OK, this one isn’t quite so vexing
September 22nd, 2005 | by mbhunter |Bank fees are more outrageous than ever. OK, I can buy this MSN article without too much trouble. Bank fees are going up and can cost a bundle if you’re not careful. (Sometimes even if you are careful.)
However, I can see why the banks are starting to charge depositors more. It just costs the banks too much money to have paper statements and teller interactions for someone with $87.59 in their account. Kinda like a Netflix customer that watches a movie every night — such a customer might cost Netflix $20 alone in postage per month. What better way to discourage your below-zeros from using your premium services than to charge for them?
(By the way, I’ve only been a bank customer for a few years of my life, and that experience wasn’t too bad. The rest of the time I was a member of a credit union.)
A friend of mine, who is a member of the same credit union that I am, recalled one period when the credit union gave a break to its loan customers, but nothing to its other account holders. My respose was something like, “You and I cost the credit union money. The loan holders make money for the credit union. Who would you want to please first?” Or, put another way, who would you hit with fees first?
Checking and savings account customers are not profitable for banks. They are a liability for the banks. Loans are assets for banks. Maintaining your account, giving you service, sending statements, etc., costs the bank. I even heard one employee go so far as to say that they were taking an operating loss on their savings account holders when interest rates were in the basement. They didn’t feel it was right to charge the customers monthly to hold their money (or, more likely, they thought that their customers would book it), so they took a loss.
Banks need to cut costs, and since the customers keep demanding more and more services, they give them what they want, but it has to be cost-effective. Paperless statements and 24-7 online access is great, but should you also get the paper statements and the teller access for free if you use the other? Each statement probably costs the band upwards of a dollar to produce and send out; each teller interaction probably costs the bank a few dollars, depending on the extent of the interaction. Granted, some banks force the issue by charging for such fees, while others (like my credit union) encourage enough people to use the less-costly-for-the-credit-union services (online access, ATM deposits, etc.) so that they don’t have to charge for the other services.
I think that this is more the nature of how things are going than banks being greedy. Technology upgrades cost money, but they save the bank money and allow the banks to give more service with less. Next, we may see the teller lines getting longer. Sure, you can talk to a teller instead of banking online, but you’ll have to wait.
And maybe you’ll have to pay, too.
4 Responses to “OK, this one isn’t quite so vexing”
By Cathy on Sep 22, 2005 | Reply
I get what you’re saying, but sometimes the technology doesn’t go far enough to make up for the lack of paper statements, etc. For example, I had a check that cleared for a different amount than what I had recorded in my register. Because the company that processed the check did so electronically, my bank didn’t have a copy of it and the company said it would take 6-8 weeks to get me a copy (I’m still waiting – thanks for reminding me to follow up). I managed to figure out what caused the discrepancy, but things would have been so much simpler if I could have just called up a copy of the check online!
By mbhunter on Sep 22, 2005 | Reply
Wow — two months for a copy of a check. That seems excessive.
Duplicate checks are more expensive, but the extra record of the check is made automatically. I’ve always used duplicate checks and it’s saved me a couple of times.
What you’re suggesting about having the checks online, that would be great. Would take a huge amount of bandwidth to do it, but I can see the possibilities.
By Adult ADD and Money on Sep 22, 2005 | Reply
The biggest problem is that all financial institution have to operate under a new structure. Financial institutions could afford to take a loss on savings accounts because if a person had a savings or checking accounts they typically had their mortgage and other loans through the same bank. Now that there are so many options available to consumers, financial institutions can’t afford to have loss leaders because consumers can easily shop around to different institutions in person, on the phone , and on-line.
By mbhunter on Sep 23, 2005 | Reply
ADD, good point. I’d certainly shop around if I could. Online banks give way better interest rates on savings accounts than my credit union, that’s for sure.