Financial rant!!

[rllink]

Originally Posted by Inyo

Good to know.

Good catch. You have an editor's eye.

[tinnitus]

Yeah, I'm old enough to remember interest on savings accounts last century, and even some checking accounts at a lesser rate. Today, short of 18-month T-bills and the like, any interest compiled in US banks is nearly negligible.

The trick I find is to scrutinize what a bank does regarding minimum balances, services, ATM fees, credit card fees, etc., etc. Sometimes a minimum balance in one account or another is necessary, and/or putting your income on automatic deposit. I ask questions, and I can play along with those rules to avoid insidious "service fees.". But that's as far as it goes for me. Any bank that charges money to hold/use/disperse my money, or issue a credit/debit card, will instantly become my ex-bank.

[Kerbie]

All banks charge for their services. They're not nonprofits. Some of the fees might be out in the open; others are embedded within the rates they pay, but they're not free.

[Tahitijack]

When I was a kid bank rates were so stable they would post the interest rate on the building and it didn't change over years. 3 to 6% as it recall...it was a very long time ago.

If your investments earning below inflation you need to talk with your financial advisor.

[rokdog49]

Originally Posted by Kerbie

All banks charge for their services. They're not nonprofits. Some of the fees might be out in the open; others are embedded within the rates they pay, but they're not free.

Not exactly. We are getting 1.25% in a money market fund regardless of what the Bank gets out of the fund, if anything. I don’t consider that a “fee” per say because the 1.25% is what they say they are giving us and they are. You could call it semantics. I don’t care what they make as long as we get ours as promised and nothing comes out of it and it doesn’t. We get the 1.25% period. That’s about as good short term as there is out there today. For the sake of honesty, we do have another account at that bank and have to maintain a certain balance, but so what, we had it anyway. That’s where they get their fees. They would get them, fund or no fund.
Annuities work the same way. If the insurance company guarantees you 5%, you get 5%. The money they may or may not make is above and beyond. The difference is you have to outlive the real value of the annuity as they dole it out over the years when you annuitize. They’re betting you won’t and the left over principle is much much less. That’s what your heirs will get. We have a six figure annuity that pays us $750/ month. I need to live to age 85 to get all my money they promised. I’m bettin on me.
The money market thing is only guaranteed for a year. After that, you have the option to stay in it or move out if the deal isn’t as good moving forward.

[Fogducker]

Prime rate was 10% and CD's were commonly paying that rate or eve 15%, in late 70's. Old folks were happy enough and retired thinking it would last forever. When the rates started coming down a lot of shuffling was necessary. Currently most accounts in banks or money markets pay hardly anything, ), .02% or so. So one has to make a move to "old lady stocks" (Or other equities) but Jack be nimble cause that could change quickly too.

There's a saying, Bulls make money, Bears make money------Pigs get slaughtered.

Fog

[rokdog49]

Originally Posted by Fogducker

Prime rate was 10% and CD's were commonly paying that rate or eve 15%, in late 70's. Old folks were happy enough and retired thinking it would last forever. When the rates started coming down a lot of shuffling was necessary. Currently most accounts in banks or money markets pay hardly anything, ), .02% or so. So one has to make a move to "old lady stocks" (Or other equities) but Jack be nimble cause that could change quickly too.

Fog

Inflation was rampant and that was an awful time. The economy was in the dumpster. I lost my job and it took years to recover from that mess.

[tinnitus]

Originally Posted by Kerbie

All banks charge for their services. They're not nonprofits. Some of the fees might be out in the open; others are embedded within the rates they pay, but they're not free.

The point I was making above is that some banks will charge customers monthly for going below a minimum balance, or assess "service fees," ATM transaction fees, instant credit score reporting fees, mailed paper statement fees, etc., etc. They're all creative and different.

True, I don't get the same interest rates I did in decades past (darn shame now that it might actually make a difference...LOL), but my balance will not diminish unless I make a withdrawal. Thus, since I pay no fees, my banking is free. Not bad actually, given that from home: I can pay bills (some automatically, some not - my choice), transfer between accounts and pay others directly. Income streams and tax returns appear there like magic, debit card and credit cards are free and I earn air miles (Mrs. Tinnitus earns hotel points, which we've used for years), ATM if free, and I can deposit checks with a snapshot from my phone.

So again, any bank that charges fees for the privilege of holding/using my money is quickly no longer my bank. But, just like a piggy bank, the banks I use are free. YMMV.

[Earl49]

As a point of interest our first house was bought in fall 1985. The best we could do with a sub-20% down payment (but very solid income) was 11.5% on an adjustable mortgage that could have indexed up to 15%. We saved aggressively and paid extra every month. With raises and work bonuses, it was paid off in about six years before the adjustments could rise and really hurt us. ( I don't recall the rate getting over ~12%) Last I heard, fixed mortgages are running right around 3½% for a 30 year term and even less for shorter 15 years terms.

Our credit union pays around 0.6% on savings and checking, but charges no fees with a $100 minimum balance. We gave up on mega-banks years ago in favor of local and regional credit unions. Better service and more direct local contact, not some 800 number manned in Sri Lanka.

[619TF]

Originally Posted by Kerbie

All banks charge for their services. They're not nonprofits. Some of the fees might be out in the open; others are embedded within the rates they pay, but they're not free.

Obviously they're a for profit business but why the fees other than blatant greed? When they're holding my money they pay me the one percent and then loan it to others at 2 to 3 percent or more. That or invest it at a 5 to 8 percent return for themselves Seems like that's plenty of profit for them as far as i'm concerned when one considers the scale of volume.

[Brucebubs]

Sorry to say but interest rates are at an all-time low here in Australia too.

I received an inheritance last week and considered investing some of it long term but rates are so low - 1% - I'll just leave it in my bank account at 0.25%.

[fitness1]

Not too far off what is happening here.

Regarding "credit checks" - I joined a local (large and old) credit union back in the fall. Put a really nice chunk of money into a CD and more in a savings. They ran a credit check and it hurt my credit score for a few months.

Tell me how that makes sense??

Savings, CD and IRA interest has been dropping for several years and is pretty bottomed out. But the CEO's still get their multi million severance bonus when they are let go.

[rokdog49]

Originally Posted by 619TF

Obviously they're a for profit business but why the fees other than blatant greed? When they're holding my money they pay me the one percent and then loan it to others at 2 to 3 percent or more. That or invest it at a 5 to 8 percent return for themselves Seems like that's plenty of profit for them as far as i'm concerned when one considers the scale of volume.

You seem to have ignored the overhead and cost of doing business.
I’m not here to defend the banks, but when they loan somebody money and charge them let’s say 3%, they aren’t netting 3% profit. Where exactly do banks invest money at 5 to 8% returns? Show me that one.
The credit card companies are the folks you should be upset about.
You borrow from them at exorbitant rates pay a fortune in interest.

[Brucebubs]

Originally Posted by rokdog49

The credit card companies are the folks you should be upset about.
You borrow from them at exorbitant rates pay a fortune in interest.

I pay my credit card debt in full each month and pay 0% interest - that exorbitant rate really only kicks in on the balance outstanding when the card holder makes a 'minimum monthly payment'.

[rokdog49]

Originally Posted by Brucebubs

I pay my credit card debt in full each month and pay 0% interest - that exorbitant rate really only kicks in on the balance outstanding when the card holder makes a 'minimum monthly payment'.

Us too. We are in a very small minority my friend...very small.