Still Don’t Trust Them
Way back in the day when I was a very young kid in school there was a big drive for kids to save money at the local banks. This initiative had two purposes;
The first was to restore confidence of the communities back in to the banks.
The second part of that initiative was brain washing the younger generation to believe and trust the banking system.
What they did was set out this little bank deposit envelopes which you wrote your name on and put money in every week.
The minimum deposit was 5 cents. Yes, just a nickel. The pressure on the kids to do this was incredible. A nickel back than was tough to get and you felt rich if you could deposit a quarter. My parents didn’t have that kind of money for me every week so I would spend hours and days looking for soda bottles thrown out on the side of the road and take them to the store for the deposit. In a big weekend, I may have earned that quarter for my deposit.
Back then there was very little trust in banks and today I still don’t trust them.
I mean really think about it, if a school has 500 children all depositing 5 cents every week that is a lot of work for the bank to handle. The cost of labor surely must have been much greater than the revenue brought in as a result of all those deposits. If you opened a new account with ten dollars you received a toaster or a clothes iron.
Today things still haven’t changed. The giveaways are pretty much a thing of the past but it’s the false incentives that gets me fired up. These incentives range from adding an additional savings account for free or a new money market account to Christmas clubs or holiday savings accounts. These are driven by your “personal banker” the more accounts he/she gets you to open the better their chances are to hit their quarterly bonus.
Still Don’t Trust Them
I know you’re wondering wants wrong with that. Here is my issue.
They are twisting the weak into it by being sold on the fact that it’s a good way to save money for those that always run their accounts down low every month. Imagine working all those hours and at the end of the month you have nothing to show for it, so open up a savings account.
The truth is with opening up a saving account the people will move money from their “free checking account” to their savings account. Here the bank is betting on these people to stay true to their bad habits of no spending discipline and failing to understand how to balance a check book. Here, even though the people have money in their savings account with the fast pace and convenience of fast food, morning coffee shops, automatic withdrawals of house hold bills combined with a less than perfect disciplined behavior is a banker’s gold mine for insufficient funds fees.
Oh, wait a minute, the new term is “convenience pay fee”.
Recently we have been seeing many borrower’s bank accounts with these charges in them when clearly, they have had plenty of money in their accounts. One of our borrowers didn’t understand this as they thought since they had money in their savings account and their bank would just move money from the savings account to the check they didn’t have to worry about non-sufficient funds fees’. Since they banked on line they never thought to check their actual statement which should over $2200 in fees for that convenience.
These programs are nothing but banking traps no different than their lending schemes and practices. They advertise lower rates only to whack the consumers with tons of back end fees from over inflated credit report fees, application fees, processing fees, underwriting fees and my favorite wire transfer fee. Yes, you have to pay to move your money from your saving or checking account to the title company while they do the closing for you at their branch bank location.
Keep your finances separated.
Keep your checking accounts with a bank or credit union, put your saving in a different place such a brokerage house along with your retirement accounts. Keep your insurance with just your insurance company and only your insurance. Keep your mortgage with a lender who only does mortgages. Mixing these up in the name of convenience is only a recipe for problems.
Understand what the total cost of all your accounts are and not just the upfront cost but the back end and operating cost. Ask questions, get all your facts and we will see you at a happy closing table.