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MaxedOutMama found an article that she felt would interest me from a sarcastic perspective. I can't imagine why. It makes perfect sense to me.
November 1, 2011
Bank Fees Are a Credit Union’s Best Friend
Something is wrong when keeping cash in the kitchen cookie jar seems a reasonable substitute for your bank.
Agreed. Something is wrong.
It may feel rebellious -- your own little Occupy Wall Street act of defiance -- and even a bit savvy, given those checking-account fees, ATM fees, and monthly debit-account fees.
Agreed. It does seem a bit rebellious and savvy to avoid fees by cutting out the middleman. In fact, I get that same feeling each time I buy TIPS and I-Bonds directly from the government for free. What a rush!
That little depository institution atop your kitchen counter has big drawbacks, however, including a lack of federal deposit insurance, zero interest, and ease of access that could prove dangerous to your financial health.
Agreed. One must carefully consider the drawbacks. Let's tackle them one at a time.
1. Lack of Federal Deposit Insurance
We absolutely need the deposit insurance because there may come a time when we go to cookie jar and the cash isn't there. Without some sort of insurance, what would happen if we loaned out the money to questionable relatives as part of a "sure thing" get rich quick scheme? What would we do if they can't pay us back?
I'm assuming of course that we are offering NINJA loans based on our love of action movies. Ninjas rock!
I'm also assuming that we aren't too big to fail of course. We clearly wouldn't need the insurance if the money was missing from the cookie jar but the government took it from other peoples' cookie jars to refill ours.
2. Zero Interest
This is a huge deal. My bank currently pays me 0.05% interest on my checking account. That means that if I keep $10,000 in the bank then I will earn a whopping $5 per year. I can use this $5 to fill my gas tank so that I can visit the bank any time I like, presumably to use its drive-through ATM to get some of my cash. How cool is that?
In sharp contrast, my cookie jar pays no interest though. I therefore can't use the money it generates to fill my gas tank. I'm also forced to walk to the cookie jar. Forced I tell you! This is America! At 51 cents per mile, we should be driving everywhere!
And lastly, I have the privilege and right to hoard paper money promises in my bank so I can earn 0.05% interest. It is not something I take lightly. I'm fairly certain it is part of the Constitution, and if it isn't then it should be!
3. Ease of Access
It's just way too easy to get money out of the cookie jar. What I really need are hurdles between me and my money. I've tried rat traps put in there with it but apparently my greedy fingers can outsmart them. That's why I keep money in a bank. What I really need though is the ultimate hurdle. Picture a note affixed to all the branches of my bank. I'm not talking one of those impersonal form-letter bank closure notes. I demand something more cryptic!
`Twas brillig, and the slithy toves
Did gyre and gimble in the wabe:
All mimsy were the borogoves,
And the mome raths outgrabe.
What the @#$% does that mean? Why is it in fine print like that? Is this legal? Is my money okay? Does anyone really care?
Imagine the joy as I push the door of my darkened local branch and it does not budge. The note says it all. Something really good must have happened. I no longer have easy access to my money! O frabjous day! Callooh! Callay! Like the mome raths, I am indeed most outgrabed!
Realtor.com Reports Active Inventory Up 25.9% YoY
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*What this means:* On a weekly basis, Realtor.com reports the
year-over-year change in active inventory and new listings. On a monthly
basis, they report t...
3 hours ago
6 comments:
Very good, Mark. I had a mental bet that you would obligingly figure the interest for the inattentive reader.
I was betting, however, that you would contrast the annual $5 interest return against the $5 monthly debt card fee BOA was planning. That leaves the alert and wise bank depositor only $55 short a year against the pig depositor - but I guess the "easy access" problem would somehow offset all that.
Isn't it easier to access your money in a bank than in the home pig? If I were wandering around and saw something I wanted to buy, under the pig system I'd have to go home and get money out of the pig. In old fashioned pigs, you have to smash the pig. Still, maybe you had a bad day and don't mind beating the pig with a hammer. Then you would have to go back and buy whatever it was - much less of an impulse deal than whipping out a checkbook or a debit card and just paying for the thing you saw.
The article is a thing of awesome beauty, isn't it?
The next thing we have to figure out is what kind of drugs generated that opinion piece. It looks like a bad trip that we don't want to go on.
MaxedOutMama,
I was trying to base it loosely on my own checking account. My bank generously waives the monthly fee if I maintain a balance ($5,000) large enough to generate an impressive $2.50 in annual interest income. They can then use that $5,000 to safely reinvest it in even lower yielding 3-month treasury bills just as nature intended. Bernanke's thought of everything! ;)
As for the pig and hammer, that would be especially dangerous for me. I could see myself easily trapped in the following endless wealth destruction loop.
1. See something I want to buy.
2. Break pig.
3. Buy replacement pig with pig's contents.
4. Put contents of old pig in new pig for safe keeping.
5. Go to Step 2.
This is why we need our banks to break instead of our pigs. It is so much cheaper and more efficient. All it takes is moving a few digits in a database. Banks go from heroes to zeroes! No hammers needed. It can even happen in the dead of night when we are sleeping! That's financial innovation at its finest!
You forgot the best part of banking - overdrafts! If you keep that money in the pig and run out, you just do without out. But with a bank, you can get charged $33 dollars for being a penny short! If you used that penny from the store for your purchase, the poor bank would have to do without. (And yes I did get charged $33 for being a penny short.)
I don't understand banks.
Our bank currently pays us 3% interest on our checking accounts for balances in the range 4500-8000USD. There are no fees on the accounts, or for using ATMs, or for paying off bills by Direct Debits.
I don't understand Building Societies (S&Ls) either.
Ours charges us Bank of England base rate + 2% p.a. on our mortgage loan. It pays us Bank of England base rate + 2.5% p.a. on our tax-free savings account. The amount we keep in that account is roughly equal to the amount we owe on the loan.
Something tells me that these happy arrangements cannot continue indefinitely.
Teri,
How frustrating!
Time for a new saying...
Find a penny
Pick it up
And all the day
You'll save some bucks!
dearieme,
First Citiwide Change Bank II
Paul McElroy: All the time, our customers ask us, "How do you make money doing this?" The answer is simple: Volume. That's what we do.
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