Specializing in bringing together all components necessary for long term business growth,
profitability and success; and ensuring
that they are working in harmony.

Posts Tagged ‘banks’

Big banks and fees – here they go again

Wednesday, October 12th, 2011

In response to new rules that recently went into affect designed to insulate merchant’s excessive fees, Bank of America, and Chase have decided to shift the burden to their customers by having them pay a monthly 5.00 fee for the privilege of using their debit cards. And, just one swipe per month will do ya! Wells Fargo is also trying out a lower fee of 3.00.

In fairness to the banks it is important to point out that they have spent hundreds of millions of dollars to create a system that provides for debit card services. This investment included the technology and infrastructure to support required, to offer debit card convenience. Wal-Mart and Home Depot led the efforts to alleviate the cost to the merchants through legislation. I personally would have supported relief for merchants generating under fifty million annually.

Needless to say, the fees are being shifted AND because the big Banks have lost their credibility for goodwill – it is difficult to feel sorry for them. So let me reiterate, this is a charge levied against you for accessing your own money! So, let’s get this straight, first you get paid literally next to nothing for giving them your money to invest, then they charge you excessive credit card rates* for you to borrow (compare your APR to the current Prime rate for lending – even 8% is excessive)

Worse yet, many small business owners today are often sneered at by these guys at the idea of giving them a loan, or a decent line of credit.

Fee addition: How did we get to this?

For any of you old enough to remember, there was once a time Banks actually liked their customers. Rather than charging excessive interest rates on credit cards and loans, they actually paid decent rates for holding your money. Now of course, one hardly is paid anything at all (if anything) and for many, is expected to pay them to take your money.

Banks use to climb over one another to offer you a free toaster or microwave oven if you opened an account with them. Then came the ATMs. Suddenly they were offering additional incentives to get us all hooked on using ATMs. The banks also competed for bragging rights as to who actually had the most ATMs. Then the big push began to encourage consumers to use their ATM cards (soon to be renamed their debit or check cards. Of course all the incentivizing and bribing was not necessarily carried out to the benefit of the customer (as the banks would have you believe)

  • Labor savings – ATM machines kept their cost down by allowing banks to eliminate staff, which would have been previously required to manage those who needed to cash a check. In addition, automated withdrawals though ATMs also reduced human error through computerized record keeping.

As an added bonus, banks realized a financial bonanza in charging non-customers excessive fees to access their networks!

  • Debit Cards – As with ATMs, debit card use was incentivized to lower their cost of business under the guise promoting customer conveyance. Once again, it reduced the labor cost of constantly refilling their ATMs with cash. Better yet, removed another roadblock for a customer to spend money if they did not want to use their credit card. Now, the “I will need to write a check or withdrawal from the ATM” obstacle was eliminated.
  • Overdraft Fees – For years, banks enjoyed another money bonanza of offering overdraft protection for anyone who spent money without having an adequate balance. The majority of those affected were not intentionally over-drawing, they just neglected to double check for new fee’s banks were slipping in which affected their balances.

  • Fee’s are like heroin to banks – Senior Bankers I have spoken with actually confided that they have “fee committees” set up to think up new fees! It is an addiction for Banks to both make up and enforce them. Therefore, when they are taken away to the benefit of the consumer, well, the banks, like any heroin addicts, get upset!

Rather than placing focus on taking care of their customers and encouraging long-term satisfaction, Bank of America, Chase and Wells Fargo are moving forward with a plan to access fees for their customers who use their Debit Cards – and the continued war against their own customers grinds on. Well unless their customers wise up and move their money to a Bank or Credit Union that is not so fee addicted.


What is expected and what needs to change

Monday, May 3rd, 2010

Recently while in Central Europe, I pondered why all of the teenagers seem to smoke cigarettes? In fact, if they are to fit in, then they are expected to smoke.

It continues to fascinate me – even after living there and doing business throughout the region since 1995. Yes, even with all that, I am still fascinated by this cultural phenomenon.

Then upon returning to the states, I read about yet another “fee” the airlines were beginning to charge so that they could claim they offered low fares, only to offset the claim with adding on upwards of 50% additional in hidden fees and charges when the passenger arrives.

I opened my Sprint bill to see that the $89.95 “coverage plan” was really 105.00 after all the cr_ p they add on. No transparency there!

Finally, my call to the bank left me on hold for 38 minutes. I had a simple question but was advised that:

  1. I could go to www. bla bla bla (I just needed to clarify something with a real person)
  1. On the other hand, I could accept my fate and yes! “Continue to hold because my business is very important to them!!!!!” Oh yea, they did apologize for the delay – so that made me feel much better!

As I sat on hold, I reflected on my curious fascination over Czech teenagers smoking cigarettes and then realized the connection with lousy service here in The United States!

And here it is

Just as people in other countries are expected to smoke cigarettes as a rite of passage, we American consumers are expected to receive and tolerate terrible, abusive lousy service. Just as cigarettes will eventually kill scores of people in other countrys, the stress in dealing with large corporate conglomerates may eventually do the same to the American consumer.

Yes, it has become very clear that many businesses seem to almost compete on:

  1. Who can offer the worst customer service?
  2. Who can be the most deliberately misleading
  3. Who can come up with the most ways” to hit you in the pocketbook?”

As you may realize, new laws recently passed to make credit card statements more transparent. The law clearly stipulates that all new credit card statements must be easy to understand and yes, transparent. I laughed when recent ads began rolling out from Bank America, boasting, “They were dedicated to transparency”. Really? Why did it take them so long? (Please refer to comment #2.)

The bottom line is that on the most part, American consumers and small businesses put up with this. They accept it as the norm and we are expected to conform to it.

But here is the golden nugget:

Businesses that are well organized with a clear mission to customer service are in an ideal position to wrestle away a large conglomerates clientele. With a promise of good customer service, quality products and transparency that is real, they can, and will win over the masses!

Even better, once the word is out, the happy and delighted customers will do a lot of the advertising for you. Yes, it is true; offering exceptional customer service that demonstrates true appreciation to the customer should become the “expected norm.” In addition, we consumers and business owners alike have a responsibility to embrace it and expect it!