April 16, 2006
The First Bank of Wal-Mart
Wal-Mart wants to open a bank. This is good news. Even the most screaming, spitting, flaming, cross-eyed liberal must assent to this. Why? Because a Bank of Wal-Mart would be good for consumers.
Citigroup doesn't post $17 billion profits on $90 billion revenues without gouging somebody. Even while national interest rates were less than 1%, your credit card still had interest rates in excess of 15%, 20%, up to 24-27%, depending on your card, credit score, state of residence, etc. That's a good racket.
Then there's banking fees. If you give the bank your money to hold on to and lend out to people, why in heaven's name should they charge you for doing so?! Fee-based checking? Hello? And the only people who managed to escape these fees were those wealthy enough to have $10-15k sitting in their accounts at all times. It's true that in recent years more and more banks have started offering free checking, but there's two things to remember here: 1) the only reason this has become common is that credit unions, which don't pay taxes, have started eating into the banking industry's customer base, and the bankers want to compete, and 2) this is still a selling point. And they'll also charge you to get your money back if you go to an ATM that isn't theirs. We're talking $1, $2, $2.50 just to have access to your money. Should you, heaven forbid, overdraw your account by even a buck or two, there's a $30-50 fee. Likewise should they just bounce it. They're going to make you pay for not having money. It doesn't get much more mean-spirited than that.
If there was ever an industry that was just begging to get the Wal-Mart treatment, it's the banking sector. And for once, there isn't any "local culture" or "small business" or "better service" or "better wages" argument. Banks are regional, national, multi-national affairs, and their attitude towards individual consumers has two facets: 1) give me all your money, and 2) die in a fire. Heck, most of them are only open 35-40 hours a week, and unless you're willing to plunk down five figures right away, they'll usually even charge you for the privilege of giving them your money.
Let's hear it for the First National Bank of Wal-Mart.
Sounds like a good idea. I've always thought why do banks charge banking fees to use your money? Right now I have free student checking, but that will only last for a few more years. Even though I'm happy with my bank (right now) doesn't mean that I won't look else where for a good offer. Another thing that bothers me is the extraordinarily low intrest rates that mega-banks, as Clark Howard calls them, and even local banks charge for savings and some checking accounts. It will be interesting to see how well Wal-Mart's venture goes.
Posted by: Nathan at April 16, 2006 01:20 PMOkay, in all fairness, the basement interest rates we've all been getting on checking accounts has more to do with basement interest rates across the board than anything else. If a bank can only charge 4-5% for a long term mortgage, they obviously can't afford to pay that on short term checking accounts. They're "buying" money from you and "selling" it to their borrowers, and aren't going to do that at a loss.
Still, the .25% or so (I don't know exactly) I'm getting on my account isn't worth the time.
Posted by: ryan at April 16, 2006 04:36 PMTrue, but even so the banks could kick some back to their loyal customers ;). At any rate, EmigrantDirect Online has an interest rate at 4.50% and I've had that account up for about 8 months now. I think it's pretty good even though I don't have my primary savings there. I personally like to have savings readily available just in case an emergency comes up and I need the money. I just saw a CD at 5.00% from 9 mos to 10 years on EmigrantDirect's website. Ok, enough plugging, but I thought you would be interested.
Posted by: Nathan at April 16, 2006 07:41 PMWow your banks must suck! The one I work at is open 70+ hours a week, checking accounts are free, its a part of a national network of 32,000+ surcharge free ATMs, and if you come to me... I don't charge any fees ;-)
Posted by: jkrue at April 17, 2006 12:14 AM