Bank Fees

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Countryboy
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Bank Fees

Unread post by Countryboy » November 22nd, 2015, 5:24 pm

I am friends with a lady who is a bank teller. We were discussing the free checking accounts one day, and I asked if the bank just made their money on them with the bad check fees. She said the bank makes money hand over fist on the overdraft fees. She said people bounce checks all the time. (If you think credit card fees are bad, check out the check cashing places - they are on every corner anymore. You write them a check and they give you cash, and then you have to repay them on payday...it's only something like 20% or 30% for a one week loan. Business is booming, because they are on every street corner.)

She also told me the only people who have any money are people who own their own business.

That bank teller said she attended some kind of financial seminar, and they said that if you don't have a credit score, it means you are doing something right.

I was raised to pay cash. Since I sell some stuff on eBay, I do have a PayPal account, and I have a debit card for my PayPal account. (But if my card was stolen, the max they could use the card for was the amount I had in that account.) I mainly use that debit card just to pay for postage at the post office, or for eBay purchases.

I paid cash when I bought my first house. (It was a cheap tax foreclosure property.) But when I went to buy my second house, the bank would not loan me any money because I had no credit. I ended up borrowing $30K from an individual.

A year or so ago I got a credit card, just to build some credit. I use it to pay for my eBay selling fees, and then pay it off every month.
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Allen Dick
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Re: Bank Fees

Unread post by Allen Dick » November 22nd, 2015, 5:44 pm

But if my card was stolen, the max they could use the card for was the amount I had in that account.
Check your bank agreement. If you have other accounts at that bank, and they decide to overdraw your account, they can take money from the other account. That was true last time I read the rules, and for the banks around here.

Banks have been known to honour charges against cancelled credit a\cards, then go after the (former) cardholder.

The deck is stacked.
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Countryboy
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Re: Bank Fees

Unread post by Countryboy » November 23rd, 2015, 2:56 am

PayPal is not an actual bank. They are an online payments processor. (But are starting to move into the direction of being a bank.) Rules and regulations are different for banks versus payment processors so PayPal avoids a lot of red tape by not being a bank.

The only account I have with them is my regular account. They can't pull money from a different bank without my permission. (Unless they have changed their policies on me.)

If I have money in my PayPal account in multiple currencies, I believe they can pull money out of the other currencies if they need to cover my purchases. For example, if my USD purchase exceeds the USD I have on account, but I have enough CAD to cover the purchase, they will use the necessary CAD. You can store funds in quite a few different currencies, but they do charge a fee for converting money, so unless currencies are fluctuating widely, it will be difficult to make much money by trying to trade currencies after you pay the fees. (Although, with the CAD going from being slightly worth more than the USD a couple years ago to 1.34 now, that would have been a good trade to do. Sell CAD for USD a couple years ago, and buy it back now.)

Used to, I had my funds be automatically kept in a money market account. I could always access my funds with no penalty, and I would earn a variable rate interest (typically 4.5% to 5%) on my daily balances. As soon as I got paid for an item on eBay, those funds started earning me money. Granted, I was usually only getting $5 or $10 a month, but $5 or $10 a month adds up. When the interest rate went to zip, they did away with the money market accounts.
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Re: Bank Fees

Unread post by Allen Dick » November 23rd, 2015, 3:32 am

Sorry, I wasn't paying attention and was carrying on about credit cards with banks. A debit card with Paypal is different -- I assume -- unless they have offloaded the card part to a bank, which happens. In that case the devil is in the details (fine print).

No worries, though, if you only have the one account and small sums involved. My comment was directed towards a situation where someone has a credit card, savings, and investments all at the same bank.
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Re: Bank Fees

Unread post by Countryboy » November 24th, 2015, 5:56 am

My comment was directed towards a situation where someone has a credit card, savings, and investments all at the same bank.
That situation calls for the comment of not putting all your eggs in one basket. Especially when one considers how shaking the banking system is, it is wise to spread out your wealth.

The old advice for protecting wealth over centuries is a third, a third, and a third - meaning that you should allocate your investments and savings to a third real estate, a third physical gold, and a third of your portfolio should be in fine art.

I've also heard that if you invest in stocks, you should invest in 10 different sectors. (not 10 different stocks in the same sector.) For example, natural resource exploration, mining, energy, financials, pharmaceuticals, food, retail, etc. This is based on Druckenmiller's approach - right after WWII, he invested $10K in 104 different stocks, and a few years later, sold at a 300% profit. A rising tide lifts all ships, buy when everything is depressed, and you increase your chances of making a profit by casting a wide net, rather than trying to identify and catch the stocks with stellar performance.
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