Bank Like a Banker
by Kimberly A. Griffiths
Author of One Paycheck at a Time (www.onepaycheckatatime.com)
The business of banking has changed dramatically over the last decade.
Because the cost of doing business the old-fashioned way is no longer effective,
banks are interested in changing their customers' behavior by encouraging
electronic banking alternatives whenever possible. They have done this by charging
high fees for services that were once free. If you pay $200 or more in annual
fees 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 meet your personal needs. If you have an established relationship with your bank, inquire about the other types of lower-cost checking and savings account products.
By understanding the rationale of why a bank charges fees for different services
will allow you to be a savvy banking customer. If human contact
is required to serve you, such as a teller or personal banker,
this is very expensive for the bank. The incentive is for
banks to encourage more high-tech, "low-touch" methods of
meeting your needs. This is accomplished by servicing as many
customers as possible with automated telephone services, cash
machines, and online self-service banking.
Since the bank needs to train their employees, provide a paycheck and
benefits, pay for the branch building, and in some cases, supply uniforms, it is conceivable that your one banking transaction per pay period could cost
the bank $3 or more for your one banking transaction.
If you conduct your banking via an automated telephone system, the cost of
this type of transaction is much less expensive. However, if you then require assistance from a telephone banker, the price goes from $1 for the
automated process to as much as $2 for human contact. For the same reasons stated
above, the training, location, computer equipment, etc. becomes more expensive
when human interaction 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 banking electronically. For example,
even though Automatic Teller Machines (ATMs) costs the bank around $100,000
each plus the cost of the computer network and maintenance, the cost of these
type of transactions drop to 50 cents to $1 each. Not only are these machines
more cost effective, the 24-hour availability to customers is very convenient.
With the ease and convenience of Automatic Clearing House (ACH) payments, this "checkless" process drops the price to around 25 cents each. And finally, the Internet drops the expense even further to less than 10 cents a transaction. I realize that there is still some fear of banking
electronically, but the security that banks have instilled with computer technology far surpasses the current security of traditional banking methods. If you lose
your checkbook and wallet, the cost and worry of canceling these checks is very tedious. It's very possible that a thief could forge your name and deplete
your accounts in a matter of hours. The sophisticated computer technology,
however, although not perfect, has a far more secure system to protect you and your money.
Avoid being the bank's best customer. Attempt to cut your annual bank fees
in half by educating yourself. Inquire about the options and products
available to you with your banker. By asking about the alternative banking methods, you
may find that your bank fees will drop considerably.
This is an excerpt from One Paycheck at a Time,
www.onepaycheckatatime.com, by Kimberly A. Griffiths, ISBN: 1591133327. One Paycheck at a Time, a
200-page workbook, contains budget management exercises for an entire year of
The author, Kimberly A. Griffiths, has been through the vicious cycle of
debt herself, and provides a no-nonsense system to managing your money paycheck
to paycheck. You customize the journal based on your pay schedule and learn
the necessary tools for making ends meets