principle the banks are all ignoring — some people really do like cash. SS Inc. is selling cards to consumers at $12 each entitling holders to a ten-percent discount on purchases from 400 designated merchants provided they pay in good old green folding money.

Revolutionary? Why, it’s enough to make a man tear up his BANCARDCH A RG EXSCOT IABANKGUARANTEE card. JACK BATTEN

JACK BATTEN