Indeed, fees are big business for banks, since they provide a way for them to make money and fund various ventures and enterprises with very little risk. Nomi Prins writes about bank fees in The Daily Beast:

In general, not only do big banks charge higher service fees for the luxury of taking your checking deposits and using them as capital for other ventures, but the interest they provide on these, and savings accounts, are comparatively abysmal relative to smaller banks. …

Overdraft charges are administered not only to people who don’t have enough money in their accounts to pay their bills, but also to customers who may keep enough money in their savings account, but get slapped for not transferring it at the appropriate moment to their meager-interest-rate checking account.

It is no surprise, then, that there is a movement toward using smaller, more local banks and credit unions. Many of the smaller banks offer more attractive rates, and charge lower fees. They do this in order to be competitive and draw your business. And, of course, many of the smaller banks and credit unions aren’t in the habit of making risky decisions. So subprime mortgages and other risky investments don’t need to be covered to as great an extent.

If you are looking at your finances and seeing that some of your money is being leeched away by bank fees, you might consider banking elsewhere. Just like any other product or service, you should shop around for the best deal.

Image source: Wikipedia

Post from: EveryJoe

Using a Big Bank: Ripped Off by Fees

Under government pressure Citigroup agreed to sell off one of it’s profitable business units so it could concentrate on losing massive sums of money in its banking activities.

The bank’s commodity trading arm, Phibro, was sold to Occidental Petroleum for what analysts termed “a pittance.”

For Citibank execs who don’t understand economic jargon, a “pittance” is generally considered “a small sum well below what something is worth.”

At issue was an agreement with Phibro’s chief trader Andrew Hall to pay him a percentage of profits generated for the company. The deal resulted in a $100 million pay package for Mr. Hall after the trader made well over half a billion in profits for the company.

Contrast the pay-for-performance deal with Citigroup’s other big cash outlay this past year where they forked over $400 million for the naming rights to the new Mets baseball stadium which will generate, um…carry the four, add the hundred million … oh, yeah — zero profits for the corporation.

Citibank chairman Vikram Pandit caved to pressure from government pay czar Kenneth Feinberg who sees absolutely nothing wrong with being yet another taxpayer expense while cutting the pay of people who actually produce something.

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The perfect Citigroup employee: it hands out money, doesn’t cost much to maintain and will do what the government ATM czar programs it to do.

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Image: Zuma Press

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Post from: EveryJoe

Citigroup Sells Phibro