10 things your banker won't tell you (copy)

[DHK]

Just copying the text from another post. Thanks to Ravenous Wolf for finding it and posting it earlier.


10 things your banker won't tell you By Laura Bruce • Bankrate.com

Just how up front with you is the banking representative who helps you open an account? Chances are he or she tells you about the various products and services the bank offers. You may even receive a list of fees or be directed to the bank's Web site to see the list. We thought we'd fill you in on things you won't be told, but you might find out over time.


1. "Our tellers get a fee for steering you toward our investment products."

Tellers and other bank employees get a "referral fee" for sending customers over to the investment side of the bank -- the area that sells products that aren't FDIC insured. Employees who sell nondeposit products receive a commission when they make a sale, but they're not supposed to make unsuitable recommendations. If the product is, for example, a mutual fund and one fund company pays a higher commission than another, the employee is not supposed to know that.

2. "We pay customers a miniscule amount of interest on savings and money market accounts to boost our profit margin as much as possible."

There's no doubt about it; banks are not nonprofit institutions. They're in business to make money. But, come on. FDIC-insured banks made $90 billion profit in the first three quarters of 2003. While consumers are earning on average 0.5 percent or less on savings and money market accounts -- not even keeping up with inflation -- banks are charging, on average, better than 7 percent for home equity and 48-month new-car loans.

3. "As long as there's no fraud involved, we really don't mind when customers bounce checks."

Fees are big business for banks, and punitive fees such as nonsufficient funds fees rake in the big bucks. Some institutions charge $12 if you bounce a check -- a bit of a sting but a good reminder not to let your account run down. But the average fee is around $26, and some banks will soak you for $35. You can get overdraft protection -- your check will be paid and that lets you dodge the bounced-check fee the retailer, utility, etc., might have imposed -- but you'll likely still have to reimburse your bank and pay its bounced-check fee.

4. "Wow, our savings accounts can be really expensive!"

Some banks aren't happy just with having you open and stock a savings account; they want to modify your behavior. A fair number of banks charge an "excessive withdrawal" fee of anywhere from $1 to $10 if you exceed a stipulated number of withdrawals within a statement cycle or quarter. Some banks charge $10 to replace a lost passbook, and some tightwads charge for deposit and withdrawal slips.

5. "Our fees will eat up the $50 balance in your child's savings account in about five months."

Make sure your bank has a kid-friendly savings account before the little one deposits his or her money or you'll end up with a broke, sobbing child. Monthly service fees demolish low balances pretty darn quick. The best children's accounts have no balance minimums, no fees and they pay interest on any balance. If none of the banks in your area offers such an account, look for a bank that offers a free savings account -- no minimum balance and no fees, but you might not get interest unless there's a significant balance.

6. "If you sign your receipt when you use your check card for purchases, we'll make more money than if you use a PIN."

Retailers pay a processing fee to the bank anytime a customer uses a check card. If you press "debit" and use a PIN, the transaction is done electronically and the retailer is charged less for the transaction. If you press "credit" and sign for your purchase, the transaction is routed through the credit card networks and the retailer pays a higher fee.

7. "We're going to merge with another bank in a month and we might mess up your accounts."

SNL Financial says there were more than 4800 bank mergers from 1990 through 2003. For most customers, a merger is a minor irritation -- new checks, new check/ATM card, etc. But for some it can mean lost accounts, lost deposits, lost patience and a lot of worry.

8. "Banks get robbed a lot."

The FBI says there were 10,150 bank robberies in 2001; that's about one bank robbery every 52 minutes.

9. "There might be some crooks working here."

Not all the crooks rob the banks. The various governmental agencies that oversee our nation's banks issued, in 2003, more than 500 enforcement actions against banks and individual employees for all sorts of no-no's including mutual fund late trading, abusive loans with fees and closing costs amounting to, in one case, 123 percent of the loan itself, selling false and fraudulent investment certificates and manipulation of credit card accounts.

10. "We'd like to sell your personal information."

Banks want you to know they'll respect your right to privacy, and they'll only share your really important personal information with all the zillions of companies they're affiliated with. You have the right to opt out, but they can pretty much still do what they want.

[DKP]

Ok, i've got to defend my good people. I'm a Branch Manager/VP of Wells Fargo in Houston. I came across this forum because i've got a client who I'd like to help. I've learned a couple of things from yall pro's here, but i take some offense to what Laura Bruce has listed.

1. "Our Tellers get a fee for steering you toward our investment products."
Response: It's true that tellers get a SMALL cha-ching ($5, MAX) for a referral. But, no licensed banker or financial consultant would spray investments on everyone. Nor should you choose an investment on whether someone is getting rewarded for finding an opportunity for you to invest your retirement. If you're asking how much or if someone gets rewarded for your investment, that's a fair question. If you base your decision on this fact as your primary decision point for an investment, you may be misguided as to how and/or why to invest. The investment should be right for you, and your goals.

2. "We pay customers a miniscule amount of interest on savings and money market accounts to boost our profit margin as much as possible."
Response: Banks that "have" money to loan out will not pay out as high of a rate. Banks that are a little more hungry for deposit dollars may give a higher rate in order to loan the money out to the guy in the lobby behind you. But the question becomes will you trade your relationship and entire financial setup for $35 per year in savings interest? Keep in mind, you pay income tax on this as well. Also, banks reward customers for relationship balances which can boost your rate significantly.

3. "As long as there's no fraud involved, we really don't mind when customers bounce checks."
Response: Banks absolutely make money on overdraft and insufficient check fees. To a point. But, I see all the time customers that get in a downward spiral of fees and get charged off/collections/chexsystems reported. We make money and have a risk tolerance for a couple a month, but we lose when the account is charged off. WF doesn't want that type of customers.

4. "Wow, our savings accounts can be really expensive!"
Response: Regulation D states that savings accounts cannot have more than 6 transactions per month. If it is exceeded, the government states when it must be closed. We do charge a fee when the account exceeds this, but it's a warning so we do not have to close your account. Outside of that, nothing that the author states has a fee with us. A passbook?? Most mid and large banks don't issue these relics outside of the new account kit with the routing and account number. That's what online banking is for!! =)

5. "Our fees will eat up the $50 balance in your child's savings account in about five months."
Response: Minor savings are free until 18, and then it's a whopping $300 balance requirement. Would you really deposit your kid's lemonade money in an account that charges $10/month?!?!

6. "If you sign your receipt when you use your check card for purchases, we'll make more money than if you use a PIN."
Response: Visa/MC/Discover/Amex turn a nickel on this. Merchant Card Processors turns a nickel on this. If you have CC processing with a bank instead of a company that solely processes transactions (First Data), than yes, a bank does receive a fee for this. But, processors may also charge a fee to the merchant for debit/pin usage. Besides, it's illegal for a merchant to raise the price to you for running your card as credit instead of debit.

7. "We're going to merge with another bank in a month and we might mess up your accounts."
Response: If the bank that's buying out your hometown bank were to say this to you, what would you do?? I personally would take my money out before they had the chance to inconvenience me or "mess up my accounts." With most large banks, we buy out banks to get a set of clients, a geographical territory, deposit/loan dollars, etc. We've done it enough that we've got conversion teams, logistics, infrastructure, and plans done FAR in advance to avoid this. When this happens, we lose the reason we bought Hometown Bank.

8. "Banks get robbed a lot."
Response: MUCHO recoveries on that statistic. We've got many ways to track crooks. Our primary concern is the safety of our team members and customers. We do want our money back, but our goal is to make it as un-lucrative as possible to try this. Legislation is written and enforced to this point also.

9. "There might be some crooks working here."
Response: There's a team who monitors employee's clicks in the computer and in people accounts, and what they do with this information. Internal rewards are sky high for those who blow the whistle on someone who is crooked. At our bank, there are famous names that all of you would recognize, and employees who go "sightseeing" for celebrity balances are counseled up or out. I have honestly NEVER heard of a single instance in which any of these have happened, nor anything even close.

10. "We'd like to sell your personal information."
Response: I can only speak for WF on this. We do not sell any information. No names, no phone#'s, no SS#'s, DOB, account history, or ANYTHING else. We are completely free of income or benefit for handing out our customer's information. We simply don't give any out!!

What you see written from Laura Bruce/Bankrate.com is a shock value article designed to get her articles read again, and keep her paycheck rolling in for writing articles. It's got some truth to a portion of it, but sprinkle in a helping of common sense and a grain of salt to her slant, and come to your own judgement.

[DHK]

DKP,

Welcome to the forum! (Normally I don't post much anymore, but I've GOT to chime in with another Wells Fargo manager - having been a WF Service Manager before going into investments.)

Responses to your responses:
#1) Right on the nose! HOWEVER, one must know WHY a teller (who usually has little investment experience and life experiences because they are young and just starting their banking careers) is recommending investments? Why would an 18 year old teller ask a 30 year old business owner about investing? From the customer's point-of-view it can be a little awkward. Why do they recommend it? Because they get paid to find an ideal prospect and ask a question.

#2) Again correct! I wholeheartedly agree. People should not have savings accounts "just for the rate". The rate is tiny NO MATTER WHERE YOU GO. (Except maybe ING Direct - they've been pretty good!) Would I trade my relationship? Well, that's a WHOLE OTHER STORY.

#3) "If you can't add, you shouldn't have a checking account" - again fees are big business AND can be a courtesy for paying a check with insufficient funds. The AMOUNT of the fees show how much tolerance a particular bank has for overdraft activity. (Aren't those NSFR reports fun?)

#4) no further comments needed.

#5) Again, I agree.

#6) Sorry, but I must add a point to this. How does Wells Fargo pay for the credit card and debit card rewards programs? Simple. They earn a fee every time a WF card is swiped and signed for purchases. It's not just about the merchant's terminal, VISA/MC, and the gateway... the card issuer makes money too. That's why Wells Fargo wants a "card in every wallet." Rewards programs do not COST the bank money, they MAKE the bank money everytime that card is swiped.

#7) I agree that the statement is not a good "PR" image to portray. At the same time, most consumers don't like changes to things that seem to be going right with their financial lives. If a credit union was going to be bought out by a bank, the transition might go without a hitch... but the fact that each depositor now must pay fees for things that were free before would still send that customer away.

#8.) no comments needed

#9) I had to PERSONALLY fire a team member for potential identity theft. Up to HALF of our investigations team is used to monitor INTERNAL fraud. And our internal teams had NO idea. I only found out when the Sherrif's Dept. called and told me the situation. The concern is REAL - especially when banks "churn" their team members up or out so quickly as to lose the bond with the customer.

#10) Sorry, but Wells Fargo Home Mortgage, Wells Fargo Securities, Wells Fargo Insurance, Wells Fargo Financial, Wells Fargo Card Services, Wells Fargo merchant card services and Wells Fargo Business Payroll are all SEPARATE entities that ALL BENEFIT from sharing information within the Wells Fargo family of companies. It is part of the new account opening process to ask for "Opt-in or Opt-out". It might not be "sold", but it is dispersed to other "internal companies" and if sales are made, then the referrer also gets compensated for the business. So no, you are DEEPLY ENGRAINED in income and benefits for sharing information WITHIN WF.

Now as far as a banking relationship goes, please read the post in the following link:
http://debt-consolidation-credit-repair-service.com/phpBB2/viewtopic.php?t=14613

[Tsandy7]

2. "We pay customers a miniscule amount of interest on savings and money market accounts to boost our profit margin as much as possible."
Response:

Banks that "have" money to loan out will not pay out as high of a rate. Banks that are a little more hungry for deposit dollars may give a higher rate in order to loan the money out to the guy in the lobby behind you. But the question becomes will you trade your relationship and entire financial setup for $35 per year in savings interest? Keep in mind, you pay income tax on this as well. Also, banks reward customers for relationship balances which can boost your rate significantly.

Reply: Do banks really loan other peoples money, I thought that was agains the law. Where does the bank get the money to loan? For example If i came to the bank and borrow money, where does the bank get the money? I would like to know, I have an idea . I think all bankers are crooks anyway.

Tsandy 7

[DHK]

Reply: Do banks really loan other peoples money, I thought that was agains the law. Where does the bank get the money to loan? For example If i came to the bank and borrow money, where does the bank get the money? I would like to know, I have an idea . I think all bankers are crooks anyway.

Tsandy 7

I was reviewing some of these older threads and now I have a response to the question posed.

Banks don't "literally" loan other people's money - as in WITHDRAWING money out of someone's account to lend to someone else.

Banks and all lending institutions have certain "Reserve Requirements" for deposit accounts. This is why there are fees for taking money out of your savings accounts too frequently. This is the reserve the banks must have on deposit TO LEVERAGE THE LOANS AGAINST. If they know what they have on deposit to leverage the loans against, this will affect the savings rates offered as well as the loan rates to be made available.

If the institution doesn't have enough money available to grant loans, they will raise savings rates TO ATTRACT NEW MONEY to the institution. If they have a "surplus" of savings deposits, they can and will LOWER rates because they don't need the money to grant new loans.

There is a specific equation as to how much money must be kept on deposit for every $1 lent out. Of course, the lended money must be in different categories. Home loans are different than credit cards. This (I think) should also be apparent in the rates being offered for such loans.

Of course, if the bank fails, the equation falls on its face. This is why there is the FDIC (or NCUA for credit unions) to protect depositors against failures of financial institutions.

Hope this helps!

[Ravenous Wolf]

There is a specific equation as to how much money must be kept on deposit for every $1 lent out. Of course, the lended money must be in different categories.

I believe the term is called "fractional reserves"...

[debtmamma]

#6) Sorry, but I must add a point to this. How does Wells Fargo pay for the credit card and debit card rewards programs? Simple. They earn a fee every time a WF card is swiped and signed for purchases. It's not just about the merchant's terminal, VISA/MC, and the gateway... the card issuer makes money too. That's why Wells Fargo wants a "card in every wallet." Rewards programs do not COST the bank money, they MAKE the bank money everytime that card is swiped.



Is that why it's so hard just to get a regular ATM card? I just wanted an ATM card and they gave me a debit card. :roll: I only use checking for online bill pay and I just want an ATM card if it's holiday or someting unusual happens and I need cash. I don't like having a debit card in my purse.

[stilltrying]

01-14-2006, 05:19 PM; post #05
[...]
#6) Sorry, but I must add a point to this. How does Wells Fargo pay for the credit card and debit card rewards programs? Simple. They earn a fee every time a WF card is swiped and signed for purchases. It's not just about the merchant's terminal, VISA/MC, and the gateway... the card issuer makes money too. That's why Wells Fargo wants a "card in every wallet." Rewards programs do not COST the bank money, they MAKE the bank money everytime that card is swiped.
[...]

07-09-2008, 07:17 AM; post #07

Is that why it's so hard just to get a regular ATM card? I just wanted an ATM card and they gave me a debit card. :roll: I only use checking for online bill pay and I just want an ATM card if it's holiday or someting unusual happens and I need cash. I don't like having a debit card in my purse.

1) It's probably not just Wells Fargo that ( a ) makes a customer specifically request an ATM card and ( b ) by default initially sends only a debit card. I had the same experience with USAA (USAA calls its ATM card a "Maestro card"). I even had one USAA agent (this only happened once) try to persuade me to use my USAA debit card instead of my USAA ATM card.

2) There wasn't any hassle for me involved with requesting an ATM card from Wells Fargo. I went in to a branch and requested one. What I didn't like about the experience is that, like on another unrelated occasion concerning Wells Fargo, the Wells Fargo teller went ahead and submitted the request for an ATM card while I was still in the process of having a conversation with her about the ATM card; I hadn't yet reached the step in the conversation of me requesting the card.

3) Like with my USAA ATM card, the Wells Fargo card has one option that for you may be worth customizing. Like you, I don't plan to use my Wells Fargo card for anything other than withdrawing cash.

Although an ATM card can not be used for signature-based transactions (this is when a customer selects the "credit option"), an ATM card can be used for PIN-based transactions (this is when a customer selects the "debit option"; in addition, apparently the merchant's register has to be set up to accept PIN-based transactions).

Therefore, the option that you can customize is called the "POS limit" (I don't know if other banks use different terminology) -- point of sale limit. Lowering the limit is supposed to prevent charges from going through when the charge amount is higher than the pos-limit. The POS limit for my Wells Fargo ATM card was initially around $ 500-ish. I lowered my limit to $ 20 (this amount is the lowest pos-limit that I can request, according to Wells Fargo). You can also adjust the POS-limit for Wells Fargo's debit card.

I don't know whether a low pos limit would prevent a large fraudulent charge from successfully going through if a crook got ahold of a person's debit card or ATM card.