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It is becoming obvious that commercial banks are starting to put the squeeze customers with extra penalties, high fees and a whole host of add on charges these days. While many people feel this is just a reaction to the current economy and recession, this fee war with consumers actually started quite some time ago. In order to help you understand the history of these changes that banks are implementing, and ensure you utilize the most efficient commercial banking tips possible, here are 4 commercial banking secrets you need to know.
Commercial Bank Secret #1- Average Consumers Make Banks More Money than the Affluent
While the main presumption for many consumers is that the rich, affluent customers are a bank’s priority, this is essentially not the case. The fact is that middle income banking customers provide the highest potential for banks to generate fees and create income. Last year in the United States alone, insufficient fund charges and overdraft fees made up for about 90% of commercial’s banks fee related income, totaling over $35 billion.
What most middle of the road customers do not realize is that a vast majority of commercial banks actually enroll customers for overdraft protection without permission, and a number of banks also manipulate check clearing in order to generate overdraft fees. If you are the type of person that runs into overdraft problems a few times a year, then your best bet is to opt for a bank program that makes it easy to shift funds from one account to another to protect against these fees.
Commercial Bank Secret #2- Banks Don’t Want you to Understand Overdraft Alternatives
Commercial banks have done their best to classify overdraft protection as a wonderful service to customers. Truth be told, some people would be better off just dealing with loan sharks. The majority of fees are paid by a small percentage of households who on average pay close to $1,500 a year in fees.
If that sounds like you maybe you need to consider ditching traditional checking accounts and going with prepaid debit cards that cost as low as $70 a year. You can deposit paychecks, make purchases in store and pay bills online with no fear of overdraft fees.
Commercial Bank Secret #3- Customer Setup Kits Make it Hard to Close an Account
Most commercial banks have introduced set up kits that make it easy for customers to switch banks; however these often come with drawbacks that most people are unaware of. You are much better off in the long run to do it yourself than let the commercial banks set up everything you. If you do it yourself and set up all payments and transfers yourself then you are not tied down as much if your banking relationship turns bad. The last thing you need is to be stuck in a situation that you are not happy with, or that is losing you money.
Commercial Bank Secret #4- Credit Cards, Debit Cards and Cash Force People to Lose Track of Money
One of the leading causes of debt these days is that people are not paying attention to the bills they pay or where their money goes. Consumers just try to balance their money because it has been made so hard to keep track of everything. If you used a number of different ways to make payments, such as with cash, checks, credit and debit, your finances become a lot more complex. Banks are starting to prey on this and are creating accounts that are all linked together and make it easier to switch money back and forth and all around.
Your best bet is to simplify your banking. Start with a free checking account that comes without any fees and a low minimum balance. The more you stick to cash the more you will know how much is going in and out, and it will force you to think a bit harder before buying things.
