Banks look to profit from their customers – Tulsa World
Banks are in the business of making money, and even though bank employees seem friendly and eager to help, the bank is still looking to make profits from its customers, says the Money-Rates.com website. Helping them with their finances is probably not very high on banks' priority lists, it says.
Here are some things to remember when doing business with banks, according to Money-Rates.com.
Entire deposit not available immediately: Banks usually allow customers access only to the first $50 or $100 of deposits. With a $500 deposit, $400 of it might not be available until the next business day, or even later. Consequently, customers can still bounce checks or overdraw accounts and be charged overdraft fees - even though they made these deposits thinking they would cover checks written on them.
Post-dated checks mean nothing: Customers writing post-dated checks trust their recipients not to cash them ahead of schedule, but banks are likely to run them through without looking at their dates. Even if tellers do look, banks have no legal obligation to honor their dates. They process all checks and collect overdraft fees when they bounce.
Online account balances not always accurate: Customers checking their accounts online for balances soon learn that information is not always up to date. Account information can be inaccurate or not reflect the way transactions were actually processed. Though online accounts can be good guides, they are not always accurate, and customers playing
close to the edge often find themselves overdrawn - and paying overdraft fees.
Bankers are sellers: Bankers tell customers they are offering great products or services, but they still are salespeople who want to sell more products so their employers can make more money. Banks now offer insurance, retirement accounts and more services beyond the standard checking and savings accounts and home loans of yesteryear. Banks pitching products or services are concerned more about their revenue than customers' finances.
Shop for financial products and services: Many bank customers go to their banks for loans and other products for the convenience of keeping all financial accounts at one institution. Many assume, as they've been loyal customers, they will get good deals. This is not always the case. Banks might not have the best interest rates on home equity loans or the lowest management fees on retirement plans. It is best to shop around for the best deals and notify bankers when they find better deals. Banks should compete for business and not just assume they will have it, as usual.
National banks trump branches: Many bank customers assume they're getting a personal decision when talking with their bankers in person - that bankers can make decisions locally. But many local banks are branches of national banks, and it is likely decisions will be made at the national level. Only smaller, community banks with local owners have the option to make local decisions.
Overdrafts help banks
The article "Banks make $38 billion from overdraft fees," published in The Huffington Post on Aug. 9, 2009, says the interest banks earn on loans and credit cards "pales in comparison to the fees they charge" for account overdrafts.
Big money makers: Bankers don't tell you that fees are their biggest money maker, says the Money-Rates.com website. The $38 billion figure is larger when considering other fees: charges for out-of-system ATM use, paper statements, not maintaining minimum balances, etc. Fees are more valuable to banks than anything else they do.
Get them waived: Some banks will waive one or two fees per year just when customers ask. Though such policies exist, bankers aren't forthcoming about them, Money-Rate says. Banks make more if you just pay the fees, fuming in silence. Ask about the fee-waiving policy.
Overdraft protection opt out: This doesn't apply to checks, but the Federal Reserve changed the rules on debit cards and ATM transactions giving consumers the right to "opt out" of the automatic "overdraft protection" plans banks push on customers. See the Fed's fact sheet "New overdraft rules for debit and ATM cards" at tulsaworld.com/fedoverdrafts
Opt out: New Fed rules on standard overdraft practices went into effect Aug. 15 for debit and ATM cards. Now, before banks can approve overdrawing transactions, consumers must "opt in" for them to do so – banks can't just automatically charge $35 for debit and ATM overdrafts anymore. See tulsaworld.com/moneyrateschecking
Consumers choosing not to opt in will find their overdrawing debit card and ATM uses denied – but won't be charged a fee. However, personal checks and automatic bill payments consumers schedule are not included in the new rules.
Banks can still approve overdrawing checks and automatic bill payments for mortgages, rent and utilities - and charge overdraft fees.
Original Print Headline: Electronic money has its price
Tulsa World consumer writer Phil Mulkins wants to know which topics interest you most. Call 699-8888, e-mail your interest to phil.mulkins@tulsaworld.com, or mail it to Tulsa World Consumer, PO Box 1770, Tulsa, OK 74102-1770.