If you want to build serious wealth then there is one thing that you should not do. Don’t park vast reserves on money in a bank. Banks are becoming exceedingly cunning at finding ways to shave the edges off your savings. Apart from paying very low interest on deposits banks are finding ways to apply fees and charges to everything. I often joke that soon you will have to put some coins into a slot before the door to the bank will open.
The personal cost of banking in Australia is reaching an astonishingly high level.
My friends in the UK and USA were bemused some years ago when I explained to them that we were being charged fees not only to take our money OUT of our accounts but also to deposit money IN to our accounts. Don’t laugh. Australia is used as a “testing ground” for the western world. Here is an example (not realted to banking)…
In Australia, the cost of fuel is different EVERY day of the week. There is no consistent price. When the price of a barrel of crude rises we are subjected to an IMMEDIATE increase. Overnight the price can rise by 10 to 15%. When the barrel price falls, the bowser price may fall weeks or even months later.
It is the same for banking. When interest rates rise the banks scramble madly to increase mortgage rates, business overdrafts and credit card rates IMMEDIATELY. If rates fall, its is again weeks or months before any adjustments are made.
Banks charge fees for deposits, withdrawals and transfers but it doesn’t stop there. If you want a statement there is a fee. If you want a deposit BOOK there is a fee. If you want advice on a mortgage there is a fee (usually per 15 minute block of time). Banks regularly publish brochures on all their fees. The brochures are now turning into books themselves.
We were informed initially that there would be no fees for internet banking. That was until the banks were able to convert a critical mass of people to engage in it. Then… guess what? Correct! Fees were added.
While bank fees and charges continually rise and the number of them proliferate out of control, the number of face-to face tellers is forever falling. There is also a major push to close down as many branches as possible. People now have to travel many miles even to get to a branch of their bank due to this “rationalization” as they call it.
While all this is going on senior banking executives are awarding themselves massive salaries and bonuses. For what? Robbing the population that they should be serving? Reducing service? Closing branches?
Those who run the banking industry are ONLY interested in ONE thing – share price. By slashing service and putting increasing numbers of tellers out of work they cut costs. By ramping up fees and charges they massively increase profits. This drives up the share price. And it is the share price that senior executive salaries and bonuses are tied to.
Yes, the banking industry in Australia is MORALLY corrupt. It has been ever since former Prime Minister Paul Keating deregulated the banking industry.
Remember, Australia is a testing ground for banking practices and fuel pricing. Don’t feel too smug if you live in another country. These morally corrupt practices are sure to find their way into your life sooner than you might think.
Everybody needs a bank account. And that is what makes the fees so insidious. They just keep shaving and scraping and gouging away at deposits and there is very little that the average person can do about it. More fees and higher percentages will ensure that the banks get more of your money to pay those senior executives their massive salaries.
So, if you want to build true wealth, think of a way that does not rely on parking hefty sums of money in a bank. They just cannot keep their greedy hands off it.