Another day full of gloom and doom according to the news in print, on the radio and TV. We say, don't listen to any of it and just take care of yourself and your family the best you can. We already know that you cannot count on anybody or anything except your close personal group of friends and family and sometimes not even your family.
One of the interesting things I saw in the paper today was an advertisement for a "high yield" savings account. The "high yield" was 1.5%. Financial institutions are advertising their generous rates for savings and CDs that range from 1.5-4.3% and yet their credit card rates for ongoing balances are in the 20+%. Consumers have more information available to us than ever before on how these institutions do business and yet we continue to ignore the warnings and dive head first into the trap of spending more than we earn. We know how difficult it is to restrain ourselves because we are used to buying what we want and paying for it later. We have forgotten one of the most important facts of life, that being CASH IS KING!! If you cannot pay cash for that item that is your current hearts desire, don't buy it.
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We as consumers have created and have the ability to correct the banking industry's taking our dollars and refusing to lend it at reasonably profitable rates. Just think about the margin of profit to the banks for services we don't even need. I recently used my credit card at an ATM machine that was not a Bank of America which is where I have my account. The ATM deducted $4.00 from my $100.00 withdrawl. When I received my bank statement, B of A charged me a $2.00 fee to give me my own money. You might say that isn't much for the convenience but look at their rate of return: $6.00 for $100.00 is a 6% return but lets look further, that is for one day so that is a 6% daily return not annual so what is the bank's true rate of return. $6.00 per day for 252 days is a return to the bank of $1,512.00. If my math is correct that would be a 1,512% annual rate of return on $100.00 but wait that was my money not theirs they loaned. If that isn't insane enough let's look at additional money that we give to the bank for services that we do not need. Each time we use our credit card the merchant is paying from 2% to 4% to the bank for anywhere from 5 to 30 days use of the money. That is an annual rate of return to the bank of 24% to 48% approximately and this is for a service we don't need since we pay our credit card balance in full each month. We do get mileage on one of the cards so when we spend between $20,000 and $40,000 we get an airline ticket for which the bank probably sqeezes the airlines and probably paid pennies. I am no financial wizard and my calculations are not accurate but close enough that you get the picture. How did this spiral happen. My guess is the amounts appear small and it is convenient to not have to carry cash and after all we don't see that we are paying 2-4% more to merchants because it isn't on our bill.
ReplyDeleteCouldn't agree more with your words. I bank only at my credit union but even they should all wear mask when they are at work.
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