10
Feb
10

A small example of why people don’t trust banks

While strolling through Yahoo today I came across a link to a New York Times article regarding  how people feel about their banks. According to the Times, nearly one third of consumers believe their bank cares more about the bottom line than about their customers needs. Of course business caring more about their bottom line is not shocking, but most of the time they hide it pretty well,  and banks should engender a certain degree of trust, right? After all, this is the place where you are putting your life’s savings, the place that pays your bills. So why do people think their bank doesn’t care? It’s simple; they don’t.

Not surprisingly the two banks that consumers liked the least are Bank Of America, and Chase. I have had accounts with both. My first banking experience occurred when I was 16. I had just received my first job working part time for Golden Fried Chicken. My pay was $4.35 an hour, big bucks, I know! My mom and dad didn’t want to see me squandering away my fortune on such useless necessities like the latest Nirvana C.D., a copy of Spin magazine, or whatever death metal shirt I could find at whatever concert I was attending (Incidentally I went to see R.E.M and Radiohead the week I turned 16.) So not unlike that poor kid with his Toppins’ in Mary Poppins I was marched to the local bank and made to open a savings account. That was Bank of America, and at that time they had yet to consolidate with Nations Bank and become the corporate behemoth they would turn into. I stayed with Bank of America through High School, and after I was eighteen opened a checking account. In college I also stuck with Bank of America, and even procured my student loans through their lending house (back when banks actually loaned money for people to go to school.)

Throughout all this time with Bank of America I never had any reason to question, or really care what my bank was about. I put money in, I take it out, simple huh? But like many people when I reached my twenties I started some bad spending habits.I began to run up credit card debt, and wasn’t as diligent about balancing my checkbook. When I was 25 I was still going to school and working part time for Whataburger. I didn’t make much money and got paid every other week. Because I lived 35 miles away from the nearest Bank of America I only deposited my checks twice a month. One day I went into the Bank to make a deposit and I asked for my balance. -162.56 they told me. Yes, that is a negative sign! How in the world did this happen! This is the first time I learned an expensive lesson in overdraft fees. What happened was that my last check went mostly on bills, and when I made a few key purchases I went under my balance. My bank charged a $35.00 fee for going under. But $35.00 is a lot less than $162, so I was still confused. Well, the bank doesn’t just charge you that one fee, but actually charges you an additional $30 fee for every transaction afte you go under your balance. Over the course of two days, right before I made it back to the bank, I had rung up a few purchases on my debit card ( I think one purchase was a meatball sub for four dollars.) At the time my paycheck would barely cover the overdraft fees and leave me any money in my account for other expenses. I decided to talk with the Bank manager. I begged and pleaded for her to take off the fees. She didn’t want to. I asked if the bank could take off some of the fees, and she wouldn’t do that either. I didn’t close my account that day ( mostly because I had to wait in line to talk to someone else) but I knew then that I would shortly be leaving Bank of America. A few months later I went to Chase, and so far they have been the better bank.

Now I am not here to excuse my poor spending choices. Everyone should learn to balance a checkbook, and in a way Bank of America taught me an expensive lesson, but Bank of America’s policy when it comes to fees is out of whack. Penalizing someone once when they have an overdraft is one thing, but charging a fee for every transaction is just piling on. And if a customer has been with you for awhile (at the time I had been with Bank of America for ten years) and they haven’t had a history of overdrafts why not waive the fees all together? And it isn’t just overdrafts. Bank of America has high fees for funds transfers, ordering checks, and just about any mistake you make. If Bank of America can charge a fee they will, and they are not the only one. Many people tell me similar things about Chase and Wells Fargo. So why do banks do this, when so many customers are turned off by the practice? This is the “pickle theory” of economics at work. The “pickle theory” (it has other names) is basically that if you own a pickle company and you produce however many million jars of pickles each year, and then suddenly you reduce one pickle frome each jar (usually without telling anyone) all of the money saved on those extra pickles will add up to millions of dollars over the long haul. If Banks raise fees, or charge them more consistently on items they used to not charge them for, and banks have millions of customers it won’t take long for those banks to start raking in the extra money.

In recent years we have seen Banks suspend or transfer their student loan divisions. They have consolidated, gone multi-national and have rung up huge corporate debts. Many banks have inderectly swindled people out of their hard earned money through poor management and corporate greed. And while little people like myself get overdraft fees we see some rich C.E.O.’s raking in several million a year. It is no wonder so many people don’t trust their banks. We know when a business doesn’t care about us, even when we don’t say it.

Just recently I finished a book on Mastery principals writted by an Aikido master. In the book, and using Tao principals the author makes the point that often the journey is more important than the bottom line, end result. It is easy for corporations to look at a spreadsheet and determine whether or not they are doing well. In order for a C.E.O. to keep his job he must raise revenues each and every year ( a feat that gets harder the bigger the company becomes). But rather than focus soley on profits, banks and other institutions need to think about the role they play in our society. The companies that treat their customers with respect will earn the most business long term. This goes for banks as well as any other company. If your bank doesn’t respect you then feel free to leave it. Maybe then they will take notice.

Sincerely,

Jack B.

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