Straight out of the Apocolypse, the personal finance blogosphere is abuzz about new monthly debit card fees. Oh the horror! Fees for convenience! Say it ain’t so!
Yes, banks are rolling out new debit card fees as a monthly cost to consumers. Why? Well, if I were in the business of lying to you, I’d say it was because banks are greedy scum who rip people off.
But that’s not the real answer. The real answer is that government has nothing better to do than regulate business rather than seek to understand it. It’s only logical that a government comprised of ex-lawyers would recommend laws as a solution to each new “problem.”
Why are banks charging debit card fees?
I have three answers for yo momma:
1. FED caps on point of sale fees – The Federal Reserve said, “sorry mama, but transaction fees are too damn high.” With the stroke of a pen, it was done. Fees were capped at 21 cents per transaction plus .05%.
2. No Yield, Bro – Yo mama is a money loser for banks. In case you haven’t heard, interest rates are at record lows, which means banks are paying you practically nothing to borrow your money, but they’re also earning practically nothing on yo mama’s accounts. Fixed costs plus lower variable revenues means yo mama gets the screw.
3. Basel III – Since making money is risky business, the government concluded that yo mama doesn’t need returns, just preservation of capital. Banks should keep less of their money in investments that generate positive yield and instead
invest it in the furniture industry put it under a mattress.
Free Checking with $500,000 Mortgage
Until rates rise, the earnings banks achieve on savings will stay near zero. While $3-5 monthly fees sound like a bunch of nonsense, you don’t have a choice. Banks operate on what is called net interest margin. Net interest margin is about as real as a unicorn right now.
Yo mama needs to get serious. Banks can’t legally make money when…
1. People spend money
2. They invest other people’s money
So what did yo mama expect?
Do you want to work for free? Bankers don’t. Is that so bad?