Comments on: How Banks Make Money http://cashmoneylife.com/how-banks-make-money/ Money Management, Small Business, Career Thu, 09 Feb 2012 19:08:34 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Ryan http://cashmoneylife.com/how-banks-make-money/#comment-24661 Ryan Tue, 20 Jul 2010 01:40:59 +0000 http://cashmoneylife.com/?p=2553#comment-24661 I've been using the debit card and cash back trick for years. I'm sure the bank loves seeing a $0.73 purchase with $40 cash back. It's the primary way I get cash! :) I’ve been using the debit card and cash back trick for years. I’m sure the bank loves seeing a $0.73 purchase with $40 cash back. It’s the primary way I get cash! :)

]]> By: myfinancialobjectives http://cashmoneylife.com/how-banks-make-money/#comment-24660 myfinancialobjectives Tue, 20 Jul 2010 01:21:00 +0000 http://cashmoneylife.com/?p=2553#comment-24660 I love this line: "Well, first, it doesn’t mean banks are evil." That gave me a good chuckle.. I agree with you though, Banks are making a KILLING! Loaning billions of dollars out with even an average of 3% interest and, honestly, how can you loose? I fortunately don't get slapped with too many bank fees. I have yet to overdraft, and really don't do too much with my bank, not even visit ATM's, if I need cash, I'll buy a pack of gum and get $20.00 back:) I love this line: “Well, first, it doesn’t mean banks are evil.” That gave me a good chuckle..

I agree with you though, Banks are making a KILLING! Loaning billions of dollars out with even an average of 3% interest and, honestly, how can you loose?

I fortunately don’t get slapped with too many bank fees. I have yet to overdraft, and really don’t do too much with my bank, not even visit ATM’s, if I need cash, I’ll buy a pack of gum and get $20.00 back:)

]]> By: Eric A http://cashmoneylife.com/how-banks-make-money/#comment-24650 Eric A Mon, 19 Jul 2010 16:13:48 +0000 http://cashmoneylife.com/?p=2553#comment-24650 I recently switched from Wells Fargo, as they charge fees for almost everything. I was once charged for checking my balance from another ATM. I recently switched from Wells Fargo, as they charge fees for almost everything. I was once charged for checking my balance from another ATM.

]]> By: kt- lifedividend http://cashmoneylife.com/how-banks-make-money/#comment-24647 kt- lifedividend Mon, 19 Jul 2010 16:01:58 +0000 http://cashmoneylife.com/?p=2553#comment-24647 and you haven't even scratched the surface. I did actuarial science in college and in some classes, they showed us exactly how loans and mortgages are calculated. In a nutshell after you are through with your payments, you may find that you will have paid almost double what you borrowed over the term of the loan. It is hidden in those effective and absolute interest rates you never understand. You get your eyeballs ripped off every time you go to a bank for a loan. i kid you not. There is also something called fractional reserve banking and it is basically another way for banks to fleece the public and you haven’t even scratched the surface. I did actuarial science in college and in some classes, they showed us exactly how loans and mortgages are calculated. In a nutshell after you are through with your payments, you may find that you will have paid almost double what you borrowed over the term of the loan. It is hidden in those effective and absolute interest rates you never understand. You get your eyeballs ripped off every time you go to a bank for a loan. i kid you not. There is also something called fractional reserve banking and it is basically another way for banks to fleece the public

]]> By: Ryan http://cashmoneylife.com/how-banks-make-money/#comment-24646 Ryan Mon, 19 Jul 2010 12:42:53 +0000 http://cashmoneylife.com/?p=2553#comment-24646 Doug, that is an interesting take, and I'm sure it has something to do with the current environment. But I think we are also seeing banks being aggressive trying to <strong>add</strong> to their customer base because the amount of deposits they have on hand is directly related to the amount of money they can lend to customers. Many banks are being aggressive with fees, but I think that is tied to the recent economic downturn as much as anything else. Many banks got hit hard and lost a lot of money in real estate and other bad loans, so being aggressive with fees helps them regain some of their losses. Although interest rates aren't very high compared to a few years ago, right now is actually a great time to shop for a new bank. Tomorrow's article covers how some banks are able to offer higher interest rates and special promotions compared to other banks. Some of the offers are worth taking! Doug, that is an interesting take, and I’m sure it has something to do with the current environment. But I think we are also seeing banks being aggressive trying to add to their customer base because the amount of deposits they have on hand is directly related to the amount of money they can lend to customers. Many banks are being aggressive with fees, but I think that is tied to the recent economic downturn as much as anything else. Many banks got hit hard and lost a lot of money in real estate and other bad loans, so being aggressive with fees helps them regain some of their losses.

Although interest rates aren’t very high compared to a few years ago, right now is actually a great time to shop for a new bank. Tomorrow’s article covers how some banks are able to offer higher interest rates and special promotions compared to other banks. Some of the offers are worth taking!

]]> By: Ryan http://cashmoneylife.com/how-banks-make-money/#comment-24645 Ryan Mon, 19 Jul 2010 12:38:55 +0000 http://cashmoneylife.com/?p=2553#comment-24645 BMT, I hope you are correct regarding adding other value services. I think a lot of banks got lazy by relying on fees as a cash cow and hopefully adding new products and services will be a win/win situation for them and the consumer. As for brick and mortar activities, I think we are already seeing a lot of that. The banks that offer the highest interest rates are primarily internet only banks; those that have brick & mortar facilities o maintain are having a hard time competing with cost. Tomorrow's article covers a bit of this topic (among other things!). BMT, I hope you are correct regarding adding other value services. I think a lot of banks got lazy by relying on fees as a cash cow and hopefully adding new products and services will be a win/win situation for them and the consumer.

As for brick and mortar activities, I think we are already seeing a lot of that. The banks that offer the highest interest rates are primarily internet only banks; those that have brick & mortar facilities o maintain are having a hard time competing with cost. Tomorrow’s article covers a bit of this topic (among other things!).

]]> By: Doug Warshauer http://cashmoneylife.com/how-banks-make-money/#comment-24644 Doug Warshauer Mon, 19 Jul 2010 11:54:18 +0000 http://cashmoneylife.com/?p=2553#comment-24644 Do you think that the extremely low federal funds rate encourages banks to be more aggressive with the fees they charge? It used to be that deposits were the cheapest source of capital for banks, so they competed extremely aggressively for them. But now, since they can borrow money for almost nothing, they have less incentive to build their deposit base. I could imagine this leading to higher fees and less willingness to waive them. Are you finding this to be the case? Do you think that the extremely low federal funds rate encourages banks to be more aggressive with the fees they charge? It used to be that deposits were the cheapest source of capital for banks, so they competed extremely aggressively for them. But now, since they can borrow money for almost nothing, they have less incentive to build their deposit base. I could imagine this leading to higher fees and less willingness to waive them. Are you finding this to be the case?

]]> By: basicmoneytips http://cashmoneylife.com/how-banks-make-money/#comment-24643 basicmoneytips Mon, 19 Jul 2010 11:05:16 +0000 http://cashmoneylife.com/?p=2553#comment-24643 I work in the financial service industry so I am familiar with banks and their many ways to make money. I think this article is accurate in listing out the many ways banks make fees. Obviously some of the overdraft fees are changing now (almost as we speak). I think you will see some banks get creative in other value added services to try and make money. Also, I would think we would see less brink and mortar activities from banks in the future. I work in the financial service industry so I am familiar with banks and their many ways to make money. I think this article is accurate in listing out the many ways banks make fees.

Obviously some of the overdraft fees are changing now (almost as we speak). I think you will see some banks get creative in other value added services to try and make money. Also, I would think we would see less brink and mortar activities from banks in the future.

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