Your Bank is Not Your Friend

Your bank is not your friend.  Many people have an aversion towards dentists, reasonably so.  But far too many folks think their bank is their friend.  This could not be any further from the truth.

Generally when you open an account at a bank, it is what is referred to as a demand deposit account.  Meaning as you accumulate money in your account, you can come to the bank and at any time demand any or all of your money.  Some of your money could be in the form of so called uncollected funds or something.  The bank is not your friend because your friend would NOT charge you $35 for loaning you $5 for a day or two.  Let me explain further.  When you deposit money at your bank, the bank now has to record those funds accounting wise as a liability, THEY OWE YOU these funds.  So effectively when you make a deposit at your bank you ARE in fact loaning them money!  Now lets take it a step further.  let's say I only have one bank.  I am loyal to no one bank but for this example, if I made 50K USD this year and deposited that money at my bank over the course of a year, for the year I have loaned them 50K.  They paid me the money back as I demanded it, by drafting checks or debit card transactions, and they took that off what they owed me.  Now  12 months later I make a mistake!  I forgot to subtract a debit card purchase for $100!  Now I overdraw my account 3 times,  once for $3.50  once for $15 and once for $30.

My 'friendly (self-serving bank)' gladly pays those 3 charges and then smiles and jacks me for $35 times 3 because they had to loan me money 3 times.  You see where I am going with this I hope.  So now I am down $105 in fees and they immediately subtract this from my ALREADY negative account.  I made an error!  I didn't overdraw my account on purpose.  And yet the bank is happy to jack me for $105.  Did they do this to me?  No!!!  But I know people that they do it to on a regular basis.  In fact I know A business man (I CAN'T say where he banks),  that spends on average over $1000 a month on these 'rip off fees'.  Why should my business loan the bank countless thousands of dollars over months and months and years and years and then in the rare instance I make an error and you actually have the nerve to jack me for $105 because you loaned me money!!!  What about all the money (huge sums compared to what you loaned me) I loaned you over the years?

So the bank is not your friend and while I have accounts at several banks,  I know the bank is not my friend and will jack me with some rip off fee anytime they get the chance, that is HOW they make money!  I expect full disclosure in business and all other transactions and relationships, however many banks do not believe the same.  Their rules are strictly set up in a one sided way....all in their favor.  And the reality is YOU are the one doing them a favour by depositing your money (LOAN FROM YOU TO THEM!!!) into their bank, but yet they carry on like they are doing you a favour by jacking you for fees which are 100% profit for them, because they paid your checks!
Your bank banks at a foreign owned bank shouldn't you?  Maybe, Maybe not, That's another article perhaps.  But there are banks and or credit unions now that allow you to scan checks yourself for deposit from the comfort of your home.  So I think it is possible to go bankless!  But I also think you are better off doing your research about the bank before doing business there and having several banks to play against each other, as bankers hate it when another banker is giving away a bigger or better reward or prize for investing at their bank.

Elijah Marks (Kenotech) is a mortgage banker with Virginia Mortgage Bankers licensed in Virginia and South Carolina. Elijah is a mortgage buyer and seller and a real estate investor who owns and manages a small portfolio of real property in Virgina.