Bank Like A Banker

Bank Like A Banker
The business of banking has changed dramatically over the last decade. Because the cost of doingbusiness the old-fashioned way is no longer effective, banks are interested in changing theircustomers' behavior by encouraging electronic banking alternatives whenever possible. They havedone this by charging high fees for services that were once free. If you pay $200 or more in annualfees for banking, it's time to do some competitive shopping.

Before becoming furious with your bank, it may be that the products you're using no longer meetyour personal needs. If you have an established relationship with your bank, inquire about theother types of lower-cost checking and savings account products.

Understanding the rationale of why a bank charges fees for different services will allow you to bea savvy banking customer. If human contact is required to serve you, such as a teller or personalbanker, this is very expensive for the bank. The incentive is for banks to encourage morehigh-tech, "low-touch" methods of meeting your needs. This is accomplished by servicing as manycustomers as possible with automated telephone services, cash machines and online self-servicebanking.

Since the bank needs to train their employees, provide a paycheck and benefits, pay for the branchbuilding and in some cases supply uniforms, etc., it is conceivable that your one bankingtransaction per pay period could cost the bank $3 or more.

If you conduct your banking via an automated telephone system, the cost of this type of transactionis much less expensive. However, if you then require assistance from a telephone banker, the pricegoes from $1 for the automated process to as much as $2 for human contact. For the same reasonsstated above, the training, location, computer equipment, etc. becomes more expensive when humaninteraction is needed.

Now it is clear why electronic banking methods are preferred by financial institutions. In fact,most banks are rewarding their customers with lower fees the more the customer does his/her bankingelectronically.

For example, even though Automatic Teller Machines (ATMs) cost the bank around $100,000 each plusthe cost of the computer network and maintenance, the cost of these types of transactions drops tobetween $0.50 to $1 each. Not only are these machines more cost effective, the 24-hour availabilityto customers is very convenient. With the ease and convenience of automatic clearing house (ACH)payments, this "checkless" process drops the price to around $0.25 each. And finally, the Internetdrops the expense even further to less than $0.10 a transaction. I realize that there is still somefear of banking electronically, but the security that banks have instilled with computer technologyfar surpasses the current security of traditional banking methods. If you lose your checkbook andwallet, the cost and worry of canceling these checks is very tedious. It's very possible that athief could forge your name and deplete your accounts in a matter of hours. The sophisticatedcomputer technology, however, although not perfect, has a far more secure system to protect you andyour money. Avoid being the bank's best customer. Attempt to cut your annual bank fees in half byeducating yourself. Inquire about the options and products available to you with your banker. Byasking about the alternative banking methods, you may find that your bank fees will dropconsiderably.

One Paycheck at a Time Inc. is the leading source for sensible debt reduction solutions. Itsproducts include the One Paycheck at a Time, as well as an ebook format, and the eTools program.The author of the book and president of the company, Kimberly A. Griffiths, has been through the vicious cycle of debt herself and has made it her personal goal to share her experience to help others. More information can be found about the company and its products at

This article is intended for educational purposes only and it should not be interpreted asfinancial advice. For advice that is specific to your circumstances, please consult your tax and financial advisor.