Peoples Trust review: feature overview and opening an account

Note: There are 2 different banks called “Peoples Trust Company”. This article refers to the CDIC-insured Canadian bank “Peoples Trust” found online at peoplestrust.com. The main office is located in Vancouver and all references to Peoples Trust in this article refer to this bank. (The other bank at peoplestrustcompany.com is based in Vermont.)

Peoples Trust is a CDIC-insured bank based out of Vancouver BC, Canada, and with branches in Vancouver, Calgary, and Toronto. While Peoples Trust is not an online bank, they do allow for electronic transfer of funds to and from other Canadian financial institutions. However, in order to keep their costs low and offer the best interest rates possible, they do not offer all of the typical services you get at most other banks.

In their own words (source: peoplestrust.com):

Peoples Trust has become a very successful provider of financial services by combining price competitive products with truly exceptional customer service and support. Recognizing that a smaller organization cannot compete effectively in all areas, the company carefully examined the financial services industry and selected a number of product lines which could be offered with real added value. The compact nature of the organization ensures that operating overhead is well controlled and contained, resulting in the ability of the company to pass on these cost savings to you, the customers, in the form of improved interest rates… lower for borrowers and higher for investors.

Assets consist mainly of conventional and insured loans on predominantly multi-family residential properties located in major urban centers. Investor Services Focus on traditional short and long term RRSP and GIC products, together with mortgage banking for institutional investors. The company is particularly active in the Mortgage-Backed Securitization program as an Issuer.

Peoples Trust maintains a unique and enviable position among Canada’s financial institutions as a result of long-term profitability, steady asset growth and the ability to perform above and beyond customers’ expectations.

Why did I decide to try Peoples Trust?

Given the current state of the economy and low interest rates, a savings account rate of 4.0% is certainly enough to catch anyone’s attention (this only recently fell to 3.6%, which is still significantly higher than other banks). Offering a rate higher than many GICs (and even higher than some Mutual Funds as of January 2009!), there is certainly incentive to “test the waters” with a new financial institution. But is there a catch? At the end of this article, we’ll review some of the pros and cons. But first, let’s go through the account opening process.

Opening an account with Peoples Trust

You can access the full Peoples Choice Savings account terms and conditions here.

To open an account with Peoples Trust, visit:

http://www.peoplestrust.com/depositSerives.htm

and under “Peoples Choice Savings Account” click “purchase”. This will bring you to the online application form. The application process is straightforward and after submitting, you will receive a confirmation e-mail that looks like this:

Thank you for placing your savings with Peoples Trust!

You chose to place your savings in a Peoples Choice Savings Account and will begin earning interest from the day your first cheque/deposit is received by Peoples Trust. Your terms and rates are listed below.

If you have chosen to pay by Personal Cheque, please make it payable to yourself and mail it with your confirmation number written on the front to:

Peoples Trust Company
1400-888 Dunsmuir St.
Vancouver, BC V6C 3K4

If your funds are being transferred by Electronic Funds Transfer, your deposit will be processed on the next business day.
We will send you an official confirmation with your account details as soon as your deposit is received and processed.

————————————————————————
Confirmation Number : xxxx
Product : Peoples Choice Savings Account
Term : n/a
Rate : 4.000
Amount : $xxx
————————————————————————

Here’s what might set off a red flag for you: the cheque must be made payable to “Peoples Trust Company”. I must admit, this made me nervous, so I did some due diligence. I verified the Peoples Trust address with the CDIC, and made out a cheque for a much smaller amount than my full deposit. In a few weeks (yes, it takes that long), I received my Peoples Trust package in the mail with the initial “starter cheques” and account information.

Transactions

Peoples Trust offers no online banking capabilities. This means that you cannot check your balance or pay bills online. Also, only the first 5 transactions of the month are free (after the 5 transaction limit, there is a $1.50 charge per withdrawal, as of January 2009).

Notable features include:

• Deposit a cheque by mail or personal delivery to a branch
• Write cheques on your savings account
• Transfer funds between your savings account and an external account at another financial institution (initiated by your external bank)
• Transfers usually take about 1 business day and cannot be cancelled once initiated (you need to wait until the money has transferred, and then transfer it back again)
• Set up or authorize withdrawals via phone or e-mail
• Set up pre-authorized, automatic deposits into your Peoples Trust account
• Check your balance and transaction history by phone

Notable omissions include:

• No bill payment service
• No ATM or debit card service
• No electronic fund transfer to other account holders
• All correspondence with Peoples Trust must be done via phone, e-mail (deposits AT peoplestrust DOT com), or by visiting a branch. This is also the case if you wish to take advantage of the other services offered by Peoples Trust (such as opening a GIC or an RRSP).

Pros

• The interest rate posted is accurate, and paid monthly!
• You can write cheques on your account (you get 4 free cheques with your starter kit, after that the minimum order is $29.00 for 50 cheques).
• There are no hidden fees (when you keep your transactions to the limit of 5 per month), no minimum balance, and your funds are indeed CDIC insured for the standard $100,000 per account holder.
• You get a monthly account statement via postal mail.
• Good customer service: I was pleasantly surprised with the polite, helpful staff at Peoples Trust. The best way to get in touch with a representative, I have found, is by e-mail, which is usually replied to within 24 hours. While some might prefer a phone call, I much prefer e-mail to waiting for 15+ minutes on hold for a phone representative at some other high interest accounts (as I’m sure we all have experienced!)

Cons:

• Of all the Canadian banks, Peoples Trust places the longest hold time on your deposits: up to 9 days. This, combined with the 5 transaction per month limit, means that if you’re very active with your account, you may want to hold an additional account for your main banking purposes, and consider Peoples Trust as more of an investment option than a daily bank account.
• While you are sent a written monthly statement, Peoples Trust does not have online banking capabilities. This means that you can’t check your account balance or transactions using their website. However, you can link your Peoples Trust account with another online account and access your money via your ING, HSBC, PC Financial, and other online accounts (explained next).

How to link a Peoples Trust account to your other online accounts

Recall that electronic transfers between your Peoples Trust account and other institution’s account(s) are initiated from your other institution’s account(s).

Normally, to link 2 different online accounts, you would need to submit a personalized, void cheque from one institution to other the institution where you want to initialize transfers. However, in your starter kit from Peoples Trust, you are only given 4 cheques, none of which are personalized (with your name and address). Most of the online banks you call will insist that they will not accept anything but a personalized, void cheque in order to link accounts. This is not true!

Once you have opened an account with Peoples Trust and applied online with another financial institution to have your account linked, simply e-mail Peoples Trust and ask them to send an “account verification” to link to your other account (at HSBC, PC Financial, etc.). They require a fax number, address, and the name of a contact person in order to do this, but it will save you 30 bucks for the personalized cheques! It will take some time, but when completed, you will be able to transfer funds in and out of your Peoples Trust account electronically!

Summary

If you’re looking for a place to park your money until this unstable market settles (and beyond), Peoples Trust looks like a great option! Just be aware that you may need to do a little planning if you want to move your money in and out of this account.