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We’ve had a two day breakfast session.  The first morning we casually talked about banks, credit cards, debit cards and the rip-off happening to all of us.  One guest at the table was a banker.  I should say a disillusioned banker who was dealing with how to maintain the ethical base with which he was raised and continue to work for a bank – or should he change jobs!!  It was fascinating stuff to take home and think about.

In todays market that is a difficult option, especially since he has worked in banks most of his adult life and it was his chosen field.  He is still pretty young, but after several years in the banking world it takes a better economy than the one in which we are functioning to allow him to make such a change.

The disillusioned banker and the woman who was confused about her debit card provided us with two days of great conversation and amazing information.  She wanted to know what we thought about debit cards and that sent the conversation off to the races.

The banker gave her an analysis, which is why the conversation carried on into the next day.  She went back to her room, pulled up her bank statement from her computer, printed it and brought it to breakfast the next morning.  She was still confused as to what the debit card cost her and she wanted to take advantage of being able to talk to a banker, who was not her own banker and who was in a mood to provide accurate information, which she didn’t expect her banker to do.

He looked at her bank statement – which kind of freaked out the rest of us with all of our privacy issues – but we were just as interested in seeing her bank statement as was the banker and it got passed around the table.  I have never experienced that before – ever.

When he finished calculating what it cost her to use a debit card we were all ready to cut up all of our cards – credit as well as debit cards.  Thought the rest of you might be interested in this analysis so it follows in as good a recollection and synopsis as I can come up with.  I wish I could give you the figures, but I didn’t want to be too obvious and she had already braved her privacy needs to bring her bank statement to breakfast so I don’t want to make her particular figures public.  You probably wouldn’t know her anyway, but I still can’t overcome my huge privacy needs to even give you the particulars on Ms. Anonymous:

1) She liked the fact that money was immediately moved from her checking account whenever she made a purchase with her debit card – kept her honest, she said.  The banker said she shouldn’t be so happy about that because even though the amount of money she received on her balance was really small, it was her money and when she had this immediate withdrawal upon using the card, she was receiving less money that month on her balances than if she used a check to pay for her purchases.  Since she used her debit card several times during the month, that could add up as that meant there were many days during which her balances were reduced prematurely when money was withdrawn immediately upon the use of the card.

By using a check instead of a debit card for her purchases, the money would stay in her account two or three days longer and for someone who had a minimum balance to maintain for the kind of account she had, that could be important and could begin to add up to nice amounts of money. Although from her bank statement she wasn’t hurting for money – still as the banker said, it was her money and she should not be prey to the banks, thinking up new ways to relieve her of her funds.

Well, that was an eye opener which none of us thought about before, but not a biggy since we realized something like that was going on – the bank benefiting from one of its products and we losing money from the same.  It is what we have been conditioned to look at as ‘normal’ and ‘acceptable’ banking practices. It was just a few dollars to us, but major income for the bank when they could keep our money in their account instead of in ours and get a free ride with a huge accumulation of such monies for a couple days.

“Our banker” as we began to call him,  then calculated what the bank was making – in addition to the money moving from her account to theirs’ where it ‘cured’ for a few days with their pennies making pennies for them instead of our pennies making pennies for us, before it was collected by whatever entity it was going to for her purchases.

2)  Every time you make a purchase with your debit card, the merchant you are paying has to pay the bank somewhere around 1 or 2 percent or some where inbetween to pay for the cost of making that transaction possible. We didn’t understand that.  We knew that happened with credit cards, but didn’t understand why that cost wasn’t paid by the monies the bank made by keeping our money for the two or three days float they managed to secure by the way they set up the use of the debit card. We wanted to know why this extra charge was being put on our purchases – especially since we all knew the merchant would have to pass that cost along to us as an addition to the cost of whatever purchase we were making.  No answer from anyone at the table until someone said the magic word “GREED”.

3) The third way  banks make money on debit cards is via the ATM machines.  Some banks charge to use their ATM machine  and some don’t, so we didn’t consider that banks making money on our debit card use, but they do.   So now I will always go to my bank to cash a check because my bank charges for use of their ATM machine – I never seem to be in the category of no charge for use of those machines.  She wasn’t either since her bank statement showed several ATM charges.  OR when I make a deposit I will take cash out with which to survive so I don’t have to go to the ATM machines.

Wow! After that I am paying for my purchases by check and having cash on hand to pay for the little things so I don’t have to use either credit or debit card or ATM machine.  The next thing you know I will be withdrawing my cash from under my mattress – talk about back to the past.  Why did we need banks in the first place?

Not one of the above was a lot of money for any one of us, but when you add  them all together and multiply by tens of thousands of such amounts, the bank is doing very well and we are not doing so well.  This is hard-earned money the bank takes away from most of us.  The bank gets very fat; messes over people like us who provide them with an incredibly luxurious lifestyle and we get to scrimp our pennies to live just reasonably well.  No wonder the Occupy people are out on the streets.  I am beginning to better understand some of their issues.

My debit card is no longer usable because I cancelled it right after that breakfast.  The bank said I didn’t need to cancel the card I should just stop using it and keep it for emergencies.  Somehow, I didn’t think that was said in my best interest so I insisted that the card be cancelled.

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