The only place we store money is a bank, as they provide protection and also the needed services from time to time. In fact, the banking sector is one of the top 5 industries that continues to be in profits irrespective of the global economic conditions. It is one of the reasons why you often find several banks mushrooming over the period. Since they are in business, they usually rip customers to make money citing several conditions for the same. As customers, we cannot do anything about it but understanding the concepts will be helpful.
The following are five different ways through which banks earn money by ripping off the customers:
1. Not responding to Suspicious Transactions
Even though banks are capable of tracking the transactions, they play dumb even when they notice suspicious transactions carried out by criminals. For example, Delaware’s First Bank involved in a $15 million settlement with the Justice Department, as it allowed illegal transactions by merchants by over 2 million times that helped them steal approximately $ 100 million. However, the bank profited handsomely irrespective of the fraud because it collected processing and overdraft fees from the customers.
2. Five days for wire transfer
A wire transfer can be the most significant scam that a customer will come across. Four decades ago, the banking sector required five working days to wire money between accounts. However, even in the current age, several banks are following the same principle because all the major banks work on COBOL, an ancient programming language. Due to this, banks are charging excessive fees and investing the same for a week without paying a cent as an interest.
3. Inflation of ATM Fees
It costs $ .36 per ATM transaction for any bank. Nonetheless, the average ATM fee collected is $ 2.45. The price is increasing, and also explains the capital ($4.4 billion) that the banks raised through ATM fees in 2007 alone. In 2010, the Congress proposed to cap the average ATM transaction to $ .50. However, it failed.
4. Selling payday Loans
Payday loans are short-term loans with high interest rates and exorbitant fees. The reason why we are mentioning payday loans is that many reputable banks are participating in selling payday loans (in invisible mode). You will not hear the term payday loan, but all the big names in the banking industry call it as bank deposit advance loans. Both payday loans and advance loans are in small amounts. The banks secure the deposit using the next paycheck of the client and charge $ 100 as a fee.
5. Made up Fees
Even after charging maintenance fee and increasing the ATM transaction fee, the banking industry became creative and began to charge for services that were once free. For instance, Wells Fargo costs $ 24 for processing credit card reward points, the US bank charges $ 2 for the issuance of people statement, and Bank of America charges an outrageous $ 8.95 as human teller fee.
