Historically, people have always established relationships with their banks. They would open an account as a child and continue to deposit -- or withdraw -- throughout their lives. Over time, the relationship would strengthen as customers borrowed money for homes, cars, and other needs. As a result, millions of people have come to think of their banking institutions as friendly resources that serve their needs with their best interests in mind. Unfortunately, most people would be stunned if banking institutions were completely honest with them. Below, you'll discover 4 things that your bank will never openly admit to you.
#1: "We need you to buy our products."
Have you ever wondered why so many banking establishments maintain expensive physical branches while the world becomes more comfortable doing everything online? The truth is, they need to sell you financial products in order to make a profit. The most effective way for them to do that is in person. When you walk into your local branch, every employee has been trained to sell. Even though you might think they have your best interests in mind, they're often only interested in selling you.
#2: "You'll get a better deal somewhere else."
If you keep a savings or money market account at a large, national bank, you might have noticed that the annual yield is dismally low. Large banking institutions rarely offer competitive yields. In nearly every case, you'll find that smaller establishments offer much higher yields, and often, fewer fees.
#3: "We love to charge you fees."
In a lot of ways, fees are a bank's bread and butter. They don't normally affect the rise and decline of their customers' deposit assets. And most customers either don't notice the fees or simply accept them as a fact of their banking arrangement. For example, an overdraft in your checking account might cost $30. Using an ATM to withdraw money may cost another $2. Transferring funds or letting your balance dwindle below a given mark might result in more fees.
Month after month, millions of people have small fees deducted from their accounts for a variety of reasons. Banks love to charge them because they add up and travel straight to their bottom line.
#4: "We make a ton of money off college students."
If you have visited a university campus during the past decade, you'll have noticed that banking establishments maintain a massive presence. There's a good reason. First, once a student can be persuaded to open an account -- even a small checking account -- they're unlikely to leave for another financial institution. Second, a college student represents a treasure trove of profit. Down the road, they'll need a car loan, home loan, credit card, and perhaps a graduate school loan. In short, they're a rich source of new business for banks.
The purpose of exposing the banking industry's dirty secrets is to motivate you to become a more informed customer. That way, whether you're looking for a savings account, credit card, or home loan, you'll have both eyes open while searching for the most attractive deal.
Lawrence J.T. Reaves is a prolific freelance writer with experience in a number of different fields. After he obtained his B.S. in Psychology from the University of the District of Columbia, Lawrence spend a number of years traveling the world as a freelance journalist. He worked for many different newspapers and magazines until he realized that he could write about all manner of things from the comfort of his own home. Visit his site at LawrenceReaves.com. Also visit popular sites on Engagement Info and About Labels for other interesting information.© 2010 Lawrence Reaves
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