Author Topic: What if banks charged for deposits?  (Read 3858 times)

El Gringo

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What if banks charged for deposits?
« on: November 24, 2013, 06:01:35 PM »
I realize that Zero Hedge is full doomsdayers and I tend to shrug off their articles. But this article linked below got me thinking about the hypothetical: what if banks started charging you for storing your money with them? Would that change your strategy in terms of an emergency fund? Would you just take it out of the bank and store it under the proverbial mattress?

http://www.zerohedge.com/news/2013-11-24/banks-warn-fed-they-may-have-start-charging-depositors

TheDude

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Re: What if banks charged for deposits?
« Reply #1 on: November 24, 2013, 06:33:59 PM »
Haha thats a funny article. I am not really sure why anyone has their money at one of the big 5. My current deposit accounts pay .65, .7 and 2.5. They may go to zero but no way will they charge you for keeping money there. I really hate big banks.

Khan

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Re: What if banks charged for deposits?
« Reply #2 on: November 24, 2013, 08:06:36 PM »
Well, in a sense most of the big banks(especially BAC) do, with fee's everywhere. I don't know, it's not my problem, I bank with Navy Federal(a mega credit union) and don't even bank all that much(most of it flows out of that into my ameritrade account).

As for using banks as an emergency fund, remember that no bank can survive a bank run, so you should always have some means, whatever it is, of paying for things(credit cards, cash, etc.) to survive a short time-period(week or two) that systems might be down, or the sky is falling.

For any time period that the sky is falling that you don't have the reserves to handle, don't worry, you'd already be dead.

El Gringo

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Re: What if banks charged for deposits?
« Reply #3 on: November 24, 2013, 08:09:59 PM »
Haha thats a funny article. I am not really sure why anyone has their money at one of the big 5. My current deposit accounts pay .65, .7 and 2.5. They may go to zero but no way will they charge you for keeping money there. I really hate big banks.

Same here! I've got my money in a credit union!

KingCoin

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Re: What if banks charged for deposits?
« Reply #4 on: November 25, 2013, 01:53:08 PM »
A 0.25% cut in rates equates to $50/yr less for a $20,000 deposit. An annoyance, but not enough to change your strategy.

bUU

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Re: What if banks charged for deposits?
« Reply #5 on: November 28, 2013, 03:39:51 AM »
Haha thats a funny article. I am not really sure why anyone has their money at one of the big 5.
I don't anymore, for the reasons you allude to, but I'm sure glad I did when I did, and now worry about the ramifications of not going forward. Some of the services that I used several time while I was a BoA customer included "free" estate accounts and Medallion Signature Guarantees - I needed several of them over the course of a few years. As long as the availability of Medallion Signature Guarantees is so limited, and yet some brokerages refuse to release assets without them, it poses a risk to us using small community banks.

dragoncar

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Re: What if banks charged for deposits?
« Reply #6 on: November 28, 2013, 03:07:57 PM »
Well, in a sense most of the big banks(especially BAC) do, with fee's everywhere. I don't know, it's not my problem, I bank with Navy Federal(a mega credit union) and don't even bank all that much(most of it flows out of that into my ameritrade account).

As for using banks as an emergency fund, remember that no bank can survive a bank run, so you should always have some means, whatever it is, of paying for things(credit cards, cash, etc.) to survive a short time-period(week or two) that systems might be down, or the sky is falling.

For any time period that the sky is falling that you don't have the reserves to handle, don't worry, you'd already be dead.

Exactly.  Plus, the vast majority of checking/savings accounts are earning a negative real return right now.  So although there is a psychological barrier to negative nominal rates, we are already in the situation where people are encouraged to put their money to use elsewhere (spend or invest)

CB

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Re: What if banks charged for deposits?
« Reply #7 on: November 29, 2013, 12:48:44 PM »
As long as the availability of Medallion Signature Guarantees is so limited, and yet some brokerages refuse to release assets without them, it poses a risk to us using small community banks.

Didn't realize this was such an issue.  Just had a couple of Medallion Signature Guarantees done at our local podunk Credit Union about a month back and didn't have any problems.

sheepstache

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Re: What if banks charged for deposits?
« Reply #8 on: November 29, 2013, 04:01:28 PM »
Well I'd store the emergency fund in t-bills or other fed bonds since the buying and selling system is convenient, or bank CDs.  If, under the article's hypothetical circumstances, those were still around.  An emergency fund just has to be risk-free and accessible within two business days for my peace of mind.

For regular checking account I suppose I'd just keep enough cash in the house to buy money orders to pay the credit card and rent bills.

Can you imagine the effect it would have on the ongoing nickel-and-diming of the poor / financially-uneducated masses?  Sorry to sound like an occupier and/or snob.  It's just I already know people who use check-cashing services to pay their bills, and more who can't avoid paying bank fees a couple times a year.  I can't imagine if it took even more extra knowledge or effort to avoid losing money.

bUU

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Re: What if banks charged for deposits?
« Reply #9 on: November 30, 2013, 03:21:10 AM »
Didn't realize this was such an issue.  Just had a couple of Medallion Signature Guarantees done at our local podunk Credit Union about a month back and didn't have any problems.
Here it's a big commercial bank or no joy.