cancel
Showing results for 
Search instead for 
Did you mean: 
Jim Meade / Iowa City
Senior Advisor

Bank fee increases

I've read several news articles recently that to make up for the revenue banks will lose because of some of the recent laws, they are looking for new ways to make money.  The stories warn us to expect the end to free checking accounts for many.  Annual fees may be imposed for accounts that don't get enough useage.  Minimum balances may be imposed on various accounts.

The stories warned that bank announcements will likely come in plain looking envelopes, the kind we are tempted to toss without reading.  Might be best to read everything from the bank for a while, for those of us who don't.

I've not seen any increases here yet.  Have any of you seen any banking fee increases?

0 Kudos
18 Replies
Kay/NC
Honored Advisor

Re: Bank fee increases

Seems that the changes in credit card laws have generated a letter from our card's isssuing institution.  Since we do not ever carry a balance, I did not really read it.  The fact that the print is too fine for me to see, even with these bifocals, was probably a large part of that decision. 

Otherwise, haven't seen letters from our bank, at least not yet.  I was actually given free checks for one acount that I'd been buying them for for years, a while back. 

I am sure that this will be yet anohter way for banks to make money...they have always gotten a lot of their profit off of the weakest customers - check overdrafts, debit card overlimits, higher interest on credit cards where the people obviously did not have enough money to pay off balances, etc. 

And bailing them out on our backs did not make them grateful.  I listen to Suze Orman every Saturday night.  She keeps me clued in for what to look out for along this line of information.  Her website is a treasure trove of knoweldge for the lay person, too. 

0 Kudos
k-289
Senior Advisor

Re: Bank fee increases

Bank's have a not so polite way of doing business--stuff they wouldn't tell there mother!!!  I have very little tolerance for their thought process---in the 80's they would give me 60 month's on a new pickup--- but 6 month's on some Angus 1st calve pairs - that I bought from a neighbor that was liquidating his 200 cow herd----The pickup and or the heifers had the same $$$$ involved ---had the feed and pasture etc.  I took the heifer's and paid for them with $$$$ out of my other business and kept them 1 year --doubled my $$$ --also changed bank's in the process--the reason for the fee's is the amount of people employed with no skin in the game drawing to much salary--golf outing's etc.  

0 Kudos
WI AgLender
Contributor

Re: Bank fee increases

It is true that most banks make more money off fees than they do from interest.

 

Caveat: we charge very little fees.  the approach is a sales decision. 

 

Assuming a good ethical management ....... (hopefully that's possible? Smiley Happy )  

If we charge more fees our interest rates should be lower, thus getting us more new business.  (but pissing off our existing customer base.)  The reverse is also true, that low fees but a normal interest rate will keep long term customers but not get new business.  

0 Kudos
Kay/NC
Honored Advisor

Re: Bank fee increases

I always have heard that repeat business is much better, since it costs a lot in adveritising and other costs to find a new customer.  Would you agree or not?

0 Kudos
WI AgLender
Contributor

Re: Bank fee increases

I have heard that it cost 10 times more to get a new customer than retain an existing customer.  Most of my growth has come from existing customers making purchases/expanding.

 

I also have seen studies that most people are loyal to their current lender, and interest rate is not the biggest decision factor.

And most people would need .50% cheaper rates to even consider changing.  

 

What do you guys/gals think is important?  And how much cheaper would the other place need to be to get your business!?

0 Kudos
Kay/NC
Honored Advisor

Re: Bank fee increases

I was under the impression that loan rates were pretty well governed by your creditworthiness and factors like prime or LIBOR.  You have only so much latitude, right? 

I like very simple loan terms...no prepayment penalty, for one. I like an inexpensive conversion to fixed rate option  If interest is low, I can drift along, and if it starts to spike, I can step out of the deeper water easily and without a lot of angst over what it's going to cost to do so. 

 I think most people get into trouble with loans when they take one they do not really understand.  Since I have no real financial education, simple terms are best for me. 

I think that a lot of people do not realize what the law does and does not protect them from...for example, these second mortgages that a lot of folks took to use all that inflated home equity for God knows what, pretty much killed their homestead exemptions.  They could have paid for their home, but not  the home and all the value they took out that is now gone up in smoke, so now they lose the home and the lender loses, too.   

You can't go upside down unless you borrow for value that evaporates, right? 

Everyone likes to hear "yes," but it is sometimes not the best answer for a person to hear.  I have stood and listened to guys talk about the complex arrangements they made to get to a certain pot of money, and all I could think was,"If you had to be that creative to get it, you probably shouldn't have it."

I like a lender that takes time to explain things to me.  Havng some good print materials for me to study helps, but I do not know if most people rely on that kind of thing.   I only deal with loan officer very minimally now, mostly just to keep the door open, in case I need the relationship down the road.   With our most recent plans, I do not expect to need him for what we are looking towards.  Then again, you never know. 

I will point you to the next growth option though:  Financing for females.  Women are holding the purse strings in the US now, and they take a special approach.  Newsweek carried an article (I think it's in the issue with Sarah Palin on the front as a saint, which is the most recent one) outlining some of this trend. 

Large banks are making special marketing approaches towards women.  Often, they found widows of some of their wealthiest clients were pulling money away because they'd never felt included.   

The most interesting item in that article to me is the fact that women like to settle eveything at once...they want one institution to serve as many needs as possible, in a cohesive plan. 

My favorite phrase in  business is often "I want to settle this once and for all...."  I do not want to be running to five different banks for seven different reasons.  I do nto want to have to re-invent the wheel every time I turn around.  That is a very important thing for a person in your position to know. 

Farm women have long held a lot of financial responsibility, and many of them are the "comptrollers" for the operation.  If you aren't already giving this consideration, it may be worth some effort to improve that aspect of your marketing plan. 

0 Kudos
k-289
Senior Advisor

Re: Bank fee increases

Sarah Palin --Oil to banking----I guess grab all the $$$ and keep smiling..Anyone hear about the animal health issue in Canada this AM ?

0 Kudos
Eze100
Contributor

Re: Bank fee increases

I've been reasearching the beginner farmer Aggie Bond loan through the Rural Finance Authority. There fees are $50 to apply and $25 to $150 depending on the loan amount your looking for. If your approved after all the loops to my understanding you have to pay them another 1.5% of the amount they loaned out. That seems like alot of fees broken down if I'm understanding this all correctly. Anybody know much about these aggie bond loans???

0 Kudos
WI AgLender
Contributor

Re: Bank fee increases

I think that has been long known that the farm women are the likely financial decision makers.  Every farm is different though, and stereotyping would be wrong.  I think everyone at the meeting is important.  If they found the time in their busy schedule to come, and the primary operator found it important enough that they were included, they deserve the same treatment as everyone else.  Golden rule, etc.

 

Normally The decision on what is needed and why is made by the husband / primary operator, and the decision on if they can afford it and are going to do it is made by the wife / bookkeeper.  That is not saying the positions cannot be reversed, but this is the normal situation.

0 Kudos