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 fees replaced the interest income.
Somebody is paying either way. It used to be the loan holders. I even remember my local bank having a stack of a hundred toaster ovens to give to anybody who opened an account. They wanted your business so you would do your loans with them.
I quite preferred that America though it might be possible to argue that getting nickel-and-dimed everywhere is overall cheaper. But that was at the height of Americans' real purchasing power from wages and I'm disappointed that my kids had to grow up in the opposite environment. Maybe this will change before they will be shopping for a home. I read recently that real wages (purchasing power) were actually higher during the Great Depression. Soaring highs on the Dow don't matter much to people when all the productivity gains during that period have been transfered to financialized everything to make that NGU. The system needs to be stable for us to all benefit. "The Gini Coefficient is too damn high" as they say.
Ask HN: Why are banks charging so many fees for accounts and cards?
41–50 of 82 posts
Re: Ask HN: Why are banks charging so many fees for accounts and cards?
#42I’ve never experienced my bank imposing such fees or restrictions, nor can I recall any bank I’ve used over the past two decades or so doing such. However, some banks adopt these practices, and I question why customers remain loyal when there are abundant alternatives in today’s competitive financial market. One possible explanation is inertia: many people stick with their bank because it’s familiar. It may be the ba…
Automatic payments make banks sticky. Once you have your credit cards and utilities paid off with a particular account, you're probably not leaving.
Re: Ask HN: Why are banks charging so many fees for accounts and cards?
#43Do they? Where? In the US? I have multiple bank accounts in both UK and Poland and none of them charge for just having the account or a debit card associated with the account.
Re: Ask HN: Why are banks charging so many fees for accounts and cards?
#44I can't tell if this is a "link in bio" ad disguised as engagement bait. But, I've opened at least a hundred bank and credit card accounts over the last couple decades as part of "churning" community. Got tens of thousands of dollars in sign up bonuses and it sent my credit score to 830+. I started when I was broke, and kept doing it, since a couple scheduled 5 minute tasks for hundreds of dollars each time is still a fairly easy side hustle. So I could ask the opposite question — why are banks giving money away? Fees and rewards are carrots and sticks. Some use both at once, like high reward cards with annual fees. There are desirable customers and there are undesirable customers and they treat them accordingly. Since you say your customer base is specifically "luxury buyers" (meaning you can skim profit off them in a lot of ways), you probably avoid the stick entirely and treat them pretty well. If your customer base was the lower-income segment with bad credit scores, maybe you'd pivot to fee based relationships. If you're a huge bank, you probably have departments for each style.
Re: Ask HN: Why are banks charging so many fees for accounts and cards?
#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?
Re: Ask HN: Why are banks charging so many fees for accounts and cards?
#46I think there are kind of three tiers of financial services: 1. Payday loan tier. It's very extractive and uses lots of fees and interest because getting a cut of whatever money is there now is all that matters. 2. "Normal" tier. There basically aren't fees for typical services, everything is paid for indirectly via interest rates and card fees or marketing other services. The banks I've used since the 2000s have all…
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.
Re: Ask HN: Why are banks charging so many fees for accounts and cards?
#47Nobody with good credit ratings is paying these fees. Exception maybe being those folks who want those fancy AMEX Black Card or whatever those cards are with concierges, etc.
And many of the best fancy cards provide enough value in the various benefits they offer to outweigh the fee for many of those customers. This is often true not only in terms of luxury experiences like lounge access, but even in terms of cold hard financial value. Examples include a certain amount of annual statement credit against certain types of transactions, points that can be directly or indirectly redeemed for…
For example, Amex Platinum comes with $400 Dell credit each year, and several other similar perks.
Re: Ask HN: Why are banks charging so many fees for accounts and cards?
#48Most banks dont charge for standard non-business accounts, neither for debit cards...where are you seeing these fees/charges?
Most big banks in Canada charge for standard non-business bank accounts. This one is TD but the others all charge the same. Why compete when you can collude? TD Unlimited Chequing Account Unlimited transactions for your peace of mind Annual fee rebate for the first year on select TD credit cards (up to $139) No TD ATM fee at any ATM in Canada Free Interac e-Transfer® transactions Monthly account fee of $16.95 or $0 i…
Also, $16.95/month is $203.40/year, which divided by $4,000 is 5.09%. If you can earn more than 5.09% then you are better off paying the fee and investing your $4,000 elsewhere.
It is also pretty much impossible to keep precisely $4,000 in your account because of the lumpiness of day-to-day inflows (paycheques) and outflows (bills). If you keep say $10,000 in your chequing account to (a) avoid the $16.95/fee, and (b) provide a buffer against unexpected expenses, then the breakeven return on your money is $203.40 / $10,000 = a paltry 2.03%.
Re: Ask HN: Why are banks charging so many fees for accounts and cards?
#49Earlier quoted context omitted.
Most big banks in Canada charge for standard non-business bank accounts. This one is TD but the others all charge the same. Why compete when you can collude? TD Unlimited Chequing Account Unlimited transactions for your peace of mind Annual fee rebate for the first year on select TD credit cards (up to $139) No TD ATM fee at any ATM in Canada Free Interac e-Transfer® transactions Monthly account fee of $16.95 or $0 i…
Also, $16.95/month is $203.40/year, which divided by $4,000 is 5.09%. If you can earn more than 5.09% then you are better off paying the fee and investing your $4,000 elsewhere. It is also pretty much impossible to keep precisely $4,000 in your account because of the lumpiness of day-to-day inflows (paycheques) and outflows (bills). If you keep say $10,000 in your chequing account to (a) avoid the $16.95/fee, and (b)…
Sure, you could pop it into a TD High Interest Savings Account and earn your high interest rate of 0.050%.
Wait, its 0.000% on $4,000
High interest, indeed!
Re: Ask HN: Why are banks charging so many fees for accounts and cards?
#50Earlier quoted context omitted.
I have great credit and my bank charges me $3 every month to pay my rent. (They will send a cheque in the mail for free, but it wasn't reliable for me so I stopped doing that.) Third world stuff.
Doesn't sound normal unless the fee is being charged by the landlord and not the bank. (Landlords seem to love payment fees.)
It's the bank. One of the biggest US retail banks. Maybe other big ones don't, maybe I should change banks.