Are the days of "true" banking long gone, replaced by "service providers" who charge you to use your own money?
Back in the day, a customer could deposit money into a bank where the money would be safe and insured. They could later withdraw any portion of it for any reason. As a bank collected deposits, it made loans, and made profits on those loans from the interest they charged. So the bank benefited from your money. But enough about 1935.
Today's banking climate is much different, much more lopsided against the consumer. The advent of technology made it easier for banks to give you your money cheaper. Instead of going into the bank to get cash which required hiring more bank tellers and cashiers, we now use ATM machines. Instead of writing a check to pay for daily things which required hiring check processors and an army of couriers to transport these checks around the country, we now use our Debit cards. The banks weaned the public into using their debit cards as safer, cheaper, and faster.
In the 1990's banks rolled out new "fees" as deregulation took full effect; some were somewhat logical, but others like an old fee Bank of America charged was quite simply, fleecing. Some customers were only allowed to visit a teller three times, any more than that and they would be charged. Also, they could not call the banks customer service department more than three times either without incurring a fee.
In the 2000's, the days of easy and increasingly worthless mortgages helped banks reap billions in profits. They also got smart, and started clearing charges to your account from checks and debit cards in order of the highest, thus ensuring that the numerous smaller and more common things would bounce, allowing them to charge you a NSF fee, non-sufficient funds. The NSF fees alone made Wells Fargo $1.7 billion dollars in 2008.
And here we are today, banks like Chase, Wells Fargo, and others are now testing the waters to charge you $3 a month to use the very card they pushed everyone to use because it was cheaper for them and safer for us.
Wells Fargo plans to roll out the new debit card usage fee in October in Georgia, New Mexico, Nevada and Oregon. An unnamed Wells Fargo Spokesperson said, "We regularly review our pricing and take into account the needs of our customers, industry trends, the market competition, and our cost of doing business." That's code for, "how can we charge you more and make it look like we're doing you a favor?"
To be fair, the new financial industry regulation takes full effect, coincidently, in October also. They impose more strict limits on how a bank processes your charges and checks, how much they can charge per transaction to the retailer, and a litany of other fees which are so complicated, over 2,500 pages, that banks are facing a significant drop in revenue since they can no longer charge for some of these ridiculous and erroneous fees. Gone are the days of outsized profits from bad mortgages, which let banks charge you less to use your own money.
The new regulations were meant to rein in big bank greed, but is it having an negative impact on consumers? It will now be harder to get a bank account in many cases, and when you do get one, you are likely to pay some type of fee unless you are willing to deposit your lotto earnings with them and maintain a hefty balance.
But not all banks are the same. Take for example USAA. USAA is a customer specific bank, in that they cater to a specific type of customer. Those who manage their money responsibly. They do not charge for having or using a debit card, have no fees for checking or savings accounts, pay interest on all their accounts, and are consistently rated at or near the top for customer service and customer loyalty. Nor do they have any plans to change this with the implementation of the new financial industry regulations. How can they do this? Like a some other responsible banks, they never made risky mortgage bets, and take an active role in helping its customers learn to manager their finances. They answer their phones quickly for industry standards, usually within 1 minute. They were some of the first to offer customer conveniences like a mobile app rated one of the best in the industry that lets customers deposit checks on their smartphone. They don't charge for web bill pay. This may sound like an advertisement for them, but it's not, we did not consult with USAA to write this article. We used rating charts and feedback from the public.
USAA is not alone, we found other banks who do a superb job and still manage to make good profits, just not greedy profits. Could big banks learn a lesson from these smaller banks like USAA? Provide a good product, great service, make sound decisions and you will reap plenty of profits without exposing yourself to unnecessary risk. (Great service does not mean offering to charge someone $2 a month to get a detailed bank statement, or charge them when they use a service like web bill pay that saves the bank money in the process, or leaving inbound calls on hold longer than it takes to sit down on the throne in the bathroom).
Big banks have grown addicted to easy and nefarious profits and now find themselves facing a loss of their drug, slapping fees to use the very cards they pushed everyone to use is not much different than a drug addict stealing money from a friend to get his next fix.
Have banks become nothing more than a service provider, charging you to use your own money? When you put it like that, it sounds ridiculous. Who would say... "Here, hold my money and feel free to make money off of it, and when I want to use my money that you’re making profits off of, charge me as much as you can so I nearly go broke. That way, I can apply for a loan with you."
Consumers should do their research and find banks that will work with you without fleecing you, they do exist.