Tuesday, January 29, 2013

Frugal Banking

Image credit: www.sxc.hu - free image

Recently I drove my mother to her long-time brick and mortar bank.  Once a local bank, it is now part of an international banking giant.  Not wanting to take my two children along, my husband spent some quality time with the kids.  But he was perplexed --

why did we need to go in to the bank to take care of some routine paperwork?  

Me - Because she has to sign papers, an IRA is involved, I responded. 

Him- Sure, but why not download the form and simply fax it back?  Why bother with all of this fuss?  

Me -Good point, but all I know is that they said to bring her in.

And half way through the visit it hit me, they were fishing for more business.  At first it was subtle.  Is she happy with her credit card.  Then inquiring about her mortgage rate, which I found odd, the banker knew she no longer had one, and her response was -- oh yes, I know, but what about you, are you happy with your rate?

Ding, ding, ding.   She was trying to bring me into the fold; we have no accounts with the institution.  Nor will we anytime in the near future.

And there we have a lesson -- banks are a place of business.  The take in your money and pay you x, then they lend it out for x plus y.  And they need the plus y to make profits.  So remember, when you stop in at your local bank or credit union, they are friendly and helpful, but also in the business of sales.  Compare prices, ask if you really need what they are offering, and understand all the associated fees.  They make a profit -- due you know how?

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