The business of banking has changed dramatically over the last decade. Because the cost of doing business the old-fashioned way is no longer effective, banks are interested in changing their customers' behavior by encouraging electronic banking alternatives whenever possible. They have done this by charging high fees for services that were once free. If you pay $200 or more in annual fees for banking, it's time to do some competitive shopping.
Before becoming furious with your bank, it may be that the products you're using no longer meet your personal needs. If you have an established relationship with your bank, inquire about the other types of lower-cost checking and savings account products.
By understanding the rationale of why a bank charges fees for different services will allow you to be a savvy banking customer. If human contact is required to serve you, such as a teller or personal banker, this is very expensive for the bank. The incentive is for banks to encourage more high-tech, "low-touch" methods of meeting your needs. This is accomplished by servicing as many customers as possible with automated telephone services, cash machines, and online self-service banking.
Since the bank needs to train their employees, provide a paycheck and benefits, pay for the branch building, in some cases supply uniforms etc., it is conceivable that your one banking transaction per pay period could cost the bank $3 or more for your one banking transaction.
If you conduct your banking via an automated telephone system, the cost of this type of transaction is much less expensive. However, if you then require assistance from a telephone banker, the price goes from $1 for the automated process to as much as $2 for human contact. For the same reasons stated above, the training, location, computer equipment, etc. become more expensive when human interaction is needed.
Now it is clear why electronic banking methods are preferred by financial institutions. In fact, most banks are rewarding their customers with lower fees the more the customer does his/her banking electronically. For example, even though Automatic Teller Machines (ATMs) costs the bank around $100,000 each plus the cost of the computer network and maintenance, the cost of these type of transactions drop to $0.50 - $1 each. Not only are these machines more cost effective, the 24-hour availability to customers is very convenient.
With the ease and convenience of Automatic Clearing House (ACH) payments, this "checkless" process drops the price to around $0.25 each. And finally, the Internet drops the expense even further to less than $0.10 a transaction. I realize that there is still some fear of banking electronically, but the security that banks have instilled with computer technology far surpasses the current security of traditional banking methods. If you lose your checkbook and wallet, the cost and worry of canceling these checks is very tedious. It's very possible that a thief could forge your name and deplete your accounts in a matter of hours. The sophisticated computer technology, however, although not perfect, has a far more secure system to protect you and your money.
Avoid being the bank's best customer. Attempt to cut your annual bank fees in half by educating yourself. Inquire about the options and products available to you with your banker. By asking about the alternative banking methods, you may find that your bank fees will drop considerably.
About The Author
Kimberly A. Griffiths
This is an excerpt from ONE PAYCHECK AT A TIME, OnePaycheckataTime.com, by Kimberly A. Griffiths, ISBN: 1591133327. ONE PAYCHECK AT A TIME, a 200 page workbook, contains budget management exercises for an entire year of paychecks. The author, Kimberly A. Griffiths, has been through the vicious cycle of debt herself, and provides a no-nonsense system to managing your money paycheck to paycheck. You customize the journal based on your pay schedule and learn the necessary tools for making ends meet. kimberlygriffiths@onepaycheckatatime.com
Have you ever asked yourself what your highest income producing... Read More
If you don't have discipline then walk away from the... Read More
When Ben Franklin said "a penny saved is a penny... Read More
"It's the business of your life?and you're the CEO!" Gala... Read More
Turn to the year 1999, a couple of friends sitting... Read More
You may think you have to be an entrepreneur to... Read More
SCENE 1: Pharaoh has just woken up from a very... Read More
Six out of six people who were asked to list... Read More
We will start the Financial Fitness System with the assumption... Read More
When I was a student in London, I had a... Read More
They are the object of thinly disguised envy. They are... Read More
In most societies, we are raised to believe in the... Read More
The business of banking has changed dramatically over the last... Read More
Giving and ReceivingIt seems that people generally find it easy... Read More
The vast majority of working people are in debt. The... Read More
Paper burns and large companies can go bankrupt, but if... Read More
What is your attitude towards having wealth? Do you believe... Read More
It's the beginning of a brand new year: a time... Read More
Here are some thoughts about the morphing of thought and... Read More
Loose change that is, if you want a easy way... Read More
We all go to school for about twelve years, kindergarten... Read More
Building wealth is as simple as saving a little bit... Read More
Money can be your servant or it can be your... Read More
Is accumulating wealth as easy as following a 3-step plan?... Read More
If you're reading this article, it means you are a... Read More
Key 1 Pay your self firstkey 2 Saving is not... Read More
Would you like to profit from your own information empire?... Read More
According to Wallace Wattles, in his popular wealth treatise called... Read More
Part of learning to become financially free is to begin... Read More
What does becoming rich mean to you? Is it early... Read More
My First Million took me exactly 27 months to achieve.... Read More
Everyone wants to be wealthy, but most of us do... Read More
Despite what you may have read or heard, anyone is... Read More
I counsel a LOT of people about money. I see... Read More
Uncle Sam and his band of merry-men, better known as... Read More
The rewarding of high compensation packages to top executives who... Read More
I am often amused by the ads and offers I... Read More
The business of banking has changed dramatically over the last... Read More
Everyone dreams of early retirement. The idea of no longer... Read More
Before I had a lot of money, I was really... Read More
When Building Wealth by Russ Whitney was released a few... Read More
Self-Made Millionaires are not smarter or better than you. They... Read More
Is accumulating wealth as easy as following a 3-step plan?... Read More
What is the difference between wealthy people and poor (even... Read More
A surprising number of readers want to know "Can a... Read More
In light of the dominant mindset overshadowing the market these... Read More
We talked recently about the wealth formula:Spend less than you... Read More
Time and time again entrepreneurs are losing out on getting... Read More
I have given many prosperity lectures over the years and,... Read More
There are few things in life that are more stressful... Read More
Wealth Building |