Banks Want To Be Best Buds - Really?

Originally Published in The Lowell Ledger August 30, 2023 

Friends Don’t Charge Friends Fees, Do They?

WARNING: the following column represents my best imitation of a combination of two crotchety old guys: Andy Rooney and Lewis Black. (Young people, ask an older person about the Andy Rooney segments on “60 Minutes” back in the day when we only had three TV networks from which to choose.) Andy and Lewis represent two very different styles, methodology, and personal affects, but they do have one thing in common in that they like to examine things that really honk them off. 

Since we are Best Friends, can we skip the fees please?

Today, I want us to examine a subject near and dear to everyone’s heart: Bank Fees. Did your blood pressure take a bit of a jump just reading those two words in that order? Cool, then we can proceed. Note: from here on all banks will be lumped together as “they” or “them.” This is my column and I get to choose the brush size I use, okay? Also, “they” are not credit unions, my comments are directed at the for profit banking industry.

Have you noticed lately that every bank really wants us to believe how import us little folk are to them? Billboards, TV ads, print, and any other medium that is available for them to use are constantly assuring us that they are our friends, they have our back, and that there is nothing more they want in this life than to be our buddies. Huh, okay. As a small business owner, I am wooed by marketers who let me know that they sure value us because “small business is the back bone of America”. Blah blah blah.

Were to begin? How about credit card processing fees? I am not opposed to service providers being compensated for providing services. Probably close to fifty percent of the business we do at our little store is repair and restoration work and we expect to be paid for our efforts. My problem with credit card fees is that the fees charged do not incorporate any type of tiered system. When the numbers are boiled down, my credit card processor collects between 2.50% to 3.00% depending on the type of card used in the store. For most of the business we do that is no big deal, but my problem is that the percentage does not go down, even slightly, as the total of the transaction goes up.

It does not happen often, but once in a while we have someone spend say $10,000.00 on something from our store. If they are using a cash back or points style credit card, then the processing company keeps $300.00 of that sale. Wait, we have sales tax in Michigan which on ten thousand dollars is six hundred dollars and the banks processing cards collect their fees on the sales tax collected, so they keep another $18.00 of the tax we collected on behalf of the State. Yup, they like our little mom and pop business so much that they get to pocket $318.00 should we be fortunate enough to land a big sale. Note to them: If you are really my buddy and want to keep the back bone of America straight and strong, then how about lowering your fee percentage a little as the dollar amount gets larger?

On the personal side of banking, there has been a little progress made in the last couple of years as far as banks charging all the fees they charge on our checking and/or savings accounts. These changes have come about as a result of class action lawsuits and/or attorney generals who stand up to the banks on behalf of the electorate and force them to eliminate or lessen the “junk fees” that they have been slapping us with for years. 

Hmm, it just hit me that the proliferation of lawsuits regarding junk fees is probably the primary motivation behind the proliferation of all the “We are your pal” bank ads we are exposed to lately. It is their way of deflecting our attention away from the fact that it took lawsuits for them to quit gouging the heck out of us. We are best buds, after all.

One of my “favorite” bunch of fees happen when you buy a house. My goodness, I bet there is an invitation only, double secret, Banking Hall of Fame that enshrines the person or group that came up with all those swell fees they get to collect when we decide to buy or sell a piece of property. Golly bank folks, you mean you are not content to just collect the thousands of dollars in interest most of us will give you over the course of our mortgages? You had to add “closing costs” to all that? One of my favorites is the “loan origination fee”. What? You told me you were loaning me the money for the property, but there is a fee for the loan to come into existence? Whoa, Nelly. Then there are “filing fees”, “compliance fees”, and several others. Typical closing costs in Michigan run between two and four percent of the total purchase. Brilliant profit center for them, right?

I have saved my favorite for last. One of the wonderful benefits of owning a small business in a small town like Lowell is that many people pay in cash. They are not buying something they cannot really afford, they have done things Old School and actually budgeted for the purchase. (What a concept, eh?) Guess what – many, if not most, banks CHARGE you when you deposit what they consider as “too much cash” into your account. Hello – cash money is actually called BANK NOTES. 

The first time such a charge showed up on my statement, I did not really understand it. If fact, so complete was my naivete that when the branch manager told me that additional charge to our business checking account was because we had “deposited a large amount of cash last month” I thought it was a joke. I looked around for someone to be video taping the conversation because I figured I was being punked. Nope – the news was delivered with a straight face and sincere presentation. The manager went on to explain that cash has to be moved around with armored vehicles and that was an expensive process.

Silly me, up until that very instant in time I was operating on the ridiculous assumption that moving cash around was what banks did ever since banks were created. Handling cash is in their wheelhouse, it is their jam, their MOA. Apparently my thinking was flawed. Just thinking about this causes my inner Lewis Black to rise up in indignation. They are going to spank me, their buddy – a small part of the backbone of America, with a fee for depositing the officially recognized currency of our nation. The bad news is that they did, they do  and probably will continue to do so until they get slapped with a lawsuit forcing them to quit. 

Anybody got the phone number for the AG’s office?