Should you place your hard earned dollars in the hands of the Bank of Americas, Citigroups. Wells Fargos, and JP Morgan Chases? Most of the large banks have had short term hiccups but the big banks have always been able to find a way to generate profits over the long term. That is because banks are great at coming up with new ways to generate revenue. The revenue that is generated often comes at the expense of the banking customer. While big banks may merit an investment during times when the share prices of low; they are often a bad bet for the small banking customer. Here are a few of the reasons why.
Banks have come up with even more fees for 2012. Banks are now charging business account holders a “FDIC fee” that they claim is a government fee charged for FDIC insurance. This fee is being charged to business checking, payroll, and non-interest bearing accounts. The government has charged banks no such fee and banks are lying to customers to make even more money.
The big banks are about to sock customers with monthly fees for accounts that used to have no fee requirements. Banks are going to charge monthly maintenance fees for customers that do not bank online, keep a large enough monthly balance, or buy enough banking products. Customers would have to open credit card accounts and charge more money monthly to avoid the service fees. Banks are encouraging customers to buy their products and take on more debt just so they can add more money to the bottom line.
Banks know that the average customer cannot afford to keep $1,000- $5,000 lying dormant in a checking account. They prey upon the financial vulnerabilities of their customers.
Tougher Loan Requirements
I have always marveled at the fact that a lot of people bank at financial institutions that would never grant them a loan if they needed one. Banks like Bank of America regularly reject its longer customers despite the fact that they may have a decent credit score. Credit unions and smaller banks are much more likely to lend money to long term customers with fair credit scores.
Let’s take a look at how banks are making you poorer. Let’s say you bank at one of the larger banking chains and they charge you $8.95 a month for the privilege of having a bank account with them. That means you are paying $107.40 per year. Over a lifetime, you could easily wind up paying a bank nearly $7,000 in fees. If you have a small business, you could easily be socked with an additional $12.95 monthly fee. This would cost you $155.40 annually and more than $10,000 over a lifetime. This is just for the privilege of having a bank account.
Credit unions, smaller banks, and online banks are much smarter bets. You can place that monthly fee amount in a savings account or with a bank that has no fee checking. This is a much wiser use of your financial resources.