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[P]
OpenBank - a modest proposal for consumers

By Signal 11 in Op-Ed
Tue Sep 04, 2001 at 11:46:06 AM EST
Tags: Politics (all tags)
Politics

My friend today got off the phone with his bank after having his card declined at a store. He was hugely embarrassed, and upset. The reason? His bank has a `next day' policy for cashing checks - he deposited it on Saturday, but on Monday the funds weren't available. It's a common scenario - your funds, locked up where you can't use them. How about the words "insufficient funds" and the huge headaches that can create as the bank rakes in large chunks of this week's paycheck in overdraft fees. Some people get caught in a spiral and lose several hundred dollars that way before they realize what's happened. Enter OpenBank.


OpenBank is an idea I cooked up this afternoon to help combat what I see is one of the biggest problems in the United States today - the debt industry. Consumers are in debt, and while quite a bit of that is due to their own poor finances, a large chunk also has to do with the fact that people either just don't understand how the system works, or make a mistake that they wind up paying through the nose for. College kids are one of the most-targeted groups for credit cards. I'm 21 right now. Not a week goes by that I don't get a credit card offer - many of these I know come from my enrollment at the University, because they spell my name in the exact (wrong) way that the University does. I don't plan on `correcting' the spelling of my name until graduation - I use this tactic a lot to track the spread of my personal information. The state DMV also sells my personal information so that, guess what, I can get more marketing. Most people don't know how mortgages work, how APR works, and a lot don't read the fine print when they sign up for a credit card. My friend onyxruby recently pointed me to the small print on one offer he got - it advertised something like 9% interest, which sounds great... but the fine print told a different story: If you're a day late, you automatically get charged 30% of the outstanding balance. After that, you get 9% on the new total.

Banks almost always have clauses against you using funds you just deposited that day - some are `next business day', others can be up to a week. It just depends on how much the customer is willing to tolerate. There's a solid financial reason for this - banks are the chief source of investment for businesses. By shuffling around millions into accounts that may only exist for seconds or minutes, they can reap very small amounts of profit - sometimes pennies per thousand dollars. And it's all automated. By keeping your money from you, they're allowing it to work for them, if only for a few days. And it adds up - financial institutions like Wells Fargo, or major stock brokers, are a solid investment - they're always profitable.

Another thing - you may have noticed `service fees' for your account. Checks seem to cost an awful lot, especially if you want them customized - either way, whatever you pay, I guarantee it's quite a bit more than the paper it's printed on. Wells Fargo, at least, allows you to `upgrade' your account if you have X amount of dollars in it, with a minute increase in interest. Most people will wind up having a few thousand in the bank for a short while, and if you go in, the teller will pester you to upgrade. Sometimes it's even automatic. But if you keep less than that amount in, you'll be nailed with a small service charge - just small enough that it's too much effort to complain, go in, and fix the problem. But it'll `net the bank $120 over the next year. ATM fees are interesting too - "If you are not a customer of $BANK, you will be charged $X, in addition to the fees your financial institution may assess." Withdraw $40, get nicked with a $2 withdrawl fee. Sometimes you'll even see the machine debit your account two or three times. Illegal, but who's going to take the time to call the bank and open an investigation? An ATM doesn't cost much to maintain - the machine itself, regular maintenance and cash drops, and a phone line is all that's needed. I would say the average ATM at a mall (and have you ever noticed that no mall on the planet will have an ATM that is owned by the bank that gave you your debit card?) will average 600 transactions in a day. If even half of those are not from the financial institution in question, that's $600. Or more. Over a month, that adds up to a nice $18,000. Think it costs that much to maintain the machine? Think again.

This is where OpenBank comes into play.

OpenBank would be a consumer cooperative. It's not a new idea - the Hmong community up here in Minnesota does this, quietly. They pool their cash into the community, and then, when they need money - they ask the counsel for a loan. It's a zero percent interest loan too, if my contacts are telling the truth. When you have a thousand people or more working together, each contributing a small sum of their paycheck together to be part of the cooperative, the net result is that the participants can get a lot more done with their money - and have a reserve to fall back on. It's like insurance, except it applies more broadly. OpenBank wouldn't have large fees levied against you if a check bounced - maybe a couple dollars to send a notice to you and the other party. Not $25. OpenBank also wouldn't have service fees for accounts for things like online banking - those things should be free, because you should have access to your financial information. Instead, consumers with a good history with OpenBank could be rewarded in the form of better interest rates for the money they do put into the bank. How would loans be handled? Organize people into groups of a couple hundred, and then have them vote on it - don't give out the personal details of the person making the request, simply state the amount, the reason for the request, their credit history, and any additional information they care to provide. You can then vote online if you'd like. Or, if that's problematic (technology at the time Openbank goes live may not be up to snuff, it certainly isn't now!), use the standard loan-approval system - but with the interest fees only slightly above what it costs to cover defaulted loans and other financial problems associated with it. And make it an honest rate - one based on the current rates by the fed, for example. It can be adjustable, but it shouldn't be exorbinant.

Expanding things a notch, imagine consumer `unions' implemented en masse to purchase certain goods (food, clothing, etc) at discounted rates - auctioning off a certain number of purchases to the lowest bidder in an open pro-consumer marketplace. OpenBank could be the catalyst for that.

This idea originally grew out of a plan for protesting the `interesting' financial practices of banks in my area - a plan to distribute fliers and mass-mailings to encourage people to discontinue depositing their paychecks for two months and instead cash their checks, and then either hold on to the cash, or deposit the cash instead- deposits of cash often don't have the restrictions that checks do - the funds are immediately available - same day. If a significant portion of people did this for awhile, banks would be deprived of a noticeable amount of money for investment. It won't fly right now with the economy we have because nobody is asking for a loan to expand their business, but in a tight market - like it was a year ago, it could make a major statement. In short, this is one idea amongst many that encourage people to join together in groups and take the bull-head of capitalism by the horns and direct it for their own benefit, instead of the few people who benefit from it now.

The problems with OpenBank

For starters, it's tough, if not impossible, to get a bank off the ground. Everything is owned by a very small number of agencies. These agencies would be very sensitive to such an idea catching on. Our legislative bodies are still very much influenced by `big money' - in the form of campaign contributions. About the worst group to attack on this front would be financial institutions. Plus, the fact that major credit companies like Visa and Mastercard are private institutions means they can simply deny OpenBank card holders access to the financial network, which makes the card useless. How likely this is, I don't know - but it's certainly possible, if you ruffle enough feathers. Secondly, you need a bank already that has solid financial footing before you try to start a political campaign to encourage consumers to switch off of their current banks. Many banks have a clause in their loan papers that state they must be the sole bank that you have accounts with - most people have loans out, so OpenBank realistically could only target people who have little financial assets - the young adults in this country. We're not exactly an economic powerhouse, kids - most of us also have student loans. For OpenBank to work, we'd need enough funding to buy out those loans and put them under our ledger. Often, it would be at a financial loss - we'd be paying the interest as well as the principal. Once banks in the area caught on, they'd put more clauses in place to stop this from being an option for many people.

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Poll
OpenBank is:
o An excellent idea for consumers 25%
o gonna flop - too many barriers to overcome 33%
o a subversive communist plot 29%
o a bad idea 12%

Votes: 24
Results | Other Polls

Related Links
o Also by Signal 11


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OpenBank - a modest proposal for consumers | 35 comments (27 topical, 8 editorial, 0 hidden)
Per request - loan restrictions 411 (3.60 / 5) (#3)
by Signal 11 on Mon Sep 03, 2001 at 09:54:21 PM EST

As requested, I do not have the details on the 'sole bank' restriction I mentioned in my article - this is 'meat-space' information only, unfortunately. I searched online extensively for a sample loan contract. Apparently, this information is simply not online. Sorry. :(

I would recommend going to a wells fargo branch office and asking for a copy of a standard unsecured loan contract.


--
Society needs therapy. It's having
trouble accepting itself.

Credit Unions already do this.. (4.81 / 11) (#4)
by enry on Mon Sep 03, 2001 at 10:06:06 PM EST

Since CUs are "non-profit", or legally, "not-for-profit", the money they accrue over the year gets paid to shareholders (i.e. the people that have money on deposit in the form of savings accounts). I live in MA, but still have my CU from New York since I the NY CU is the best I've seen, and takes care of all the problems you have listed:

1) Checks under $1000 are second day (maybe first). Over $1000, the first $1000 is the second (first), the remainder is 3-5 days.

2) Payroll checks are always honored immediately, as are checks from the same CU.

3) The CU is part of the SUM network (http://www.sum-atm.com/), meaning if I go to an ATM that is on the SUM network, I don't pay a fee at that ATM (I still pay $.75 to may CU as ATM fees). Since I get a wad of cash back when I go to the grocery store (no fees on either side) this isn't much of a problem. You can't spit in the boston area without hitting a SUM member ATM.

4) A few years ago, the CU offered all members an immediate $500 overdraft account - no credit check , blah. Just ask for it and it was yours. There's $1.50 fee for automatic transfer, and the overdraft rate is about 14% at last count, but it's a lot less than a $20 service fee from the CU for a bounced check plus the service fee from the person you paid the check to.

5) All services can be done over the phone with a live teller, touchtone phone service, or internet. All free of charge.

6) I can write as many checks as I want, have my balance go as low as I want (provided I can cover checks, see #4), and my checking account *still* gets interest.

In short, see if you can be a member of a CU in your area. Many are based on employment, and some are based on locality. Either way, once you're a member, you're a member even if you leave your job or locality. Family members can also join as well.

Credit Unions are the way to go... (4.33 / 3) (#12)
by maynard on Tue Sep 04, 2001 at 09:59:43 AM EST

Without a doubt. I've been screwed by more banks than I can count. Fleet, back when they were BankBoston, screwed me out of $1500 by claiming to a credit reporting agency several years after I had closed my account that I owed a debt which I had paid in full while closing the account. I didn't discover this until I ran a credit check. Since I hadn't saved my stubs and receipts I had to pay them again.

The hassles involved with even small banks changing contract terms after the fact and then charging ridiculous service fees have convinced me that the only rational course of action is to join a credit union. I'm a member of the MIT credit union, though in Cambridge there's a perfectly good Portuguese CU which takes any and all requests for membership. At this point banks are charging usurious interest and service fees. It's in your interest to get the hell out of the system and stop letting them nickel and dime you out of your hard earned money. One might think these guys were colluding to raise fees considering how even small banks play this game....

Cheers,
--Maynard

Read The Proxies, a short crime thriller.
[ Parent ]

A caution (3.33 / 3) (#14)
by Woodblock on Tue Sep 04, 2001 at 01:05:09 PM EST

<IANAB>

While I agree that credit unions are a very attractive means of banking. They do have a few cautions. Banks, at least in Canada, are more heavily regulated, and these regulations do cost the bank money. One such regulation has to do with the way the bank borrows money from the Federal government. I think a significant portion of their assets have to be backed by gold held by the Canadian government. In the event the bank fails, which doesn't often happen except in extreme circumstances, a bank customer can get some, if not all, of their money back. Credit unions, and trust companies I believe, aren't held to this and other similar regulation.

At least that's how it works in Canada. It may be different in other sovereign states.

</IANAB>
-- Real computer scientists don't use computers.
[ Parent ]

FDIC (2.66 / 3) (#16)
by maynard on Tue Sep 04, 2001 at 01:40:04 PM EST

In the United States we have the Federal Deposit Insurance Corporation, a government agency which insures bank deposits up to $100,000 per bank. My Credit Union checking and savings account is most certainly insured through the FDIC and is no different than any other bank account in this regard.

Cheers,
--Maynard

Read The Proxies, a short crime thriller.
[ Parent ]

NCUA (obsessive nitpick) (4.00 / 2) (#20)
by mdecerbo on Tue Sep 04, 2001 at 02:59:18 PM EST

Actually, I think credit union accounts in the US are insured by the NCUA, not the FDIC. I know mine (which is great, and which you can join if you have just about any connection to Norfolk County, Massachusetts) is.

[ Parent ]
I stand corrected. (2.50 / 2) (#22)
by maynard on Tue Sep 04, 2001 at 03:35:14 PM EST

Hey, is that you Mike???? --M

Read The Proxies, a short crime thriller.
[ Parent ]
CDIV (none / 0) (#28)
by Woodblock on Wed Sep 05, 2001 at 09:42:14 AM EST

In Canada we have the Canada Deposit Insurance Corporation , a government agency which insures bank deposits up to $60,000 per bank. There are no credit unions which are member institutions. All banks, and most trust companies are. But this was just an example of regulations. Banks, in Canada, are much more heavily regulated. These regulations increase the cost of doing business and so the banks pass the cost on to the consumer.

But such is the world of business.

Regards
-- Real computer scientists don't use computers.
[ Parent ]

Cashing cheques (3.33 / 3) (#11)
by MSBob on Tue Sep 04, 2001 at 08:05:59 AM EST

There's a very pragmatic reason why banks take up to five days to clear cheques. It's simply that during that time your money is exclusively in their hands and it allows them to invest that money freely which in a large scale of things means a tidy profit margin. This is a common albeit a malicious practice and consumer groups in Great Britain have been fighting against that for a few years now. It seems though as banks are completely immune to consumer pressures.
I don't mind paying taxes, they buy me civilization.

I hate banks (4.20 / 5) (#13)
by Lord13 on Tue Sep 04, 2001 at 10:27:04 AM EST

I've written about my hate for credit cards before, but I hate banks just as much. Here is why:

Anyone remember way back sometime in the mid-90's 20/20 or 60 minutes did a special on insurance check fraud? All the new fangled PC's and color printers were facilitating check fraud. Kids were printing out bogus checks for thousands and cashing them in at banks. It actually caused a bit of fever in the banking industry of which I became a victim. I had a legitimate check from an insurance company to cover some CD's that were stolen from my car. It was perhaps a day or two after the TV broadcast that I tried to cash the check my then current bank Standard Federal. Predictably they refused to honor the check. At the time I had held an account at the Standard Federal for over 20 years and had the account passbook to prove it. No matter how much I yelled or demanded that they AT LEAST attempt to verify the check, they refused. I threatened to close the account I had for 20 years if they would not attempt to verify the check, they refused. So I took my cash, closed the account and chucked the passbook at the manager. Damn bank is so fucking greedy they will gladly lose a long standing customer versus cash, deposit or even VERIFY a $80 check from an insurance company. It still baffles me.

I switched to First of America, now National City, and they are just as bad. Anybody who has an account can verify this fact, they now charge you a $1 to withdraw money from your own account. This only occurs when you go in the bank but it's still fucking ridiculous. Their excuse is something about I should be writing checks for cash so I won't unbalance my checkbook or something, whatever. I'm guessing charges for making deposits are just around the corner so I'm getting out.

I would have switched to a credit union a long time ago, but I live in an area that doesn't have much to offer.

I really hate banks and credit cards in general. I often wish I could start my own bank. A bank that didn't make everything a service charge of somekind could take over the market.

Signal's article just made me have to bank rant. Keep moving, nothing to see here folks.

Growing half a tree, water it everyday.
I hate them too (4.00 / 5) (#15)
by Ender Ryan on Tue Sep 04, 2001 at 01:09:10 PM EST

I work for a company that is part of the credit card business, we provide information for cc company executives and consumers.

While I'm a programmer and am not involved with all that, I still learn a lot about what goes on in those industries and it is sometimes pretty sickening.

EVERYTHING banks and cc companies do is to try to draw more fees from their customers, usually using extremely deceptive tactics. I will simply list a couple examples...

  • cc companies will give someone a card with a low limit, after they prove they pay ontime, they will increase their credit line. people see this as a good thing, but when they use that increased line of credit, their cc company will suddenly deem their credit-worthiness not so great and jack up their rate, leaving the customer with a very high rate and a lot to pay off. cc companies have been doing this for a long time.
  • banks try as hard as possible to make your check bounce. one trick they use a lot is to process checks/transfers/deposits in the order where they can get as many checks to bounce as possible so they can hit you with fees.
  • cc companies try as hard as they can to not process your payments on time so they can hit you with fees. a few companies have recently come under fire for this practice, taking as long as 20 days to process payments. they often flat out lie blaming the USPS, saying the payment arrived late.
  • many cc companies have deals or partnerships with insurance companies and offer to insure all your purchases. often, this is opt out, and many times you aren't even told of this before hand and aren't actually given a chance to opt out. other times your opting out is ignored.

That's just off the top of my head, the list goes on and on. What's really frustrating is that MOST banks use these same tactics, it's a few banks here and there trying to rip off their customers.


-
Exposing vast conspiracies! Experts at everything even outside our expertise! Liberators of the world from the oppression of the evil USian Empire!

We are Kuro5hin!


[ Parent ]

Ah, another reason to hate banks (4.66 / 3) (#21)
by Lord13 on Tue Sep 04, 2001 at 03:23:25 PM EST

I've been doing this so long I nearly forgot why. The $1 charge to withdraw thing is something I run into every month because I get a money order for my rent check. I get charged because I get the funds for the money order from checking. The reason I do this is because a couple years ago, for nearly 6 months straight, my rent checks bounced. It was driving me insane since I was keeping pretty good track of my spending and I had the funds when I wrote the check. Turns out the bank (the apartment complex sweared on their collective mothers it wasn't them) was holding onto the check until the third Thursday of the month before putting it through. This was, on average, when my account balance was the lowest during the month. So it'd bounce and I'd end paying $25 to the bank and $50 to the apartment complex for late payment. $75 is enough motivation to get a money order done and the problem is solved.

Someone told me National City was being sued for this type of behavior, but I could never find proof.

I've been combating the $1 charge in my own way. The stupid bank doesn't charge for ATM withdraws. So typically when the teller tells me she has to charge me $1 I ask her to wait and I walk outside to the ATM. I get most of what I need from the ATM and then I do the transfer from checking to savings with the teller and withdraw the balance I need from savings. Finally, after all that, I get my money order.

Yes, this takes about 10-15 minutes and yes I'm insane. I normally complain loudly and get pissed off every time too. This has helped since I'm known as the jackass customer and the tellers that recognize me don't try to charge me a buck.

It's all fucking lunacy and I can't stand it. I'm wasting a lot of my time and a lot of the banks time, but these greedy fucks have got to learn somehow. Another poster mentioned some credit unions do this do. In the meantime I plan to continue being the biggest jackass I can be.

If any fellow K5'ers have some ideas on how to obfuscate this process even more, I'm all for it. I have to go to the bank in 15 mins, rents due.

Growing half a tree, water it everyday.
[ Parent ]
$1 withdrawel fees.... (4.00 / 3) (#17)
by Elkor on Tue Sep 04, 2001 at 01:57:46 PM EST

My CU has this same policy. If I want to withdraw cash from my checking account they are supposed to charge this fee.

I just look at them funny, and they generally relent. If they don't, I give them an "are you an idiot look" and then say "Ok, transfer $XX+1 dollars from my Checking Account to my Savings account and then I will withdraw $XX from my savings account."

They can't complain about that, as I am allowed to transfer funds between my checking and savings account at my discretion.

It still "costs" you $1 from your checking account, but it goes into your Savings account, not to them.

If you wanted to be a REAL pain, you could then transfer the $1 from your savings account back to your checking account.

You can then point out to the teller (or get the Bank Manager to do this for you) that it took them twice as long to perform the three transfers than if they had just given you the money like you asked.

Regards,
Elkor


"I won't tell you how to love God if you don't tell me how to love myself."
-Margo Eve
[ Parent ]
Credit Unions... (4.00 / 3) (#18)
by Elkor on Tue Sep 04, 2001 at 02:12:35 PM EST

I agree with another poster, Credit Unions are the way to go, for physical location.

There are starting to be a few banks that are solely on-line that are beginning to offer attractive alternatives to conventional banks.

One bank I got an offer for doesn't charge ATM fees and will actually refund me up to $1.50 in ATM fees charged by other banks to withdraw my money. They will also provide postage paid deposit envelopes if I want to deposit a check with them. Since my paycheck is electronically deposited, there would be few of these, and unlikely that they would be large.

Further, as a student, you might/are probably elligible for membership in your State Educators Credit Union.

If you don't have a state credit union like that, find a credit union with a branch near your school. Some credit unions have membership requirements set by branch localities. If you work/live within so far of the branch you are eligible for membership.

That is why I have an account with an Air Force Credit Union as well as the one I got for being an Army Brat. They have a branch 2 blocks from my job.

Regards,
Elkor


"I won't tell you how to love God if you don't tell me how to love myself."
-Margo Eve
Reason for check cashing delay (3.00 / 2) (#19)
by miker2 on Tue Sep 04, 2001 at 02:28:06 PM EST

There is a legit, and technical, reason why there is a delay between cashing a check and when the funds are available. Banks that do business in the US are all on a network, the financial transactions network, across which all inter-bank transfers of money take place. If I cash a check at bank A written by someone with an account at bank B, the funds have to be transferred between the banks before they are credited to your account. This time can vary greatly depending on the size of the bank that the check is being drawn on and deposited to and the time and date when it is deposited. The volume of cash that rides this network is astounding, so some delay is necessary just to perform the transaction, and since EVERYTHING that a bank does is regulated by the FDIC and SEC, there is a lot of redundancy in verifying transactions and additional overhead that slows the process down even more. I happen to know all of this due to first hand experience as a sysadmin at a very large bank. The inter bank network accounts for well over 3 trillion US$ per day in inter bank transfers, quite a large volume of transactions. Also, some banks have a program where the first 100$ of the check is available right away, no questions asked. Ask around to see if someone in your area has this.

3 days!? (none / 0) (#30)
by mrogers on Thu Sep 06, 2001 at 11:27:00 AM EST

Are you seriously telling me it takes 3 working days for a transaction to travel across the Fedwire network? What is it based on, USENET?

[ Parent ]
i got bitten by this : it was my own fault (2.50 / 2) (#23)
by steve m on Tue Sep 04, 2001 at 04:13:17 PM EST

When I first started work my wages were paid by cheque. I withdrew some of my wages, before the cheque cleared, and got charged for going overdrawn. At the time I was being paid 60 / week, and the letter cost 20. my fault - shoulda checked the balance first...

Anyhow, I got an overdraft, and now go regularly overdrawn (at the end of each month).

moral of the story: it's your job to look after your finances - check your balance, save some money as a float, or get an overdraft facility. the bank is owned by shareholders and so must make money - off you, the customer.

To Canadians - PC Bank (3.33 / 3) (#24)
by brunes69 on Tue Sep 04, 2001 at 04:53:55 PM EST

Hey, to all Canadians out there, I would highly recomend President's Coice Financial as the best no free bank out there. I've been with them since they opened, and can sing nothing but praises. This bank has it all.
  • No fees. Period. unlimited free cheques, unlimited free withdrawls from any CIBC or PC Bank machine, unlimited deposits. The only fee you will ever see is if you withdrraw from another banks machine, cause they charge that, not the PC Bank (At least thats what the sales rep said)
  • Free Internet Banking, which has the best web baking interface ive ever seen
  • Free Telephone Banking
  • A Savings account with 4.5% intrest, and your regular chequing acct has like 0.75% - 4.5% intrest as well (depends on balence)
  • A No - Feee mastercard
  • PC Points - Every automatic deposit into your acct, you get 100 points. Every bill payment online, you get 100 points. Every dollar charged to your PC Bank mortgage gets you a point. Every dollar owed on your line of credit gets you a point (/month). 1000 points = 1.00 in Free gorceries. You get 20,000 points when you first become a member and activate all your services.
  • They give you a free bag of cookies for joining!

    The only bad points are these, but I don't even care about them
  • There are no tellers available. None. The bank is purely electronic. This isn't a problem for me since I kept a No fee basic service acct at Royal Bank to do things like cheque cashing.

    Thats it! And the bank is run by CIBC, so you know its not going to go under. Seriously, it can't be beat!

    ---There is no Spoon---
  • American Internet banking (none / 0) (#26)
    by dzelenka on Wed Sep 05, 2001 at 01:11:57 AM EST

    Us Americans have many Internet banks to choose from. I used to use SFNB before it was swallowed by Centura. Now I use Everbank.com. The internet banks are still hungry, so you get a very good deal on fees and services. You just have to get over the need to see a teller. However, Everbank still has a long float time for mailed deposits. Direct deposit is fast.

    "Are you talkin' to me?"
    [ Parent ]
    Not "Internet" Bank (none / 0) (#27)
    by brunes69 on Wed Sep 05, 2001 at 06:32:56 AM EST

    The PC bank isn't an "Internet Bank". You can deposit, and do anll your transactions, at any CIBC bank machine, which has machines all over Canada (It's one of our 4 or 5 nationwide banks). No need for mailing anything anywhere



    ---There is no Spoon---
    [ Parent ]
    I will second this reccomandation (none / 0) (#32)
    by ZanThrax on Sat Sep 08, 2001 at 08:04:15 PM EST

    I have been using a PC account since a month after it came into existance and have never once regretted it. They don't hold my money back either. As soon as I put the deposit into the atm, the balance is adjusted and I can use the money. I pay all my bills through the phone banking system (which is well-designed, and there are live, helpful, polite people available if you want to talk to one 24 hours a day), including the one store credit card that I had to get last christmas to pay for my brakes.


    Intolerant people should be shot.


    [ Parent ]
    I would say this is a great idea... (2.00 / 2) (#25)
    by PhillipW on Tue Sep 04, 2001 at 05:16:59 PM EST

    ...If I had any faith in the people of my community, or any other people for that matter.

    -Phil
    Objections (2.50 / 2) (#29)
    by Scrymarch on Thu Sep 06, 2001 at 05:08:37 AM EST

    Ye gods, with the number of libertarians that whine vociferously every time someone suggests perhaps the poor people could be a little better off I can't believe the bank-bashing howlers above haven't been tackled yet. Unfortunately I am currently without cut&paste but here goes ...

    • The cash float. This is a myth. The funds that are being processed while waiting for eg cheques to clear are not used by banks. You don't have access to the funds because the bank is at risk until the check is cleared. Old banks are risk averse, and a damn good thing too. Cheque clearing times were ridiculously long until recently - this was due to old tech and the economic phenomenon of "satisficing" - people do just enough to get along. It's like the financial force of static friction.
    • Service fees. Signal11, as I recall, has been employed. Are you not therefore aware that labour costs money? This is what is behind service fees, with a little extra added to encourage people to use more efficient tech. I am sick of the whining about face-to-face service fees by banks; the whiners are asking everyone who bothers to use a more efficient method (eg credit or debit card) to subsidise their social pleasantry. As far as I'm concerned the in-bank charge should be doubled unless you're actually generating new business for the bank - asking for a loan etc. Oh, and maintenance costs more than you think, it includes property lease etc, plus profit (shock!).
    • Mutual societies and credit unions. Sure credit unions can give you a better deal in the marketplace for some financial products. Good luck to them; if you're happier with that product than go ahead and move your account. Their ATM/branch networks can be small though; you might still be charged by those nasty banks when you have to get out money. A more serious problem is that by being joint owners of the company you share the risk of running it; if it falls apart your cash might go with it. Not sure about whether the Federal Reserve in the US backs credit unions the way it backs banks, for instance. Equitable Life in the UK is going down big time because of a foolish decision made some decades ago (in times of high interest rates) to guarantee returns on certain policies. Members with those policies pursued those guarantees in the courts and now the whole organisation is rooted and people are losing their life savings.
    Sheesh people - things are the way they are for a reason, you know, it's not always a Big Corporate Conspiracy.

    Responses (none / 0) (#33)
    by ZanThrax on Sat Sep 08, 2001 at 08:21:25 PM EST

    • Bullshit. The bank is worth an insanely large amount of money. They are at no risk over a $500 paycheque being no good. If I attempt to deposit a phony cheque, I'm commiting fraud and they can deal with me over that. <quote>Cheque clearing times were ridiculously long until recently</quote> Exactly. Cheque clearing times are no longer as long as many banks hold the money for, but they continue to do it because no-one is competing with them.
    • Bullshit. Service fees as they exist today did not exist in the past. Banks are supposed to make profit by loaning us our own money at interest greater than the interest they give us for holding our money. Much like gas stations, the banks have realised that as long as they all fuck us in the ass, we don't really have any incentive to switch rapists.
    • Well, I don't know what insurance exists for what credit unions where. I'm certain that in some jurisdictions they're insured in much the same way as banks, even if not by the same exact agencies. Still, its worth looking into a slightly riskier long-term arrangement when the short term one is so heinous.


    Intolerant people should be shot.


    [ Parent ]
    Continued (none / 0) (#35)
    by Scrymarch on Tue Sep 11, 2001 at 08:11:09 AM EST

    Looks like I touched a nerve ... at least enough to be zero rated by someone. I feel special. Anyway ...

    The bank is worth an insanely large amount of money. They are at no risk over a $500 paycheque being no good. If I attempt to deposit a phony cheque, I'm commiting fraud and they can deal with me over that.

    Depositing phony cheques isn't the main risk, the main risk is the cheque bouncing. There is usually no fraud involved here, just a mess of timing. This is expensive. Cheques can be larger than $500, too - consider purchase of stock.

    Cheque clearing times were ridiculously long until recently ... Exactly. Cheque clearing times are no longer as long as many banks hold the money for, but they continue to do it because no-one is competing with them.

    Banks are big risk averse institutions, so it does some pressure to change ... in Australia pressure from the stock exchange going to 3 day clearing is what is pushed/ing banks to 3 day cheque clearing. Anyway, cheques are a badly outdated way to do business ... see below

    Bullshit. Service fees as they exist today did not exist in the past.

    But the cost associated with them did. The relative costs of labour were also cheaper. The bank just hid the fees behind lower deposit interest rates and higher loan fees. The service fees are good because they allow you and the bank to save money. It is cheaper to use an ATM than see a teller face to face, so if I use an ATM I want to be rewarded rather than paying for someone else's convenience.

    Banks are supposed to make profit by loaning us our own money at interest greater than the interest they give us for holding our money.

    Banks can make a profit however they want within the law. If they let people choose the charges they pay, which is what up-front service charges do, I welcome the choice.

    Much like gas stations, the banks have realised that as long as they all fuck us in the ass, we don't really have any incentive to switch rapists.

    In your charming allegory I would prefer to structure my life to reduce the frequency of being anally raped.

    Well, I don't know what insurance exists for what credit unions where. I'm certain that in some jurisdictions they're insured in much the same way as banks, even if not by the same exact agencies. Still, its worth looking into a slightly riskier long-term arrangement when the short term one is so heinous.

    Well and good, you seem happier with implicit costs.

    [ Parent ]

    most credit unions are insured (none / 0) (#34)
    by Low11376 on Mon Sep 10, 2001 at 05:41:36 PM EST

    The NCUA (National Credit Union Administration) is the U.S. credit union equivalent of the FDIC (Federal Deposit Insurance Corporation). All federally-chartered credit unions, all state-chartered-and-federally-insured credit unions, and some non-federally-insured credit unions are required to have insurance through the NCUA. Like the FDIC, the NCUA insures credit union members' deposits to US$100,000. Also like the FDIC, it's a federal agency, so it's gonna make good on the insurance if necessary; at least, it'll make good as well as the FDIC will.

    - Chris

    [ Parent ]
    Washington Mutual (none / 0) (#31)
    by dvNull on Sat Sep 08, 2001 at 02:32:19 PM EST

    When I moved to California I looked for a Bank to get an account with. I tried Wells Fargo and Bank of america. Both refused to give me an account sonsidering the fact that I had bounced ONE check 2 years ago. The check amount was $100 and I had maybe 20 dollars less in my account. No matter that the amount I had on hand to deposit was 8000 or so ..

    I finally got an account in Washington Mutual who charges me $6 (The Gold Plan) which includes a gold Visa check card, no minimum balance, $500 overdraft protection (which I havent even had to use yet), free checks, free online banking and bill payment, small lines at the teller if i need to go in for something, very very courteous customer service (which I havent seen in ANY other bank). Of course you can also get the regular account which is free, but you fdont get the benefits of the Gold Visa check card which includes travel insurance, dental and some more perks.

    I have recommended Washington Mutual to friends who have also switched and now echo my praises.




    If you can see this, then the .sig fell off.
    OpenBank - a modest proposal for consumers | 35 comments (27 topical, 8 editorial, 0 hidden)
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