Hidden Ways Banks Make Money From Customers
When it comes to making money, banks are usually up there with the best. Of course it does sometimes go wrong and they need bailing out to the tune of billions of dollars. But, while there are the unwary among us banks will always have a chance of continuing success. Unwary? Yes. Banks provide their customers with loans, with up front interest rates etc, so customers know exactly what they will be expected to pay back, and over how long. But it has to be said that banks loan money to customers in less obvious ways, and in ways in which the borrower isn't always fully aware of what the final cost will be. There are situations where customers may borrow a bank's money and not even realize it.
Consider for instance 'non-sufficient funds' charges where a number of checks have been written, and are all presented to the bank for clearance at the same time. Suppose you wrote out check #1 for $10, check #2 for $30, check #3 for $35, and check #4 for $750. Your bank balance has $750 in it. You might think your bank will pay the first 3 checks as they were the first ones written. That would mean a total of $75 being debited from your account. Your bank would then not honor the one for $750 and you would incur a NSF charge of, say $30. That $30 charge is bad enough, but what if your bank paid the $750 check, but refused to pay the other three? Some banks will pay the largest value check, and if that leaves insufficient funds in the account the rest of the checks will not be paid. So, you end up paying 3 x $30 for all unpaid checks. An easy way for your bank to make some extra money out of you.
Of course you shouldn't have written checks out if you didn't have sufficient funds for them to be honored, but even so your bank won't be helping you out any if you incur additional, and unexpected, charges. If you find you can't pay your bills properly you should look at how to budget properly.
When you use your debit card in a transaction your bank won't pay out if there are insufficient funds in your account to cover the amount. Right? Wrong! Banks will sometimes allow payment and call it a 'courtesy overdraft.` So, you get your item, you aren't embarrassed by your card being rejected, and you feel great. But, be warned. Your bank has effectively given you a 'loan' for a period of time. Not only that, but because you didn't ask them first they will of course have to charge you a penalty. In addition, you'll pay interest on top of the loan for the period of time your account is overdrawn. And with some banks, if you don't get your account back in credit within a certain time frame, perhaps one week, they'll hit you with another penalty charge. If there's a way for a bank to squeeze their customers for money they'll do it.
Remember, banks are in business to make money, and if you borrow from them, whether by arrangement or not, you will get charged, sometimes excessively so. If you get a penalty charge try phoning your bank to see if this time they will waive the charge. Sometimes it works, though don't count on it.
Consider for instance 'non-sufficient funds' charges where a number of checks have been written, and are all presented to the bank for clearance at the same time. Suppose you wrote out check #1 for $10, check #2 for $30, check #3 for $35, and check #4 for $750. Your bank balance has $750 in it. You might think your bank will pay the first 3 checks as they were the first ones written. That would mean a total of $75 being debited from your account. Your bank would then not honor the one for $750 and you would incur a NSF charge of, say $30. That $30 charge is bad enough, but what if your bank paid the $750 check, but refused to pay the other three? Some banks will pay the largest value check, and if that leaves insufficient funds in the account the rest of the checks will not be paid. So, you end up paying 3 x $30 for all unpaid checks. An easy way for your bank to make some extra money out of you.
Of course you shouldn't have written checks out if you didn't have sufficient funds for them to be honored, but even so your bank won't be helping you out any if you incur additional, and unexpected, charges. If you find you can't pay your bills properly you should look at how to budget properly.
When you use your debit card in a transaction your bank won't pay out if there are insufficient funds in your account to cover the amount. Right? Wrong! Banks will sometimes allow payment and call it a 'courtesy overdraft.` So, you get your item, you aren't embarrassed by your card being rejected, and you feel great. But, be warned. Your bank has effectively given you a 'loan' for a period of time. Not only that, but because you didn't ask them first they will of course have to charge you a penalty. In addition, you'll pay interest on top of the loan for the period of time your account is overdrawn. And with some banks, if you don't get your account back in credit within a certain time frame, perhaps one week, they'll hit you with another penalty charge. If there's a way for a bank to squeeze their customers for money they'll do it.
Remember, banks are in business to make money, and if you borrow from them, whether by arrangement or not, you will get charged, sometimes excessively so. If you get a penalty charge try phoning your bank to see if this time they will waive the charge. Sometimes it works, though don't count on it.
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