Banks Are Actually Losing Money to Service Your Checking Account

Marina Shifrin

By , Staff Writer
Posted on Tue Dec 13, 2011, Last Updated on Wed Jan 25, 2012

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In the past year big banks have cut their free checking programs by over half as they try and make up for lost profits due to the controversial Dodd-Frank act. By capping swipe fees to encourage merchants to lower prices, the Dodd-Frank act ended up pushing banks to eliminate free checking, add annoying fees to basic services and find other ways to increase profits.

A study from Moebs Services, showed free checking accounts were actually costing banks their profits — potentially the main factor leading to their fee restructuring.

American Banker sat down with Mike Moebs of Moebs Services, a firm dedicated to improving the performance of financial institutions through research, and they found some interesting statistics.

Free Checking Accounts Cost Banks Profit

Moebs told American Banker that the average checking account cost banks $349 this past year, and with an average revenue of $268 per account this means banks are posting losses of $81 for the typical account. How does this work?

Well, the calculations take into account overhead costs including salaries, security and compliance expenses, as well as product development and sales costs. Considering nearly half of checking account customers do not help banks turn a profit, the move to start charging for various services makes more sense — from a business stand point.

Moebs Services is not the only organization to spot a discord in banking revenue and services; financial consulting firm Oliver Wyman noticed the same thing as noted by the New York Times. According to the way things are currently moving, “banks would need to recoup, on average, between $15 and $20 a month from each depositor just to earn what they did in the past.”

On top of the poorly performing checking accounts, big banks also have to worry about the expected $5 billion cut in revenue due to the debit card swipe fee caps. These dismal figures will not plague all banks though; smaller institutions are not only avoiding the debit card fee caps, they even pay less to sustain checking accounts.

Fee Changes to Expect

As a quick rundown of what you may see, we’ve compiled a list of fee changes. Some have been tested, some already implemented and some merely speculated:

  • increasing card replacement fees
  • mobile deposit fees
  • checking account fees
  • electronic transfer fees
  • increases in monthly maintenance fees

These are just some of the fees you may see. Some banks offer alternative solutions to avoid these fees, but you have to be able and willing to sift through all the fine print.

For some of the larger banks there are ways to avoid these fees. Check out these “How to Avoid Checking Fees” stories for U.S. Bank, Citi Bank, Wells Fargo and Chase.

Do You Feel Bad For Big Banks?

It’s going to be difficult to find people who pity these large billion dollar institutions, but at the end of the day the banking industry is still a business, and that business’ profits are rapidly declining.

Business or not, the average consumer (and nearly all the commenters on both stories) are not buying it. With banks still raking in billions of dollars a year, consumers do not see why they need to be penalized for the banking industry’s blunders. We’d like to know what you think, leave a comment in the section below:

 

Post a Comment

  • http://twitter.com/FinancialBrand The Financial Brand

    So if Moebs is calculating all assigned costs like branches in its $349 figure, then the smart strategy would be to grow as many checking customers as possible. There aren’t that many costs directly fixed to a checking account — postage, ATMs and tellers. The point is that each additional checking account added will not cost the financial institution $349. It costs less.

    • Sunk818

      Banks could also better control their costs like not rewarding incompetence via bonuses, or figuring out other ways to reduce cost.

    • dutchs

      You’re forgetting that somehow money from Bank A has to get to bank B. If I write a check on Bank A and the retailer banks at B, somehow that money has to be tracked and accounted for. Back when it was all paper checks, clearing houses took care of it, and it cost about 50 cents to process a check. Now we have ATM’s that have to be repaired, stocked with money, etc., and bandwidth that has to be paid for. Even with electronics the accounting has to be tracked, maybe even more so given the risks of hacking. Try cashing a bogus Ebay check, and you’ll find out personally there’s a difference between a check “clearing,” and the remitting bank actually releasing the funds. I suggest writing a few complex Excel macros or Visual Basic programs before you assume that it’s all free now that everything’s computerized.

      • flyonthewall

        However, you forget that banks went to ATMs because it allowed them to reduce personnel (Tellers). Checks clearing vs releasing of funds (a check vs a “draft”) have always been around and banks cancel each other out because they all “hold funds”. And electronic banking was adopted because it got rid of all the paper and personnel required costs for paper checks and statements. By going to electronic statements the banks shifted the cost burden of ink and paper to the consumer. Yes, you have additional cost for bandwidth etc, but to say that the sosts are more than personnel is simply not true.

    • Robert T. Jenkins

      If, in your words “… the smart stategy would be to grow as many checking customers as possible …” a prudent individual would realize that an increase in the number of checking account customers would cause the cost of servicing those accounts to rise.  If the average branch of major branch banking institutions, such as Chase, Citibank, or Capital One were to experience an increase of an average of 500 checking accounts at it’s typical branch, each new account would probably necessitate an increase on funds necessary for clearing house personnel for transactions, bank branch personel dedicated to opening accounts, an increase in online banking transaction activity, increased use of automated telephone customer service systems, and increased costs for postage of checking account statements, as well as every other increase of resources necessary to devote time to the servicing of this increased number of checking accounts.

      • http://thefinancialbrand.com/ TheFinancialBrand.com

        When capital and fixed costs like branches are factored into Moebs’ equation, the average cost of servicing a customer will go down as the number of accounts grow. Moebs’ calculation of average costs today already accounts for variable like service reps. If the cost to serve 1,000 customers with 10 employees today is $349 per customer, the average cost to serve 2,000 customers with 20 employees would still be $349. Actually it would be lower, because you don’t need to build a new branch to serve those 1,000 extra customers.

  • Dillon Davis

    Does this ‘loss’ take into effect the bail out?  Does the cost of offering said checking accounts take into account the outrageous earning of the top bankers?  ‘Wealth vs: commonwealth’.  And; ‘Power corrupts and absolute power corrupts absolutely’.  Same old game, different players.  Perhaps when the Tea Party and OWS folk realize they have more in common than the 1%, change will begin.

    • http://twitter.com/FinancialBrand The Financial Brand

      The bailouts had to do with recapitalization. Read up on “bank capital requirements” and you’ll get a better idea of what was going on. It wasn’t free money, and it’s not something banks would have ever accounted for as an operating cost.

      • Sunk818

        They deregulated themselves and over leveraged. And why is that my problem? Let them all crash and burn. We will survive.

        • http://www.mybanktracker.com Marina

          Although it’s not likely that banks will actually “crash and burn”, do you think people will just move all their money into credit unions? Or become unbanked all together? Either way it will probably be very difficult for businesses to operate, then again there are all these online institutions coming out like Simple and PerkStreet, but they still rely on banks to operate. 

  • Ingram091

    Thing is they use your money to do things that are suppose to make them profit.  without our deposits banks are NOTHING.  They in turn have no right to my money.  Indeed if everyone of their customers demanded their money be withdrawn it would destroy the bank.  they would be unable to fulfill their obligations.  it is in their best interest to keep this from happening.  Though in some cases it may be worth while to withdraw your money from banks abusing their customers and make deposits in banks that have more respect for the customers that choose to deposit funds in their bank and allow them the opportunity to benefit with those funds.  Now if the big banks want to be rid of the Debit cards they DEMANDED we use well so be it.  cancel them.  I always preferred the Pin protected ATMs anyway.  And indeed going in and dealing with deposits in person and buying with cash is my preferred method to prevent overspending.  But thats me.  Banks that abuse their depositors deserve to have a run on them and have a dire lack of account holders.  Is that any different in what they are doing draining an account to zero with fees and then charging overdraft charges for not having enough in the bank for further fees?  Such actions effectively make a customer and plaintiff in a lawsuit.  how is that a method for profit? More like a strategy for defrauding their customers.

  • James Scherber

    Taking into account salaries?  You are kidding right?  Looking forward to extinction for big banks with employees making multimillion dollar salaries and bonuses claiming poor mouth.  Who wrote this piece of poorly researched apologist nonsense?  

    • Jjets

      Where is your expertise in making this comment? 

  • CRANKYOLDMAN56

    CRY SOME MORE!! BAIL ME OUT AT THE SAME TIME AND MAYBE I’LL CONSIDER FEELING SORRY FOR THE “BANKS” BILLIONS IN PROFITS- BIG BONUSES- WHILE THE AVERAGE WORKER WHO NEEDS TO USE THESE BANKS,LOSES EVERYTHING!

  • Anonymous

    How much are they paying you to write these lies???  Deceit such as this should be a criminal act punishable with JAIL time.

  • Dougecat

    After bailouts, broken mortgage relief promises, and the fact they can still manage to pay huge bonuses and salaries to top people, I have no sympathy for their bottom line let them make less or go out of business. They greedy asses brought this down on their own heads!

  • D_nagpal

    If this were true, banks would have stopped taking in new checking account.

    Also, the way of calculation is incorrect. Is 349$ the incremental cost of a checking account? That is if I open one more checking account, will it cost the bank 349$ more. No, it will cost them a few cents more. The figure of 349 includes the fixed expenditures like salaries, ATM setups, branch costs etc.

    • http://thefinancialbrand.com/ TheFinancialBrand.com

      That’s precisely what I was saying at the top of the comments.

  • Danmac

    don’t believe these numbers the assigning of costs is always arbitrary and manipulated to make this kind of case. Checking accounts which receive direct deposits and from which on line payments are made and there are no paper transactions couldn’t possibly not be profitable. Who are you trying to kid. 

  • Shakeytown

    Bah blah blah more bank propaganda. Here’s something they can expect from me. Charge me for my checking and see how fast I switch to a credit union. Correct, banking is supposed to be a business, except when they are destroying an economy for fun and profit. So they should have to compete for my business, and charging me more for something that has been built (by banks) into a necessity to do business in this country is not the best way to do that. Bank management can kiss the south end of my north bound goat before I’ll believe anything they tell me, including the time of day.

  • Autisticwonder

    Banks make money on overdrafts. They make money by loaning you money that doesn’t exist. So forget any sympathy from the little guy! Banks make tons of money and they don’t need to charge for checking to make it!

  • TreTark

    I for one do not feel sorry for them.  They use our money to make more money, and then nickle and dime us to death because we do business with them.  Let them recoup some of the money they are supposedly losing, by cutting out those million dollar salaries and bonuses being paid to the CEO,s,  CCO,s,CFO,s , etc.,which would save them quite a bundle right there.  They need to stop complaining and start doing by their customers, who after all, are keeping the ones keeping them in business.

    • Anonymous

      …and unicorns should deliver your bank statement each month. As lovely as your ideas sound, there’s one big problem: what you think the banks should do and what they actually ALWAYS do are two entirely different things. It’s the little guy who always end up holding the bag. You may thank the ‘good intentions’ of the your dear Leader and his liberal minions for these increases.

      • Mr. Commonsense

        you dumbass, you seem to forget who was in office when all this went down and just because Obama followed through with the bailout of Bush’s, to try and fix eight years of deregulations and the federal reserve catering to big money and wall street is why things are so messed up. I am not a liberal or conservative, I am a person who thinks for themselves not what a political party or fox news tells me, you should try it sometime. 

  • Timholtsr

    This author is ignorant of how the banking system works. People accept these “fees” as the propaganda like this article paves the way. Here’s how the system works:
      Checking accounts are referred by the FED as Demand Deposit Accounts. Banks are allowed to “create” money out of thin air, based on the amount that you have in a checking account. They must hold a certain amount as “reserves”, depending on how much money the fed wants to have in circulation. When you place $1000 in your bank, and the fed decides reserve requirements are 10%, your bank creates $10,000 , less $1000 (9k) and loans it out at interest. So 9k loaned at say 10% annual interest equals $900 per year.
        How is that losing money? Next time your bank tries to stick you with a “fee”, calculate how much you have placed in the account in a year and how much money they made loaning it out. Then tell them all that future money is walking over to a credit union (they don’t have the ability to create money, they are essentially a membership organization that pools money and loans to members).  Then tell the bank manager that you are thinking about going down to the courthouse and challenging the “fee” (unjust enrichment, fraud, etc…). Let them know you will be happy to discuss the matter in court with their $200 hr lawyer and a jury that would love to make their opinion known on the matter.
       I have never paid a “fee” or charge to have an account to a bank or credit card company. And they did try to get fees from me…quite often. Educate yourselves…Ignorance is expensive and will keep you poor. If you like to pay fees, The fee for reading this is $20. send to me !

  • Chastmorris

    I work for a major financial firm and the story is true. We now impose a “transfer” fee if you try to take your account elsewhere of $75. We charge and annual fee of $150 and we charge a “maintainence” fee of $90 per year as well. One thing that readers should know is that as a “banker” I don’t want your $5,000 checking account. I don’t want your “college savings” account either. In fact, I don’t want your account if it has less than $100,000 in it. Period.

    • Realist

      You lethargic devil, How about everyone who has an account with less than a million in it makes a run on every major bank in the country. Anyone one who would do business with someone like you is either clearly stupid, or a devil themselves. With a 100,000 in my checking account I would gladly tell you to suck one if you wanted to charge me to store it. Also if you tried to impose a transfer fee on me wanting my money i would gladly spend hours in court with you. Customers just won a law suit against Boa for fraud and excessive fees and overdraft. After studying the case Ive decided to get a lawyer involved in a similar case against td bank north.

    • Rick3

      Just proves how self-serving and morally corrupt banks have become.  Little depositers created banking.  You greeddy phuqs need to be heavily regulated again to prevent your legal thievery.  I seriously doubt banks could survive if they only had accounts with over 100k because they would not have enough on hand to continue their Ponzi scheme – yea – banks are nothing but fraudsters.  Like BOA charging me interest in advance when there is no balance and no debt.  What is the interest for?  Simple line their criminal pockets.  I would like to see banks and their decision-makers prosecuted under the RICO statute as organized criminal enterprises.

    • Armchair Pirate

      Wow, you really are a greedy bottom feeder. You are the people that need to be removed from any kind of power….then just removed or at the very least sterilized. 

    • Dntrnt

      just name your financial firm, and i,m sure that some of your depositors will fix that for you.

  • Realist

    First off this article is misleading, banks only loose money on checking accounts with less than a certain amount, so in all actuality the banks have still been highly profitable, bank of america for example making billions and high officials receiving millions in bonuses. I for one am not going to pay someone to hold onto my money and give me a debit card. Thats ridiculous, Most of these institutions knew exactly what they were doing 

  • Bugmartin

    the banks have a right to make a profic.Nothing is free anymore.

    • Air Lar

      Nobody said they don’t have a right to make a profit – they said this article is a load of horse dung, which it is. However, the unscrupulous methods by which banks make much of their “profit” are beyond disgusting.

  • Rick3

    This article is so full of false assumptions and disingenuous self-serving information as to render it totally unbelievable.  First, the actual processing is computerized and they no longer meet daily to reconcile with other banks and exchange paper.  Second, accounts that maintain over the minimum balances are profitable and the bank uses your money all the time for their own self-interest like a giant Ponzi scheme.  Third, banks have been more profitable since TARP that any claim they are not is totally ridiculous.  Just look at JPM-Chase who just announced record profits in Q4/11 and we will see next week and I bet the other big banks made big profits too.  Banks are legalized thievery and we can thank phaggot Barney the Dinosaur for the fiasco.  He will be living high on all the under-the-table $$$ he got.  He was broke when he first ran for Congress and now is worth millions – how does that work on a Rep salary?  It doesn’t- he is a corrupt thief like most of Congress is.

  • Mike King

    Don’t feel sorry for the banks.  And no they didn’t go down because of decreasing check fees!  Every dollar placed into banking is worth four more by the time it goes through the system.  With more of those dollars, money is loaned through credit cards, installment loans, car loans, and to other businesses who put the dollars to work elsewhere.  If you paid 200% interest on a loan thern they stick you for higher checking fees every year, where is the loyalty?  Were you impressed by how quickly the banks paid off the stimulus loans?  I was too.  Maybe they don;t need any more help?  I wish  I could loan money out for the interest rates they get on bank mortgages, credit cards, and checking fees.  I was a customer of wells fargo for 27 years.  They tacked a ten dollar charge onto my account because someone called to verify a check!  When I threatened to close checking and savings accounts,they  never blinked an eye as they asked if I prefer my mony by cash or check. 

  • Jfreejr

    Banks are high end criminals! Moebs is in bed with the banks to come up with such nonsense. Their 
    “creative” accounting is very much like Hollywood.

  • http://pulse.yahoo.com/_NY72T2OMDZ7TLA2WQMY6FCGTAM drzoon

    I have between $5 – $10,000 in my checking account on any given day. but even it was more a more modest account I sure as *heck hope the bank knows how to make money on my money while they have it. 

    • Frobisher1

      Banks — I mean custodial fiduciary institutions that primarily offer checking, savings, CDs, etc. — that are not authorized to gamble with depositer’s funds (such as selling depositers so-called products on a commission basis), and who loan money generated by savings and checking, very prudently, without engaging in usury (like credit cards charge), should have no trouble. being profitable. The financial world has been turned upside down in the last few decades. Stock brokerages calling themselves “banks” is misleading. Allowing brokerages to becpme insured by FDIC is wrong, and misleading. It is surprising that the FDIC does not insure Indian casinos, and race track bookies! Credit card companies should never be FDIC insured, and never be identified as banks.

      In regard to drzoon’s  “hope”, I want to add this comment: I am not a banker presently, but I was earlier a vice president of a mid-size “trust and savings” bank, and my specialty was lending short term construction funds for income producing real property, and arranging for subsequent long term outside investor loans which paid back the construction funds to my bank.

      My bank, and our investor institutions, had solid, common sense rules concerning the multi-family projects, the office projects, condominiums buildings, shopping centers, warehouse parks, and special purpose properties we funded. Out of the many dozens we funded over the five years, we had only one forclousure — a 24-suite medical office property — where we and the owners were blind sided by an unrecorded easement on the land, that all of us, including the title insurance company, didn’t know about. We had no monetary loss, because we were insured. The borrower lost his investment.

      In these complicated but typical lending activities, we were using bank depositor’s money. They lost nothing. Our banking executives all regarded it their duty to be fiduciaries. A bank should be the guardian of depositor’s monies.

      I, and no one else in our bank, was paid on a commission basis. Lenders on commission tend to strech the limits, and engage in risky behavior. That is bad banking. Money can be made by banks acting responseably. My experience with my employer bank showed me that.

    • Dntrnt

      you miss the point , no one care that the banks make money from your money, its the fsct that they are charging you for the privlige useing your money

  • jihobby ist

    “the Dodd-Frank act ended up pushing banks into eliminating free checking, ” 
    Marina Shifrin Marina Shifrin works for a bank and she’d paid to be forgetful. “Free Checking” existed before Dodd-Frank. Get your fact strait.

  • Midnight Fapper

    What’s the big deal about paying for a bank account? This is how most the world works. I pay service fees on all my cheque accounts (personal and business) and receive outstanding service as a result. Definitely worth the the trivial amount of money.

    Why is it americunts must have absolutely everything for free? Are they special?

    • http://pulse.yahoo.com/_5S66INZOKPMIL3IOS5K7F43DIQ Me

       Hey, you wanna pay, go ahead.  You want to lump all Americans together, so you can badmouth us?  Why, are you a duduhead?  Are YOU special?

  • Anonymous

    Mostly, I feel sorry for me and those similarly situated. I / we were having our costs for various banking services covered by the financial profits of others.  As they say, “Now, not so much”.
    Am I grateful to the “remedial” governmental measures that have lead to the current situation (and I fear have much more mischief to accomplish)? 
    No.

  • Kk4mr123

    I don’t use banks I belong to a credit union.  I left banks a long time ago because of the fees. Competition is a wonderful thing.  Some say the fees are too high I really don’t know, high relative to what?  What you have to look at is the difference between what the banks pay you and what you have to pay the bank in interest for loans.
    Loans at present have very low interest rates but so are CD rates.  The banks at present are making a large profit.  Banking is a free enterprise business and if the want to pay large bonuses so be it.The Obama (Democrat)  solution is The Dodd-Frank Act. Sen Dodd did not seek reelection because of a  sweet heart deal with a large mortgage broker.  Congressman Frank is not seeking reelection because of his failed oversight of Fannie Mae and Freddie Mack.  They backed loans that people could not repay.And now we are stuck with this new government attempt at “fairness”.  You haven’t seen the new fees the banks are going to charge thanks to the ACT.

    If the banks had been allowed to fail or go bankrupt we would be well on the way to a good solid recovery.  It would have cleaned out a lot of poor banking practices.  Nothing has really changed except the National Dept is steady rising.

    • JustAThought

      I don’t pay much attention to the machinations of politicians, but I have noticed that, on the bank bailouts, no one in government, media or even academia has ever described in detail the exact sequence of events that we were all made to fear so much by claiming that, if the big banks failed, the global economy would collapse.  We got, and still get, only sweeping statements about a domino effect, but no one has ever explained why the money that went to bailing out the big banks and Fannie and Freddie (and ended up in foreign banks) could not have been held back and used to protect smaller local banks from any consequences of the big banks failing. The U.S. effectively bailed out all our banks’ foreign creditor banks with our tax dollars.  The foreign banks should have been left to seek help from their own governments, who could then have asked the U.S. Treasury Department for assistance on a government-to-government basis, which would have enabled us to negotiate something of value in return for any assistance we might have given.

  • Independent 1

    I think it unconscionable that all of us are having to tighten our belts, but the banks, their executives, the wall street financiers, and corporate CEOs, who have all been receiving outrageous profits and bonuses for years, find it unacceptable that THEY should accept lower profits.  If we can make it on less, so can they.

  • bruce Dumais

    you mean Barney Frank’s work is not good policy….wow yes just like the home loan BS he put together so people with bad credit could get loans…of course the liberal media would never say that.

  • http://twitter.com/Liberty4ALady Lady Beth

    Hahaha lets gets some facts to the people about how banks really make their money! http://youtu.be/JXt1cayx0hs

  • http://pulse.yahoo.com/_2P7RH6YMYKNGVYAHBCERTE6X2U Christopher

    Banks aren’t loosing money…..

  • Air Lar

    Please stop – you’re breaking my heart.  FYI – Banks lose money on checking like casinos lose money on free drinks.  What a STUPID article. I don’t mean to be harsh, but you should write for Highlights…

  • grace white

    My heart bleedsfor tjhe banks.  Maybe the homeless and unemployed should contribute to them

  • Micholina

    I never knew a poor banker…..do such people exist?

  • http://pulse.yahoo.com/_W3FJPTY4WXVBBBT53RWRLSBQHE HOSS

    Trust me Banks Are NOT Losing Money!!!  With their crazy intrest rates they make up for their so called “Loss”… I dont feel sorry one bit!

  • Daniel Mahan

    Boo hoo banks make plenty loaning out deposited money at 15% while paying less than 1% interest…I could honestly care less about banks losing money on checking accounts…..

  • Bobkins

    The whole idea was to cut their profits, which have been absurd and ridiculous when you consider they make those profits with our money, and pay us nothing for it. I don’t believe for one minute that they are “losing money” on Free Checking. That is only true if you’re comparing For-Free Checking to what they’d be making with For-Fee Checking. It’s only a loss if you hold up something bigger to compare it to. 

    When banks make money with our money, they should have to share that money with us in the form of interest paid to us. Free Checking does not drain their industry. 

    Quit listening to bankers, who have come to believe that if they don’t personally profit in the tens of millions each year (with their banks in the hundreds of billions), they are failing. 

    • Frobisher1

      Bobkins is “right on”! Currently, if an individual “loans” his or her money to a typical banking institution — say purchases a Certificate of Deposit — that will earn a typical rate these days (of usually less than going inflation of 3% + or -), that individual will have to pay federal tax, and likely state tax, on the so-called earnings. That said, a time-deposit ties up one’s money, which is also losing purchasing power via the inflation factor.

      Years ago, when I was a bank officer, I felt proud of my profession. I was contributing to the success of the American economy. If I were a banker today, working for a financial institution that charged usurious rates and nickle and dimed its clients, from which a bonus would be forthcoming, I would have to be ashamed.
      _______________________________________________________________________ 

      Banks — I mean custodial fiduciary institutions that primarily offer checking, savings, CDs, etc. — that are not authorized to gamble with depositer’s funds (such as selling depositers so-called products on a commission basis), and who loan money generated by savings and checking, very prudently, without engaging in usury (like credit cards charge), should have no trouble. being profitable. The financial world has been turned upside down in the last few decades. Stock brokerages calling themselves “banks” is misleading. Allowing brokerages to becpme insured by FDIC is wrong, and misleading. It is surprising that the FDIC does not insure Indian casinos, and race track bookies! Credit card companies should never be FDIC insured, and never be identified as banks.
       
      In regard to drzoon’s  “hope”, I want to add this comment: I am not a banker presently, but I was earlier a vice president of a mid-size “trust and savings” bank, and my specialty was lending short term construction funds for income producing real property, and arranging for subsequent long term outside investor loans which paid back the construction funds to my bank.
       
      My bank, and our investor institutions, had solid, common sense rules concerning the multi-family projects, the office projects, condominiums buildings, shopping centers, warehouse parks, and special purpose properties we funded. Out of the many dozens we funded over the five years, we had only one forclousure — a 24-suite medical office property — where we and the owners were blind sided by an unrecorded easement on the land, that all of us, including the title insurance company, didn’t know about. We had no monetary loss, because we were insured. The borrower lost his investment.
       
      In these complicated but typical lending activities, we were using bank depositor’s money. They lost nothing. Our banking executives all regarded it their duty to be fiduciaries. A bank should be the guardian of depositor’s monies.
       
      I, and no one else in our bank, was paid on a commission basis. Lenders on commission tend to strech the limits, and engage in risky behavior. That is bad banking. Money can be made by banks acting responseably. My experience with my employer bank showed me that.

  • Anonymous

    Oh my! I guess I’ll go to bed tonight  praying for God to help our poor little bank e poohs!

  • Justinlrankin

    You want me to cry for banks that make over 100% profit on mortgages, 76% on auto loans, etc Really?

  • http://pulse.yahoo.com/_6X2QXCRRC36352OKJROOPADS2Q Richard

     They used to BEG for us to deposit our money, offering various enticements such as toasters, blenders, whatever. They used OUR money to loan to others to make THEIR money well beyond prime interest rates while paying little or nothing for funds they’ve borrowed from the Federal Reserve.

  • http://pulse.yahoo.com/_KBOR4FV5YHNW532CAVJ7NUETIA Anna

    Yeah, I feel sorry for banks.  They borrow money from the feds at 0% and lend it out for more.  They need the fees to pay bigger and bigger bonuses.  My solution:  Join a credit union.  I refuse to contribute to their cause.  See?  My non-checking account costs them nothing. 

  • Cain

    Bullfeathers.  Banks earn interest on average daily balances they hold, including checking accounts. These earnings more than offset the expense of servicing the accounts.  What is the purpose behind this propaganda?

  • Dntrnt

    banks make money from the checking accounts by havivg use of that money while in their bank,it,s billions of dollors that are in transit that the banks make money from, one that comes to mind is chashing a ck, from another bank. if you have no account their that the ck, in written on, you are charged a fee for them to give you your own money. my heart bleeds for the bank,s as much as their,s do for us.

  • Flamethrer

    I think the banks customers should not be bitching about the fees.  Instead of bitching just go to a local bank or local credit union and put your money in them.  I took my money out of BOFA and put it into a credit union called iqcu and believe me it is a lot less hassle and worry.

    I can get loans from IQCU cheaper then I could get them from BOFA without collateral 14% with collateral 3.25% and it helps raise my credit rating.  Oh and don,t worry about the people that get laid off from the big five in Vancouver BOFA laid off several of their employees and the credit unions hired them.  It seems so many people left BOFA that credit unions had to hire more tellers to handle the business lol.

  • http://profile.yahoo.com/MAZAN2FSFEE72BFH5FVTFGYCJA B PL

    I have had a heated battle with Wells Fargo about their overdraft fees. They are ridiculous and once you are hit hard, you are never able to stem the flow because they don’t give you a full pay period to make up the actual money they have advanced to you. It is a nightmare and has you in debt to them with every paycheck. The fee itseld should be either appropriate to the amount of the money put forth by the bank. You should not be charged a $35.00 fee for a $6.99 amount. They are so greedy! A sliding scale with a max amount of $25.00 shoud help. More importantly, they should allow their customer to catch up without adding any further fees for a set period of time. Anyone agree?

    • http://www.mybanktracker.com Alex Matjanec

      With the recent lawsuits that banks are paying millions to, its obvious that the way they processed overdraft fees was in bad taste. 

      The only bank that has overdraft fees right is ING Direct. They call it a Overdraft Line-of-credit  and charge you 11.25% APR. 

      http://home.ingdirect.com/products/htmls_content/odcalculator.html

      So if you borrowed $100, their fee is $0.31 cents vs $30

  • http://www.facebook.com/people/Ellery-Tuck/100000121509965 Ellery Tuck

    The key is:” According to the way things are currently moving, “banks would need to
    recoup, on average, between $15 and $20 a month from each depositor just
    to earn what they did in the past.”
    These accounts are managed by computer, not individuals as they were in the past.  Most banks were making almost obscene profits, now, with the rule changes, they are having to adjust to less income. 
    Welcome to the consequences of the Bush II world.  The question is, how do their profits relate to other businesses?  Perhaps the banks were simply ripping the public off in the past?

  • http://pulse.yahoo.com/_7JEBEB6NM5BXACFIIOPMXNZHAM Leon

    Keep your money in a cookie jar or under a mattress. There isnt enough interest being paid on savings accounts. Use Currency Exchanges. Debit cards are nothing but status symbols. Buy on credit only when absolutely necessary mainly for large items such as cars. Just save for that new TV etc in the cookie jar.

  • Lauramd666

    Working with budgets in grants and other programs, I am curious if, in calculating all assigned costs, that means that they accounted for salaries and other overhead in the proper percentage of what actually goes solely to servicing checking accounts. Not ever person in every branch, not every teller, spends 100% of their time servicing checking account customers. Therefore, only the overhead representative of the percentage of use in servicing checking accounts should be considered as “costing” the banks for that function.
      I wonder if that would change the ‘costs per account’ figure quoted.

  • Flyonthewall

    Having worked in bank management for years, I can truthfully say the REAL reason banks fail to make a profit is outdated internal practices, over-abundance and top-heavy management personnel and really DUMB business practices. The adage “I’m from the government and I’m here to help you” could be easily changed to “I’m from the bank and I have your best interests in mind”. Any bank that fails to make a profit took on risky business and didn’t control their costs – PERIOD.

  • Anonymous

     Many people forget that banks went to ATMs because it allowed them to reduce personnel (Tellers). Checks clearing vs releasing of funds (a check vs a “draft”) have always been around and banks cancel each other out because they all “hold funds”. And electronic banking was adopted because it got rid of all the paper and personnel required costs for paper checks and statements. By going to electronic statements the banks shifted the cost burden of ink and paper to the consumer. Yes, you have additional cost for bandwidth etc, but to say that the costs are more than personnel is simply not true. 

  • Dwighthale

    Your article failed to show the difference between a “loss of former profit” and a true “loss from allowing the free checking account”.  The article reads like it was written by a %1 person.

  • responsible

    I still have to read a law that states that big banks MUST be protected and remain in business.  Dump them and head for smaller institutions that actually appreciate the business.  Or, stay with them and don’t complain when they use you as a gravy train / cash cow.

  • Oldpartsnrust

    The main thing that the press and the banks seem to forget is that when we put funds on deposit, they use those funds to generate revenue by making loans with that very money or other investments.  Why has this fact gotten lost when the banks cry about how they are not making as much money as they used to?  Joe public’s money is why the banks exist at all.