Does anyone remember the days when banks paid interest?
For you youngsters, here's how it worked: the banks would pay you a fee for allowing them to lend your money to others at an even higher fee. It was a neat little system and one that, in some people's view, built America. Well, of course some people think slave labor built America, but that is another blog.
Banks still do this, but interest has become, like dew claws on a dog, vestigial.
Case in point: my interest paying checking account.
This is my fun money and consists of funds I scrape together from sale of my artwork, Google ad money from my web site, and any other miscellaneous income I may accumulate.
This used to be a free-checking account that paid no interest. Someone at the bank persuaded me to change this to an interest paying account. All I had to do was to maintain a minimum balance and the free gelt would come pouring in. "You might as well have the interest," the banking genius said.
I couldn't have been happier as I watched my account grow by a nice, steady one cent ($ .01) per month.
Then last month I noticed on my statement, right next to my one cent profit, a whopping $13 service fee.
I ran to the bank and confronted the genius who informed me that was charged because I dropped below the minimum balance. Now, I am not a financial wizard, so I have a hard time imagining how my little account dropping a few bucks would require a frenzy of service to the tune of thirteen bucks.
"All you have to do is put more money in," she blithely said. As everyone in this sick puppy of an economy knows, putting money in is the hard part. I informed her that that was not an option at this time.
"Then you can switch back to a free checking, but you will lose the interest," she warned.
I did the math: Thirteen dollars is thirteen hundred pennies which equals 1,300 months, or 108.333333 years of interest. Since, even with modern medical science, I am not likely to live this long, I went with the free checking.
No wonder the banks are doing good. It annoys my wife that each and every time she asks what they might be building on that empty lot over there, I always reply: "It's a bank. What else?" It annoys her, because I am always right.
It's reached a point where you can't swing a laid-off teller without hitting a bank. The weird part is that, with the internet and all, nobody but old people like me goes to them anymore.
Which reminds me, I have a shoe box full of pennies I should run up there.