Investment & Financial Articles
Title: Learn How to Bank Like a Banker
Author: Kimberly A. Griffiths
Article:
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, in some
cases supply uniforms etc., 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. become 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 $0.50 - $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
$0.25 each. And finally, the Internet drops the expense even
further to less than $0.10 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.
About the author:
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
paychecks.
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