Walking into a bank is like walking into a casino. You walk into the building and think to yourself, “Where did they get all of this money?” The answer is simple: They make it from people like me.
Some ways they make money are legitimate. They offer you a mortgage and they make a reasonable, federally regulated amount of money in interest. They offer products that you chose to buy. They loan money between banks and they make money. They make profits by loaning you money with a credit card at 5-6 times what they borrow from you for. (Notice what your savings account interest versus their credit card interest!) I have no problem with those types of profit because they are easy to understand and they are transactions that you agree to.
Some ways they make money are illegitimate. A major way banks make money is by tricking you and I into paying fees, hidden profit sources. These are legal ways to immorally steal money from consumers for their profit. My bank, National City, is terrible at this. We’ve had an account with them for years and we have increasingly found their fees or “fines” easier and easier to pay because of the systems they create.
For instance, it is a long-standing “trick” of banks to process withdrawals to your account before processing deposits. This is done to maximize the opportunity for you to overdraft your account… resulting in a fee that they get to decide the rate on without your consent or agreement or regulation. (3 years ago this was $20 at National City. Currently it is $39! Why the increase? You decide.)
A pretend example:
- Today’s opening balance: $100
- Today’s deposits: $500
- Today’s withdrawals: $200
- Tomorrows balance: $361 (because you overdrafted $100)
This is an old trick that most of us have adapted our spending habits to. While they have enough technology to detect the spending habits of a person visiting a prostitute they claim they don’t have enough technology to handle processing deposits and withdrawals at the same time. Yeah right. They do this because overdraft fees and overdraft protection are an important line item in their books. It is a major source of profit as overdrafts don’t cost the bank a penny but cost you $39.
A “new trick” they have put in place is holding withdrawals until your account balance is low. I’ve noticed this increasingly in the past several months at National City. Sometimes a withdrawal via my debit card will not post for 7-10 days. But “magically” it will post on a day when my account balance is low, such as right before payday. Some transactions post immediately while others are held for days. While a reasonable explanation could be levied that these are credit card transactions dependent on 3rd party sources… how can they explain not posting things from their own ATM’s for days or weeks? It’s because they are doing their best to extract exorbitant and immoral transaction fees from consumers for their own profit. It used to be that you could talk to your bank and they would remove some of these fees. Not anymore. When this happened to me a couple months ago I called the customer service number and was treated very rudely. Not only did they take hundreds of dollars from my account without my consent then they were rude to me about it.
I think banks are extracting these fees in full-knowledge of our culture. Our culture dictates that we keep financial matters private with our peers. What are the chances hundreds of consumers will share an experience of getting ripped off or are suddenly paying overdraft fees when they never were in the past? Almost none. Why? Because no one wants to admit that they sometimes run low on cash. So, silence on the matter results in increasing profits for banks.
The Bible says that what is done in the darkness will be brought to the light. It’s time consumers start talking to one another about these practices. Likewise, this creates a new opportunity for a bank that will use technology to the advantage of consumers instead of stockholders. I predict a consumer friendly bank will put these preditory “old school” banks out of business. They won’t have dirty hidden fees that rob families.
National City has a slogan that they are “banking made simple.” I think this couldn’t be further from the truth. There is nothing simple about their “policies” and rude customer service representatives.
Not only can you not research the actual overdraft fees on their website, you can’t sign up for their overdraft protection either. Simple?