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Ask HN: Why are banks charging so many fees for accounts and cards?

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Re: Ask HN: Why are banks charging so many fees for accounts and cards?

#71

Post by imtringued »

toomuchtodo wrote: post #4

As a financial services provider, you can make money in a couple of ways: net interest [1], loan interest (spread between your deposit interest and interest rates you price for credit products), fees, and interchange (skim off debit and credit card transactions). Which matrix of fees you elect to implement is a function of your customer persona(s), what they value, and sensitivity to those income levers. How do you p…

This is the answer. Running a bank is expensive, even if from the customer's perspective all the bank is doing is provide a website that shows them a number. But that number is probably the most important single number in their life.

Since people are resistant to paying monthly account fees, banks will have to hide the fees in ways that you won't immediately notice. In a way, customers are deceiving themselves. If they just paid the monthly fees, the cost of their bank account would be highly predictable.

Re: Ask HN: Why are banks charging so many fees for accounts and cards?

#72

Post by imtringued »

SoftTalker wrote: post #35
citizenpaul wrote: post #33

I prefer to pay a decent fee so they make money for the service. As tech oligarchs have taught us if you are not the customer you are the product. I'd prefer to be a customer to my bank. Banks are an odd business. You are basically guaranteed some income but the margins are slim and lots of regulations. Despite all the bad behavior they are probably one of if not the closest watched businesses by gov regulators.

The banks are holding your money and lending it out at a profit (fractional reserve banking). You should not feel obliged to pay fees on top of this.

You're arguing that banks should subsidize their payment department with the profits from their investment department when safe investments like treasuries no longer yield interest. Basically, asking that banks should take ever larger risks to subsidize your bank account, simultaneously risking your bank account in the process.

That's how you get an economy in which banks are too systematically important to fail and therefore must always be bailed out, no matter what.

Re: Ask HN: Why are banks charging so many fees for accounts and cards?

#73

Post by ulfw »

dgeiser13 wrote: post #45

> especially when they don't seem to make significant profits from them. Where do you get the idea they don't make significant profits from them?

Shitibank US account hasn't charged me in 25 years. Now they do. $15 a month.

May they go to hell.

Re: Ask HN: Why are banks charging so many fees for accounts and cards?

#74

Post by n2d4 »

elmerfud wrote: post #3

My bank doesn't do this and I can't recall any bank that I've banked with for several decades now ever doing this. I do see some banks saying they do this and I wonder why anyone would choose to be their customer because there's plenty of market choice out there in banking. Likely they do it because they can and it's a vendor lock-in mindset from their customers. People have banked with them their whole life or their…

Slightly unrelated, but in the interest of those who are with one of the banks that charge fees, which bank is it that you use? Would you generally recommend them?

Re: Ask HN: Why are banks charging so many fees for accounts and cards?

#75

Post by MistaIA »

elmerfud wrote: post #3

My bank doesn't do this and I can't recall any bank that I've banked with for several decades now ever doing this. I do see some banks saying they do this and I wonder why anyone would choose to be their customer because there's plenty of market choice out there in banking. Likely they do it because they can and it's a vendor lock-in mindset from their customers. People have banked with them their whole life or their…

Interested to know your bank if I may

Re: Ask HN: Why are banks charging so many fees for accounts and cards?

#76

Post by aaomidi »

bill_mcgonigle wrote: post #41

I was a kid in the 80's and would regularly see $5 interest credits on my meager savings, free ATM, free phone banking (don't laugh) and they even set it up for me that if I went below $20 in my checking the system would pull $50 from my savings. 1986 or so - overdraft fees hadn't been invented. After the dot-boom/bust The Fed "aggressively pursued ZIRP (zero interest rate) policies". Mortgages got much cheaper but f…

I agree. But I think we’re stuck with this until a chaotic event happens. It’s really hard to untie some knots through reforms.

Re: Ask HN: Why are banks charging so many fees for accounts and cards?

#77

Post by scarface_74 »

n2d4 wrote: post #74
elmerfud wrote: post #3

My bank doesn't do this and I can't recall any bank that I've banked with for several decades now ever doing this. I do see some banks saying they do this and I wonder why anyone would choose to be their customer because there's plenty of market choice out there in banking. Likely they do it because they can and it's a vendor lock-in mindset from their customers. People have banked with them their whole life or their…

Slightly unrelated, but in the interest of those who are with one of the banks that charge fees, which bank is it that you use? Would you generally recommend them?

BOA charges fees for checking. But it is easy to avoid just by having a direct deposit of at least $250 a month.

Re: Ask HN: Why are banks charging so many fees for accounts and cards?

#78

Post by seanmcdirmid »

Lopsii wrote: post #66
troupe wrote: post #46

Earlier quoted context omitted.

When it comes to banks, there is also a tier where fees are waived for high value customers. For example, checking, atm, wires, are free if you have $50k or more in your checking account.

this is true. makes you question why they do it for them and not for everybody

They want high tier customers and they don’t profit on low tier customers? Your bank can sell a lot of services to someone who has money to spare.

Re: Ask HN: Why are banks charging so many fees for accounts and cards?

#79

Post by elmerfud »

n2d4 wrote: post #74
elmerfud wrote: post #3

My bank doesn't do this and I can't recall any bank that I've banked with for several decades now ever doing this. I do see some banks saying they do this and I wonder why anyone would choose to be their customer because there's plenty of market choice out there in banking. Likely they do it because they can and it's a vendor lock-in mindset from their customers. People have banked with them their whole life or their…

Slightly unrelated, but in the interest of those who are with one of the banks that charge fees, which bank is it that you use? Would you generally recommend them?

I use USAA now, and have for quite a while. Yes, if you can qualify for a USAA account I absolutely recommend them. They are one of the best banking institutions I've ever had.

But there are several national banks that have similar no fee accounts. Just looking around online at some deals and the one that stands out to me is really good deal is Charles Schwab offers a no fee account. Yes you have to open a brokerage account but that also has no minimums with it as well. Plus it seems they have unlimited ATM rebates.

Some of it may come down to your needs as I haven't had the need to access a local branch in many decades now. I don't deal in large sums of cash and needs a deposit it. I primarily look for a bank that has excellent online access and telephone access.

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