Originally Posted by otomik
you can get a higher interest rate if you were to go to an online savings account like HSBC Direct or ING Direct but you give up some of the brick and mortar bank services when you do that. if average people had higher rates of savings like the bavarians (i say Bavarians because it's an old relatively harmless stereotype that doesn't cloud the issue with racism and historical conditions. the germans and chinese right now are relative savers.) things might be structured a bit differently. sadly if a bank can't find a profit in you having money they attempt to find a profit in your lack of money. historically in the United States inflation averages 3% in the long run but during recession there is considerable deflationary pressure.
but they can't see a way to serve the poor people at all if they don't think they can find a way to make it profitable. if you want to run it as a civil service there have been attempts at that which I alluded to in my previous link. a more extreme example would be soviet savings banks, a system with no interest and no credit.
Thanks for clarifying the Bavarian thing. Makes more sense now.
I don't think my other post clearly stated what I was trying to get at. This may help.
1. Banks should cut elaborate spending (skyscrapers, huge salaries/bonuses) so they don't have to gouge customers.
2. Banks can still make a profit off overdraft fees and bounced checks, but make them within reason ($5-10 is more reasonable than $35). This won't be as
profitable, but it will still be profitable.
3. Try to attract wealthy people with higher interest rates for large & long term savings accounts that compete with other options.
In other words, I just think the banks could be doing a much better job with a few changes. My biggest point was that if they cut out the big spending, they wouldn't have to gouge their customers.
And poor people can still be profitable. I think you should actually give them something real for their money instead of a huge fee for practically nothing. All you have to do is look at what's going on and what their needs are. There are 3 really big things that come to mind off the top of my head:
1. Check cashing places. I went with someone once and they were charged 15% of the check just to cash it.
2. Payday advance places. I have no idea what they charge, but I know they ain't cheap.
3. Rent to own stores. Biggest ripoff of all. No joke, a $700 living room set can easily cost you $3000.
How about banks come up with plans to offer more affordable alternatives to those 3 places. As for #3, of course they can't offer furniture, but they could offer easier to obtain loans that cost less than rent to own places.