by Steve20

Created on: December 02, 2009

What Your Bank isn't Telling You

The average person knows less when it comes to understanding how you, and why banks operate the way they do. It's all a person can do to balance a check book and hunt for high savings interest rates and low borrowing rates. But banks have a strategy when they raise rates and lower them. There's a method when they lure you to automatic tellers and they charge outrageous interest on credit cards and loans. And they know you probably won't complain when they pay you less interest on your savings and checking accounts.

Banks have to make money to stay alive. But you can keep more of that in your pocket if you learn some of the banker's innermost secrets. Below is explanation on some of the key ones in simple English.

How Banks Stay in the Black

Banks come out ahead when they rent your money (savings accounts) at one price, and then peddle that same cash to someone else in the form of loans (credit cards, personal loans, and mortgages). Look at the banks as though it were a little one -room building with two doors - one in front, the other in the back. You deposit your savings at the front door; the bank marks it up, and then lends the money to people lined up at the back door to borrow.

When interest rate begins to plunge, banks cut their savings rates faster than they cut loan rates. The result was their profits got bigger and bigger. In addition to financing the enormous banking bailout by paying more taxes, you picked up the tab by earning less on your savings and paying more when you borrowed.

Fees and Charges:

Fees and charges have been growing - like weeds. These keep taking more and more out of your wallet. Customers focus mostly on interest rates - not on the fees. The bank slips in a higher fee here, a new little charge there, and you hardly notice it.

Fees have become so important to banks that they're now considered "profit centres" all by themselves. In fact, it has been discovered that they are suddenly making money hand - over - fist from bounced - check charges.

The cost to use an automatic teller machine keeps on raising/ going high in shillings. That might not sound like much, but multiply it by millions of customers using their ATMs three to four times a month and you get an idea of how much money is involved. The number of fees is increasing too. For example, many banks now charge customers even to balance their statements.

Bank - beater secret: Ask your bank for a copy of its fee disclosure statement.

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