Illinois Teen Learns About Bank Fees the Hard Way

[Admiral Yi]

Riddle me this then, Clarence: banks have minimum balance fees, designed to punitively pile on charges on the poor sucker that can't maintain the minimum balance...but what's the maximum balance fees?  Where do they hit people without economic handicaps?

The maximum balance fees are the interest they earn by loaning out the money on deposit.  They hit people without economic handicaps (as well as those with) through deposit-lending spreads.

[DGuller]

Riddle me this then, Clarence: banks have minimum balance fees, designed to punitively pile on charges on the poor sucker that can't maintain the minimum balance...but what's the maximum balance fees?  Where do they hit people without economic handicaps?

The maximum balance fee, or more precisely the positive balance fee, is the ass-rapery of an interest rate you get when holding money in a bank.

[Admiral Yi]

I'm guessing that next we'll get something from Seedy about Jewy McShylock.

[CountDeMoney]

Riddle me this then, Clarence: banks have minimum balance fees, designed to punitively pile on charges on the poor sucker that can't maintain the minimum balance...but what's the maximum balance fees?  Where do they hit people without economic handicaps?

The maximum balance fee, or more precisely the positive balance fee, is the ass-rapery of an interest rate you get when holding money in a bank.

Yes.  How punitive.

[dps]

What?  They opened up extra branches, hired extra staff, and installed some new ATM machines just to service this one guy's account?

I was operating under the assumption that there might be more than one person in the world who would maintain a low balance account in the absence of minimum balance requirements.

Sure, and it costs the bank essentially NOTHING to maintain those accounts. 

You think the wages they paid the teller for the time he/she was processing his new account come to a fraction of a cent?

Well, it was probably an account manager rather than a teller.  If it was a teller, given the wages that tellers are normally paid, and the amount of time it generally takes to open an account, the wages involved probably came to about 3-5 bucks.  I dont know what account managers make, but I suspect that it's not a whole lot more than tellers.  Call it double, so 6-12 bucks.  And those wages would have been paid whether or not anyone opened an account at the time, and wouldn't change if the person opening the account kept $1 in it, or $1 million.

[Stonewall]

There is something pretty messed up about charging a fee on low balances that is basically designed to overdraw them.

Thread winner.

[BVN]

I even get phonecalls from my bank to warn me if an account is running low.

That is a cool service.

Indeed. But I'm not really happy with the way they handle it. The phonecall is just a computerized voice screaming: GIVE US MORE MONEY, CHEAPO!

[Brazen]

Wow, British banks are good at something after all. Most current accounts come with a free overdraft up to a certain amount (usually about £400) and you can arrange favourable terms if you contact them when you know you're going to go over. This plus juggling interest-free credit cards = free money win. I think they hope people will get overexcited and bust these generous limits, which obviously happens a lot otherwise I wouldn't be tripping over bankers lying in the gutter drunk on magnums of champagne after their bonuses roll in.

[dps]

I even get phonecalls from my bank to warn me if an account is running low.

That is a cool service.

Indeed. But I'm not really happy with the way they handle it. The phonecall is just a computerized voice screaming: GIVE US MORE MONEY, CHEAPO!

Used to be common, thirty years ago or so, that if you were about to go overdraft, someone at the bank (a person, generally someone who actually knew you personally, not a computer), would call you and say something along the lines of, "Hey, this check is going to overdraft your account.  We can hold it for a couple of days--can you come in and make a deposit so we don't have to return it and charge you an overdraft fee?", especially if you had had a fairly long-term relationship with the bank.  But that's largely gone out as local banks have gotten bought up by chains and transactions have gotten more automated.

You're lucky to still be doing business with a bank that extends that courtesy, even if it's in the form of an annoying pre-recorded message.

[CountDeMoney]

There is something pretty messed up about charging a fee on low balances that is basically designed to overdraw them.

Thread winner.

How dare you question capitalism.  You should be questioning people who can't maintain minimum balances;  anything else is simple secular-socialism.

[Admiral Yi]

Sure, and it costs the bank essentially NOTHING to maintain those accounts. 

It does indeed cost the bank essentially nothing in variable costs to service those accounts.  Or in fact any kind of deposit account.  But the bank has to find some way to cover its fixed costs too.

[Grey Fox]

Sure, and it costs the bank essentially NOTHING to maintain those accounts. 

It does indeed cost the bank essentially nothing in variable costs to service those accounts.  Or in fact any kind of deposit account.  But the bank has to find some way to cover its fixed costs too.

Yeah, charging interest on loans.

But you americans complain the mouth full, just open an account in a fee-less coop.

[Admiral Yi]

Yeah, charging interest on loans.

Or charging fees.

But you americans complain the mouth full, just open an account in a fee-less coop.

I agree 100%.  You're supposed to bitch about government services and other monopolies, because you have no choice but to use that provider or forego the service.  There are thousands and thousands of banks and credit unions you can take your business to if you think one is ripping you off.

[DontSayBanana]

I agree 100%.  You're supposed to bitch about government services and other monopolies, because you have no choice but to use that provider or forego the service.  There are thousands and thousands of banks and credit unions you can take your business to if you think one is ripping you off.

Sure; except for one tiny little detail: what this bank did is the rule, not the exception.  Bank of America does it, TD Bank does it (though their overdraft is a wee bit more forgiving- it allows several days to get out of the hole before hitting you again); I have yet to find a bank that doesn't snowball fees in this manner.

Hell, I had this happen to me when a check from my grandmother bounced while I was unemployed and doing work for her- I had to close a bank account because, within a week, it snowballed to ~$400 over, just from fees.

[Admiral Yi]

Sure; except for one tiny little detail: what this bank did is the rule, not the exception.  Bank of America does it, TD Bank does it (though their overdraft is a wee bit more forgiving- it allows several days to get out of the hole before hitting you again); I have yet to find a bank that doesn't snowball fees in this manner.

Hell, I had this happen to me when a check from my grandmother bounced while I was unemployed and doing work for her- I had to close a bank account because, within a week, it snowballed to ~$400 over, just from fees.

If it's the rule, perhaps the lesson is that this is the cost to the bank of providing that service. 

If I go to supermarket after supermarket after supermarket in the belief that they're ripping me off by charging more than 10 cents for a loaf of bread, maybe after I've looked for a while I should conclude that the fair price of that loaf is in fact more than 10 cents.