# Same to you, buddy

Wal-mart is now advertising a new "low" rate for cashing checks of only \$3.

Any such rate seems like it's too much, since the check is your money, and paying \$3 for your own money is a rip-off. But, as Wal-mart points out, \$3 is a lot less than many of their competitors charge for this same dubious service. Those check-cashing competitors, Wal-mart says, can charge as much as \$8 per check.

Wal-mart's TV ad for this check-cashing service actually underestimates the savings this could mean for their marks customers.  A fresh-faced young couple tells us how happy they are to be using Wal-mart's \$3-a-check service instead of the \$8 alternative. The husband holds up a calculator and tells us this saves them about \$200 a year. With both of them earning a paycheck every two weeks, that's actually more like \$250 a year — and that \$50 difference would be substantial for the annual budget of a working-class couple outside the fringes of the banking system.

The same quick and dirty arithmetic also lets us easily calculate the annual cost of check-cashing for this couple even at Wal-mart prices: \$150 a year.

That \$150 is a poverty tax — a fee paid by the poor because they are poor.

But then calling it a poverty tax isn't accurate. It's a poverty surcharge, not a tax. If it were a tax, then the couple in Wal-mart's ad would eventually see some kind of indirect benefit from that \$150. Taxes go toward civilization — national defense, highways, sewer systems, health care, police, food safety, clean water, fighting wildfires, developing flu vaccines, etc. And taxes are part of the social contract assented to by everyone who participates in that civilization. But this \$150 poverty surcharge doesn't help to fund any of those things and it isn't part of any social contract. It simply lines the pockets of the Walton family and the rest of Wal-mart's shareholders. The poor families paying this surcharge receive no benefit — direct or indirect. All they get in exchange is access to their own money. This \$150-a-year surcharge is simply a transfer of wealth from them to much richer people, a direct, you-have-no-say transfer of at least \$3 subtracted from every paycheck.

So as nice as it is that this couple is "saving" \$250 a year by cashing their checks at Wal-mart instead of the even-more-exploitative competition, it'd be nicer still if they could save an additional \$150 a year by not having to pay to cash their paychecks at all.

There's the rub. To cash your paycheck without paying a fee, you need a bank account, and for working-class people, a bank account costs a great deal more than \$150 a year.

People who don't realize that — who don't appreciate the enormous, steady cost of a marginal bank account — tend to think that those who rely on check-cashing agencies are just being stupid and wasteful. The couple in the Wal-mart ad, for example, who are paying \$150 a year to cash their paychecks could instead open a \$100 no-fee savings account that would allow them to cash their paychecks for free. That account would only "cost" them \$100 — but even that money would still be theirs, sitting in their savings account and even earning a modest rate of interest.

The problem, though, is that such no-fee accounts are money-losers for the banks themselves. A \$100 account with no fees costs the bank more in paperwork and tellers' time than it's worth. In the long-run, such accounts can help depositors develop savings habits and savings balances, developing into the sort of customers banks can and do make money from. But neither the executives nor the shareholders of the bank are interested in that kind of long-run — particularly not when, in the short run, they're losing money on these tiny accounts.

So seeing no incentive to provide such low-balance, no-fee accounts that would allow our young couple to cash their checks without a fee, the bank will instead try to push them into something more lucrative — into the kind of account that generates a steady stream of nickel-and-dime revenue from ATM fees, minimum-balance charges, late fees and, above all, "overdraft protection" charges.

Last year, U.S. banks collected about \$36 billion in overdraft protection fees. This year, they expect to transfer about \$38.5 billion out of customers' accounts in the form of such fees.

\$38.5 billion. \$105 million every day. \$4.4 million every hour. \$73,250 every minute. More than \$1,200 a second. Transferred directly from the poor to the rich.

\$38.5 billion.

I keep repeating that figure because I can't quite manage to grasp it. The public, obviously, can't grasp it either. Open your window and inhale — smell any torches or smoke from the barricades? Turn on CNBC, Are bankers using fake names and requiring their faces to be distorted? are the bankers still using their real names and allowing their faces to appear onscreen without electronic distortion? No? Then the public still doesn't yet appreciate the meaning of this figure.*

\$38.5 billion taken directly out of people's bank accounts.

\$38,500,000,000.

I'm not suggesting that everyone who works at a bank that extracts these billions from customers through an overdraft protection scheme is, necessarily, a Bad Person due to working there. And I'm perfectly willing to allow them the chance to defend themselves. I am, in fact, eager to hear their explanation — to hear them describe the actions they've taken to protest this policy and the reasons why such actions have, thus far, not succeeded. My point here is only that such a defense, such an explanation, is required of them if they want to continue interacting on polite terms with the rest of us — if they want to drink in our bars or attend our churches or walk down our streets without parents clutching small children by the hand and dragging them aside and saying, "Come over here, honey, we don't want to go near the banker."

That, at a minimum, is what \$38.5 billion a year means.

Yesverywellbut, say those comfortably removed from the economic margins, such fees can be avoided through responsible account management. And the supercilious and dim yesbuts raising this objection will go on to point out that they, personally, have never had to pay such a fee. And they will take this as evidence of their own superior responsibility and their oh-so-superior superiority too all of those stupid working class people stuck at the margins for whom one flat tire or one sick child or one unanticipated \$10 expense can incur a cascading series of late fees and overdraft charges and other forms of emergency short-term credit that can easily exceed the \$150 that Wal-mart graciously offers to extract from their paychecks each year.

And so …

Crud. Now I've gotten all worked up and forgotten where I'd intended to go with this whole discussion.

The point here, I suppose, is that check-cashing fees may be an exploitative scam run by sleazeballs, but that they may turn out to be a more prudent option for the working poor than the even-more exploitative scam run by the more mainstream, but sleazier sleazeballs of the banking industry.

I should probably wrap up with some practical sort of action steps or something, so OK then:

1. We need a viable community banking option for the working poor, a place where they can cash their paychecks and maybe even someday build their savings without being subject to fees and overdraft protection rackets. We needn't get into the details here of the policies the FDIC and Fed could put in place to protect and encourage such banking options, only to mention that such policies are a Good Thing.

2. \$38.5 billion. Seriously. The executives and shareholders of those banks ought to be flipped off, constantly, by everyone they encounter, all day long, from the moment they leave the house in the morning until the moment they return home. Even in church. Especially in church. From the pulpit, in fact. Nonviolent social change doesn't need to be genteel.

– – – – – – – – – – – –

* (Clearer wording courtesy of David S. Thank you.)

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• http://ira-wyatt.livejournal.com Ira Wyatt

Finally caught up with the thread. Yay! Okay, so…
The Poor Need To Be More Responsible With Their Money: um, not always feasible, especially for hourly workers. If your paycheck isn’t always for the same amount, all the budgeting in the world might not save you. Say you work in fast food and you get an unexpectedly slow month. You get sent home early a couple of days so as not to drag down productivity and suddenly your next paycheck(s) is/are \$50 less than what it should have been according to the number of hours you were scheduled for. Or whatever. And then the price of gas goes up significantly at the same time, so suddenly even though you had budgeted enough for gas according to how much you expected to make and how much you expected for the gas to cost, you end up coming up short anyway. So maybe you then get hit with overdraft fees, which you may or may not be able to pay, depending on how much business your place of work gets in your next pay period. There isn’t really any way to protect against that kind of thing except “have more money.” This isn’t really directly related to the problem of being able to access one’s own money but some commenters here just don’t seem to have a very good idea of the kind of financial risks living on a very tight budget without much of a safety net can entail.
Cashing checks at grocery stores: No idea if my local grocery store does this, but I do know that in several nearby towns, the local grocery store isWalmart.
On customer service: I believe someone upthread mentioned Walmart clerks being unusually chipper. Maybe it’s just something in my demeanor, but I tend to get the Walmart cashiers who tell me things like “I’ve been here since six in the morning and I haven’t eaten all day and I just want to go home and sleep.” I always feel rather bad for them.
On the other hand, I’ve gotten quite a bit more customer service experience than my depressed introvert self would like at my current fast food sandwich place job. I’ve been described by a customer as “all business.” As far as I can figure out, this is because I am incapable of pretending that interacting with relative strangers is the high point of my life. I’m probably lucky that I don’t have to rely on tips for income.
That said, during some of the more friend-deprived periods of my life, I’ve been grateful to store clerks and so on who were willing to talk for a minute or so about the weather or the local football team or whatever while ringing up my purchases. Sometimes even that little bit of human interaction helped to brighten my day. So I try to keep that in mind when I’m at work and the caffeine buzz has worn off but it isn’t time for my lunch break yet and I’m not feeling too charitable toward customers.
On socks: I always figure that for pants other than jeans, the socks ought to match either the shoes or the pants – both, if possible, but I tend to only own one pair of nice shoes at a time. Most of the time, though, I just grab whichever pair of socks is at the top of the “clean laundry” basket, whether they match any other part of my wardrobe or not.
On sewing one’s own clothes: Expensive, typically, these days.
On people asking for money: I so rarely carry cash anymore (as a direct consequence of having direct deposit and a debit card, so this is almost related to the post topic!) that I hardly ever have anything to give people asking for money. On the rare occasions I do have cash, I’m usually willing to part with a few dollars, no questions asked, unless I know I’m going to need the cash for something in the near future. This is partly because I figure that the chance of helping someone out is greater than the risk of losing money to someone who doesn’t really need it or is using it to facilitate an unhealthy addiction or whatever, and also partly because I don’t like being confronted by people I don’t know and giving someone *something* is usually the easiest way to get them to stop trying to talk to me.

• Hawker Hurricane

Also she mentioned that on one occurance one congregation member went up to another congregation member that he disliked in the parking lot, put his hands on the man and said “Dear Lord, please take the Satan out of this man,” which I can’t imagine myself reacting to in any way other than grabbing the guy, shaking him, and saying “What the hell is wrong with you?” That might not go over well.
Posted by: Jason
=============================
Similar but not identical, I had a fellow sailor do something similar to me weekly. My response was variable, but often went something like “Satan says work on the plank in your eye before looking for specks in others.”

• Hawker Hurricane

Wait a second. I thought your socks were supposed to match your *shirt*.
Posted by: Ross
———————————
I have enough trouble getting them to match each other.
USN uniform socks are black, and warn with Navy Blue winter uniforms, White summer uniforms, medium blue work uniforms, and always with black shoes, unless you’re a aviator in which case the shoes are brown (trivia question: why do navy aviators where brown shoes?)

• Lori

So, we’ve basically moved on but I have to mention this. Did other people see the news report about the banker using a foreclosed house in Malibu as her own little summer home/party pad?

MALIBU, Calif. (AP) — A Wells Fargo & Co. executive who oversees foreclosed properties hosted parties and spent long summer weekends in a \$12 million Malibu beach house, moving into the home just after it had been surrendered to Wells Fargo to satisfy debts, neighbors said.
The previous owners of the beachfront home in Malibu Colony — a densely built stretch of luxury homes that has been a favorite of celebrities over the years — were financially devastated in Bernard Madoff’s massive fraud scheme, real estate agent Irene Dazzan-Palmer said.
The couple signed the property over to Wells Fargo last spring, and the bank subsequently denied requests to show the house to prospective buyers, Dazzan-Palmer said.
Residents in the gated community told the Los Angeles Times that a woman they believe was Cheronda Guyton took up occupancy at the home in May. Residents said they obtained Guyton’s name from the community’s guards, who had issued her a homeowner’s parking pass.
Residents also wrote down the license plate number of a 2007 Volvo sport-utility vehicle they say was parked in the home’s garage. A check of state motor vehicle license plates by the Times found the vehicle was registered to Guyton.
Guyton is a Wells Fargo senior vice president responsible for foreclosed commercial properties, resident Phillip Roman said.
“It’s outrageous to take over a property like that, not make it available and then put someone from the bank in it,” said Roman, who lives a few homes away from the property.
Residents said Guyton, along with her husband and two children, often hosted guests at the home, including a large party the last weekend of August. Malibu Colony is about 25 miles from downtown Los Angeles.
Wells Fargo said in a written statement that it would conduct a thorough investigation of the allegations by neighbors, but said it wouldn’t “discuss specific team member situations/issues for privacy reasons.”
Guyton’s home number is unlisted, and attempts to reach her at her Los Angeles office after work hours were unsuccessful.
The bank’s agreement with the prior owner required it to keep the home — a 3,800-square-foot, two-story structure built in the early 1990s — off the market for a period of time, Wells Fargo said in the statement. The bank said it planned to list the property for sale soon.

• lonespark

Also, if a company does have a dress code, then they should give the workers a clothing allowance.
Absolutely. Or, alternately, only well-paid jobs should have dress codes.

• lonespark

I long for a way of instantly knowing when I do bring mistreatment on myself and when I don’t.
Here’s a handy tip for the rest of the year:
Nobody “brings mistreatment on” themself. Nobody. No one deserves to be mistreated, disrespected, hurt, disregarded, or treated like an object. You don’t, Tonio. Not ever.
Sometimes stuff happens that’s hurtful that’s nobody’s fault. Sometimes stuff happens that’s hurtful and someone did cause it. Maybe by accident. Maybe on purpose. Maybe lots of people. Maybe everyone involved. That’s not the same as saying that any human being deserves to be treated badly.
(I’m trying to separate this idea from the idea of corrective punishment, or protective avoidance, because that’s not at all what we were talking about.)

• Tonio

Lonespark, when I say that I might be bringing some mistreatment on myself, I’m NOT claiming that I deserve to be treated that way. Instead, I’m postulating simple action and reaction. For example, if I don’t know that a certain type of behavior is rude, and people react badly to my rudeness, I bear responsibilty for acting rudely even though it was out of ignorance. That responsibility does not mean that their bad reaction was justified. In addition to the Golden Rule concept in such situations, the other concept at work is my desire not to be treated badly and my frustration that I don’t know how to avoid that bad treatment. I cannot discern whether I inadvertently provoked the person or if I was simply a random target.

• Sean Mulligan

Make sure that only the bank executives are shunned not the regular employees at the bank.

• Kristy

(skipped a lot because I actually want to comment on this post, and if I try to read everything I’ll never actually get around to commenting… I know me. I’ll catch up later.)
Speaking as one living on the margin (hopefully not for TOO much longer… saving for the online course I want to take has made groceries=luxuries, but once it’s completed I’m strongly hoping that we’ll move a little further inward from the poverty line), I’ve actually had good luck with banks – actual banks, not credit unions. Both Wachovia and Bank of America have, essentially, poor-people accounts – oh, they’re not labeled as such, but don’t pretend, you know that’s what they are. (And that’s fine with me – I’m poor. It’s the truth, I’m not ashamed.) No minimum balance, to start with, and with both of them there’s the option of a low-impact, easy savings account linked to the checking account to cover any overdrafts. (With BOA it’s the Keep the Change program, where they round up card purchases to the next dollar and put it into savings; Wachovia’s program just transfers a dollar to savings every time you use the card.) It’s easy, it’s light enough that it doesn’t cut significantly into your spending ability, and it’s a means to avoid otherwise disastrous overdraft-pileups, if you simply lose track of money one month (not hard to do, living paycheck-to-paycheck.) I’m also a little in love with Wachovia right now for how quickly and efficiently they handled a fraud issue (my own damn fault; my gut instinct told me the company was shady and I gave them my card # anyway; take note, kids: if an online company won’t take Paypal, don’t walk – run), so I may be biased in their favor, but I seriously haven’t seen any nasty practices from them, personally.
The credit-card half of the bank, though… I walked away from a good job in credit card collections, and won’t go back to it even though it was more money and better working conditions than my current job of waiting tables, because, well… I like my soul. I’m sort of attached to it. And if you work that kind of job long enough, you turn into a bad person. It’s true. The only other option is to go crazy. If you want to continue liking yourself, you have to turn into the sort of person who blames people for being poor. And I started to become that person. And noticed. And immediately started looking for a different job.

• Anne

For everyone saying “avoiding overdraft fees is a matter of responsibility”, here’s something that happened to my husband and I. He is the only one of us who gets a paycheck, but he makes substantially more than minimum wage. Even if his income were instead our combined income (i.e. if instead of making \$X, he made \$X/2 and I made \$X/2) we would *both* make substantially more than minimum wage. There is no reasonable definition by which we are poor.
A few months ago, I used the “pay online” feature of a credit card of ours to pay that company \$220. They debited our credit union account twice, refunded us twice, and then told us that they would not re-debit us \$220. So we paid them \$220. This was on the 30th of the month.
On the 1st of the next month I wrote a rent check; our landlord always cashes the checks on the 4th. Then I paid all the utility bills (online, so those debits happen more-or-less immediately). There was now about \$rent+\$200 in the bank, for things like gasoline and groceries. Then the credit card company mentioned above debited us \$220, on the grounds that they had refunded both the intended and erroneous debits.
If my mother-in-law had not immediately transferred \$220 into our account – if she had been unable to do this and no one else we knew could either, or if someone had instead written us a check, which would have taken time to clear – our rent check would have caused us to overdraft \$rent-20… and there would have been no money to make up that overdraft, or to pay any fees, or to buy any gas or food, for two weeks, until my husband’s next paycheck. If, on the other hand, our rent check had simply bounced, we wouldn’t have overdraft fees, but we would firstly have bounced a rent check (landlords don’t like that) and secondly still have needed to find \$rent somewhere.
For that matter, if my husband didn’t habitually check the credit union site every morning (I only check when I expect there to be a difference), we would never have known anything was wrong until either the credit union contacted us about the overdraft, or our landlord contacted us about the rent bouncing.
There is absolutely no amount of careful tracking of income and expenses that would have helped us. (Short of assuming the credit card company guy was lying or wrong when he told us, “No, we won’t charge you a third time, you’ll have to go to the website and make a payment again, or mail one in,” that is.) Too, this *exact* situation could have happened to someone whose household income was not as high as ours, since the credit card in question is marketed as a way to pay unexpected medical expenses – that is, it’s not like Dreamhost, where you could assume that anyone who had a Dreamhost account was also not living hand to mouth. (Though even there, suddenly being debited for six or twelve times what you budgeted is not something most people have a buffer for…)

• http://tomkatsumi.wordpress.com/ Tomkatsu

Thankyou so much for this post. As a regular victim of bank charges (in the UK that is – hopefully things will change soon… fingers crossed for justice) i’ve never heard the argument summed up so persuasivly. I almost thumped the desk with agreement (especially your rebuttal of the arguments of “the supercilious and dim yesbuts”)
Thankyou
Thankyou
Thankyou

• ako

A big part of the reason my credit rating isn’t far more messed up than it is:
– My mother had the good luck to get into a credit union well before I got a bank account
– I automatically qualified on turning eighteen, thereby having my financial responsibilities being reduced to “Keep at least five dollars in this specific account”
– My credit union has little interest in extracting money in ways that lead to long-term dissatisfaction.
– I have middle-class parents that are both willing and able to bail me out of financial messes (I haven’t had ones I’d chalk up to egregious stupidity, but I’ve made mistakes that would have snowballed in ugly ways had my parents not bailed me out when things got messy, with the whole “This is an interest-free loan you’ll pay me back, right?” proviso, which some but not all parents can affort to make).
– I automatically get a certain degree of credit due to my parents having financial status.
– My parents didn’t rack up the kind of debt that scares people who provide credit to the middle class (specifically, student loan debt being okay, but credit card debt creating a massive mess).
So yeah, a whole lot of inherited advantages can play into the system, having little or nothing to do with how well a specific person manages money, and a lot to do with family history. There’s a level where it’s practically logical, if you remember the goal of businesses, but it’s not what you’d call fair.

• http://tomkatsumi.wordpress.com/ Tomkatsu

And @Not Really Here:
Thanks for the ‘crafts from banknotes’ tip – as a keen origamier (is that a word?) i will be starting this as soon as i have paid off my latest bank charge

• http://tomkatsumi.wordpress.com/ Tomkatsu

I admit that i’m not the best at money management (but i’m pretty good!) but then i’m also terrible at cooking – the difference being that when i cook a bad pasta my husband doesn’t charge me £50. Justifying these (illegal – in the UK anyway) charges by saying people should manage their money better is like saying it should be legal to steal from a house who’s owners were too lazy to buy an alarm.
P.s. My last charge: £68 for a £5 donation to charity going out of my account early. That’s a £73 donation from me, 93% of which goes to some of the most highly paid people on earth who caused the crash that lead to widespread international poverty

• Lila

neohippie, I too am a BCI member and love my bat socks (not just at Halloween)!

• http://blog.trenchcoatsoft.com Ross

Not strictly relevant, but I just saw this threat at amazon.com, and am livid with rage:

What irks me is that they give them a credit card which many people can’t tell what it is..looks like a real one. You don’t want any incentives for one to stay on government assistance, you want one to have the initiative to get off as soon as they can get back on their feet. Actual food stamps were embarrassing and one of many reasons to quickly get back on one’s feet. (In the cases where that’s possible of course.)

http://www.amazon.com/gp/forum/cd/discussion.html/ref=cm_cd_ef_tft_tp?ie=UTF8&cdForum=Fx20DX5GEB7TUX8&cdThread=Tx3UW06161Y5QSR if anyone feels like having a look. The whole thread is about how poor people should not be allowed to buy name-brand products or soda with food stamps.
Sorry for threadjacking. Just a little insane with the angry.

• Launcifer

Ross: The whole thread is about how poor people should not be allowed to buy name-brand products or soda with food stamps.
Here, rather than there, is probably the wrong place for the question, but: How the hell does someone not buy branded products, especially from chainstores? I mean, everything I buy in a supermarket in the UK has packaging of some description. It pretty much always bears the name of either the company that produced the item or of the supermarket from which I’ve purchased it. If the latter counts as “brand-name”, which it might, then what the hell are people supposed to do? Drive out to a farm and barter with the landowner?

• Ruby

Launcifer: Here, rather than there, is probably the wrong place for the question, but: How the hell does someone not buy branded products, especially from chainstores? I mean, everything I buy in a supermarket in the UK has packaging of some description. It pretty much always bears the name of either the company that produced the item or of the supermarket from which I’ve purchased it. If the latter counts as “brand-name”, which it might, then what the hell are people supposed to do? Drive out to a farm and barter with the landowner?
But is the implication that poor people should buy store-brand, as in the generally-cheaper-but-with-the-same-ingredients products?

• Launcifer

Ruby: I wasn’t entirely sure, myself, hence the caveat of wondering whether the latter counted as brand-name produce. I have a suspicion you might well be right, but you can bet there’s somebody out there, fingers all a-quiver over the keyboard, who thinks the evil people on benefits shouldn’t even be allowed to go into the same shops, never mind having the option to buy the same over-priced products.

• Jason

But is the implication that poor people should buy store-brand, as in the generally-cheaper-but-with-the-same-ingredients products?
I have heard that sometimes store brand actually is name brand in a different package. If you buy Kellogg’s Frosted Flakes, you may be buying exactly the same thing as store brand “Frosted flakes of corn,” you are just paying extra for the picture of Tony the Tiger on the box and the free toy inside.
I don’t know that this is always the case, but it sometimes. I generally buy store brand because most of the time I can’t tell the difference between store brand and name brand. There are a few exceptions though…. for me soft drinks and toilet paper are the main ones that spring to mind. Gotta have name brand on those.

• http://blog.trenchcoatsoft.com Ross

Since I was diagnosed with diabetes, I have discovered that a surprising percentage of the time, the nutritional details of the name brand are slightly different from those of the store brand. A lot of the time, the store brand will have a slightly higher sugar content (There are a couple of products where the difference is actually profound. I assume they’re either using less inert material to pad out the box, or theye trying to compensate for a (real or imagined) difference in quality.

• Ruby

Launcifer: Ruby: I wasn’t entirely sure, myself, hence the caveat of wondering whether the latter counted as brand-name produce. I have a suspicion you might well be right, but you can bet there’s somebody out there, fingers all a-quiver over the keyboard, who thinks the evil people on benefits shouldn’t even be allowed to go into the same shops, never mind having the option to buy the same over-priced products.
Jason: I have heard that sometimes store brand actually is name brand in a different package. If you buy Kellogg’s Frosted Flakes, you may be buying exactly the same thing as store brand “Frosted flakes of corn,” you are just paying extra for the picture of Tony the Tiger on the box and the free toy inside.
I don’t know that this is always the case, but it sometimes. I generally buy store brand because most of the time I can’t tell the difference between store brand and name brand. There are a few exceptions though…. for me soft drinks and toilet paper are the main ones that spring to mind. Gotta have name brand on those.

Store brand is often just a cheaper version of name brand. The most obvious example I can think of is over-the-counter medications. Check out the ingredients lists of Advil versus store-brand ibuprofin, of Tums versus store-brand antacids. Same-same, in everything except price.
I have seen the occasional episode of “The Shopping Bags,” two ladies who personally test various products on TV. Sometimes the results of their tests are surprising, sometimes not. The one I always remember is when they tested various dishwasher detergents–the cheap store-brand detergent got the dishes just as clean as the fancy name-brands, for half to two-thirds the price.

• Aaron

“…if you came from an area of the country where you weren’t likely to come into contact with black people on a day-to-day basis, (say, certain counties in the American South)”
Or like, say, most of Oregon, Washington, and California. Can we please stop pretending that the South is the only part of this country which still has a problem on the subject of skin color?

• http://pecunium.livejournal.com Pecunium (Maintainer of the Imperial Cutlery)

Credit Unions require a credit check, just like Banks do. If you’re score is too low, all the happy benefits of a CU will be denied you. And from what I’ve seen, CUs have much stricter limits on that score than Banks.
Not true. There may be some which have such a requirement, but mine wanted to see nothing more than an address, or business license.
I did that, filled out a form, and was a member.
Bugmaster: However, passing laws that prohibit conventional bankers from charging whatever outrageous prices they wish for their services is, IMO, a waste of time and taxpayer money. There being no polite way to respond to the actual content of that statement, I will merely address the argument.
Nonsense. What you are saying is there is no justification, no fairness in preventing people from exploiting others. “Charging whatever they want” wasn’t allowed for quite some time. In that time a lot of people managed to have a very successful bunch of banks. On the occaisions the rules have been relaxed (or abandonded), the system has foundered.
It’s in the best interests of everyone to have a thriving middle class, no matter what Goldman-Sachs things about it (and they have been major players in the massive financial meltdowns we read about 1929, 2008, and the lesser ones in between).
The only reason the banks can get away with the vicious policies they presently engage in is that that they are, for most, the only game in town. If you need short term credit… they will soak you. If you need long term credit, they will soak you.
They rig the game, so those who are in the marginal aspects of payment are those they soak the most; which increases the chance of default. They then use this self-created extra risk to justify soaking everyone else.
There is no reason not to rein in that sort of predacious behavior.
I also don’t see how preventing people from exploiting others = “punishing the rich.” It’s not a zero sum game. The only way protecting one group is punishing another is if the behavior being prevented is in some way necessary to their well-being. I don’t think being able to pull an extra \$38,500,000,000 (thirty eight billon, five hundred million, dollars out of the economy, so as to pay off lobbyists, hire more lawyers to screw the clumsy/poor, conduct more advertising, etc., counts as punishing the rich.
If that money was going back into the economy, I might be a little less dismissive, but it’s not. If it were I’d not be looking at 200 dollars to make it until the GI Bill gets itself sorted out (sometime in the next 6-10 weeks). Someone would have the money to hire me, because people would need some good, or service, I could be used to provide.
But nope. I’ve been sending out resumes, filling out apps, and replying to want ads, since May, in three different areas of the country (and a couple of sub-regions). That money went somewhere, but the somewhere seems to have been somewhere else.
Grenadine: If I didn’t have a bank account (shorthand for my CU account. When I stopped getting a DD from the Army every month the Wells Fargo Account went bye-bye), there is no way, right now, I could afford to open a bank account. I have 130 in my CU (apart from the 50 reserve). I have a 150 check in my wallet (going into the credit union today). That’s all I know I have coming for the next 30 days (when I will have a pittance from Calendar Sales (forgive me, but context explains why I’m mentioning it). Wells Fargo charged 8.00 a month for savings, and 7.00 for checking (waived if one had direct deposit). So, I give them my 280 dollars. I don’t have Direct Deposit anymore, so I just promised them 28 dollars (over the next three months; by which time I ought to have some money from the GI Bill). That’s food money. I have a if, God Forbid, something goes wrong, and I get over my limit on that account, BANG… 35 bucks is gone on top of that.
If I need to get money, and there is no Wells Fargo ATM, that’s gonna cost me not less than \$6.00 (because wells Fargo want’s \$3.50 to let me have it, and the machine I use will demand not less than 1.50, but more commony 2.50. and I’ve seen 4.50).
All that adds up. It’s where the huge sum Fred quoted comes from. It’s the “little” things they tack on to the every day needs.
(all of the above, and dealing with same, and going back to school, is why I’ve been not so much around)

• http://pecunium.livejournal.com Pecunium (Maintainer of the Imperial Cutlery)

danAlwyn: You’ve made a conflationary claim: 1: The amount of money is huge, ergo the relative profit from fees is inconsequentiantial. That is arguable.
2: The fees must be coming from the large investors who make up the bulk of those assets.
Me,I’m a cynical bastard. I figure the banks are making a pretty penny from the large investors (who are parking the money in vehicles like CDs, and the like, which guarantee the bank the use of the money for a known period of time.
But the requirement to squeeze as much profit as possible from every quarter means all those, “small” people, whom you say they don’t care about, need to be made to pony up too. Which is why the fees exist.
The rest of your argument, banks are hard to start, is in part true because one has to compete with behomoths like BofA (whom I banked with for a very brief period. When I got a statemen telling me I’d lost something like \$20 in fees for depositing money because I’d had a one day dip below the minimum balance, I left. I was in college, delivering pizza, and had been billed for every deposit I’d made of my tips; which was to avoid the,”I’ve got money in my pocket” problem).
That makes the idea of, “community banking” as a way to compete almost farcial. Since the capital requirements are huge (even with the low ratios of capital to value required in the modern world of marginal banking), and the need for investors is absolute; that mandate to get every possible nickel out of every possible source, will corrupt any new venture.

• http://pecunium.livejournal.com Pecunium (Maintainer of the Imperial Cutlery)

I’m in East Palo Alto right now. There is one credit union, and a number of check-cashing places. There are no supermarkets.
Ponder that. One has to take a bus, several miles (and there is only one bus I know of in the area, SAMTrans 280, which is going to be reduced from every 30 minutes, to every hour). That doesn’t actually lead to a supermarket, you havr to get onto a VALTrans bus to do that.
So getting to the market, or a bank, takes two buses, and costs about \$5. The Credit Union isn’t well placed (one has to walk to it, from the bus), and I don’t know how many people know of it, but banks, there are none.
This in a tolerably affluent area, generally. But E. Palo Alto is on the wrong side of the freeway, and so is isolated. No banks. No trivial access to ATMs. No place to use the convenient debit card to get cash back.
Wal-Mart’s fee would be a godsend to lots of people here, but there’s no Wal-Mart either.
Bugmaster: So what are the “acceptable” limits you place on banking? You aver they are in some way not culpable for the present ills. Whose fault is it those who think they are getting free checking end up with fees. Who is to blame that when one bank institute a fee (or practice) which fleeces the poor, other banks don’t rise up and say, “come to us, we don’t do that,” but rather rush to the new gimmick (or, as WaMu did, make a big deal out of not doing it; garner a bunch of customers and then change the rules, instituting the new gimmick on a slew of people who changed to avoid it)?
truth is life: actually, not loan, but lend (it’s one of my knee-jerk grammar peeves. Spelling doesn’t get me, but noun/verb adjective/adverb switching grates; sorry)

• http://pecunium.livejournal.com Pecunium (Maintainer of the Imperial Cutlery)

One of the things about becoming poor is the sense that one doesn’t deserve those little luxuries. A spot of chocolate seems not just an indulgence, but a sin. One should save that buck, and do something useful with it.
One has to struggle to grasp the message in the poem,
If two loaves are you have left of your worldly dole

• JackieBinAZ

I got a special, no-fee student account at Wells Fargo and was able to decline overdraft protection as well. Being out of work and going to school does have a few benefits.

• Jim D.

Really we need to recongnize the have you flipped of your local Banker today! Why let them feel good and smug about their 35 dollar pop on a 5-\$10 bank charge? Who the hell says we just have to take this shit from some snobish self-righteous lookin down your noseSnivling white collar crime bastard! Hell ya I say flip em off in church to and every chance you get for their greedy commee tight wad like we don’t know who you are bastards! 38.5 Billion a year! Kiss my ass!

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• Thrifty

I’ve frequently had under \$100 in my checking account, and never been hit with any sort of fee at all. I don’t know what you guys are all up in arms about.

• Ryan

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• Anna

I have a checking and savings account at 2 banks. All of the account are under \$100, one is even less than \$1. I haven’t received a fee for anything. Where do you get that you can’t have a bank account for less than a minimum balance?

• Ryan

“And the supercilious and dim yesbuts raising this objection will go on to point out that they, personally, have never had to pay such a fee.”

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Where are the calls from the rabbid dog left for withdrawal? Where are their calls for am exit strategy? Where are their calls for a timeline?

We have this problem in the UK that over 2 million people don’t have banks accounts so have to pay this ‘tax’ like you say.

• Sam Eskenazi

I wholeheartedly agree, my friend, such a racket that banks inflict on everyone is ridiculas. I have to watch my ass constantly to make sure I do not even touh the red for fear of a overdraft charge.

• jeffp

keep up with your balance and you won’t get an overdraft fee!  at least you’re not getting banned from shops for passing bad checks, or getting arrested for check fraud.  you have access to a computer, get on your bank site and you can see your current balance and your entire transaction history.

• Cougar Draven

You’re…not getting the point here. Being a supercilious dickhead isn’t going to make you more right. Have you ever paid an overdraft fee? Or ever had enough money to pay for everything that you ever needed? Especially the emergencies? Because if you have, then you clearly don’t know what you’re talking about. And if you have, then you’re insane. I can “see my current balance” right now, in fact, I just looked at it. However, I still have \$350 left on my apartment deposit to pay, and less than \$10 left in the bank.

From the article: “And the supercilious and dim yesbuts raising this objection will go on
to point out that they, personally, have never had to pay such a fee.
And they will take this as evidence of their own superior responsibility
and their oh-so-superior superiority too all of those stupid working
class people stuck at the margins for whom…”

From the article: “And the supercilious and dim yesbuts raising this objection will go on
to point out that they, personally, have never had to pay such a fee.
And they will take this as evidence of their own superior responsibility
and their oh-so-superior superiority too all of those stupid working
class people stuck at the margins for whom…”

• Nomuse

Take a look next time at what your account activity actually does over a period of hours and days.  Merchant charges hit at least twice; once to “check” if there is money in the account, a second time with the correct amount.  During this period your balance fluctuates wildly.

Bank fees, and recurring automatic debits (such as are required for most auto insurance) hit whenever they chose; also, for insurance at least, for whatever value they chose that month.  Nor does the bank make tracking deposits simple; they will change their minds at least twice about WHEN and HOW MUCH is actually draw-able.

And at any moment in this dance your bank can find you short.  It’s in their best interest to do so.

NOT a problem for even the lower middle class — just keep enough balance to cover the expected debits plus error.  But when your last two paychecks got “lost in Payroll, we’ll get them to you ten working days from next monday,” you are down to ten miles in the tank, enough scraps in the pantry for two meals, a cough that won’t quit and a broken tool you can’t finish your current job without…

• Elle

Our bank started charging a fee we weren’t warned about.  As a poor family budgeting every last dollar, the appearance of a \$7-fee suddenly caused another purchase to go in the red and we were slammed with a \$35-fee.  We didn’t have internet access then, and right this moment are homeless and I’m using an open wi-fi.  Getting online isn’t always so easy.  It’s a privilege to have easy internet access, and a privilege to have enough money that a small fee won’t push you over, and a privilege to have enough money to get a free account.  It has nothing to do with being irresponsible.

Funny how the rich, those with money to spend, get so much for free.

• Elle

Our bank started charging a fee we weren’t warned about.  As a poor family budgeting every last dollar, the appearance of a \$7-fee suddenly caused another purchase to go in the red and we were slammed with a \$35-fee.  We didn’t have internet access then, and right this moment are homeless and I’m using an open wi-fi.  Getting online isn’t always so easy.  It’s a privilege to have easy internet access, and a privilege to have enough money that a small fee won’t push you over, and a privilege to have enough money to get a free account.  It has nothing to do with being irresponsible.

Funny how the rich, those with money to spend, get so much for free.

• Oncenudged

to jeffp, actually, that’s not true–overdraft fees are only one of many, many fees your bank can hit you with–there’s a wide variety, including the sudden charging of a 12 dollar monthly fee if you don’t direct deposit over 500 a month into your formerly free checking account, and furthermore, it has to be the same check, so despite making nearly twice that a month, if an individual check wasn’t that amount, surprise! you get charged a fee–and the only notification required is a very small sentence on your normal monthly statement… (had this happen, can you tell?)

my personal anecdote aside, it is STUNNING what banks can get away with requiring of their consumers–among them, in my opinion, forced arbitration–I have yet to hear it adequately explained how our constitutional right to take a case to court can be signed away merely in order to open a bank account, but the very liberal application of fees–the holding of money being timed so that the bank is more likely to trip you into going into overdraft (I’ve seen accounts of this where your money is always available within a day of deposit, and then on a day when your funds are really low and you make a purchase, the bank does NOT have it ready the usual time, but conveniently it’s still within their contractual time window and you’re sol), the aggressive pedaling of credit cards to college students that are unemployed (again personal experience watched someone crash and burn because they were given a 5,000 dollar credit card by Chase when they were 18, unemployed, in school, and had requested a \$800 loan for textbooks… I know someone who makes 80,000 a year who doesn’t even have a 5,000 dollar credit card!–yes, better money management would have helped this individual’s situation, but the fact that the bank was allowed to nail this person to the wall upsets me), etc.

I’ve heard repeated suggestions of credit unions as an alternative to banks, but it’s still not an answer for poor hand-to-mouth level workers.  Community lending projects can be cool, but mostly their employed in third world countries to make first world citizens feel righteous, rather than used here, where it would help the internal economy too…

• Siberwolf2k

Didnt the banks get bailed out?  The \$38,500,000,000 should be mandated to go right back into then national debt coffers… I bet that sh-t would stop quick.
I opened a account with B of A(holes) and they charge about 8.00 a month in fees as opposed to the 5.00 per check they were charging before hand. so I went from spending \$260.00 per year to 100.00 per year to use my own money …. yay?

• Javert

Funny, while working my way though school at Taco Bell and a machine shop I never bounced a check.  Oh, and check cashing fees are nothing new…I had to use it a couple of times about 22 years ago.

Why can people not be responsible?  I wish I could make money off of all you stupid whiners as well.  It is not a poor surcharge, it is an I did not pay attention and cannot do simple arithmetic surcharge.

• http://feygelegoy.myopenid.com/ Feygele Goy

Fucking-A. Transportation, housing, and food are among those luxuries that should be reserved kept out of those grubby lower-class hands!

• Amaryllis

And so it has been and so it is written
That those who falter and those who fall
Must pay the price!

That Javert?

Anyway, when did it get to be 2009 again?

• unzippedurmom

awesome dude, but yesterday you broke your toe and had to pay a 500 dollar deductible,

• Chenrezi

Well congratulations on never being blindsided by unexpected expenses, such as, say, car repairs.  Plus towing expenses if your vehicle is inconsiderate enough to break down somewhere other than your own driveway.  Or maybe a pipe in your home springs a leak, and you can’t go without running water until your next paycheck.  And God forbid you get sick or injured at any point ever, because affordable healthcare is still apparently a Bad Thing in this country.

But no, you’re right.  All these stupid poor people don’t have the sense to be as lucky as you were.  If they would just wise up and stop being so unlucky, their lives would turn around!

By the way, you do realize that you’ve named yourself after one of the most legendary hardasses in fiction, right?  On the other hand, given what we’ve gleaned of your personality, that was probably intentional on your part.

“Cannot do simple arithmetic”? Ok smart guy, 22 years ago was a completely different economic situation than today. I am also working my way through school at a pizza place, almost the only place left that WILL hire a currently-enrolled college student, from personal experience. That means ridiculous amounts of wear and tear on your car, and not to mention gas. When it was near \$4 a gallon, I shelled out close to TWO HUNDRED DOLLARS a week on gas. Want to know what my weekly income at one job was? Around \$60, plus the average \$120 in tips. Sound like a loss to you? If not, I’ll make the “simple arithmetic” more clear. I made ~\$7,600 last year. My expenses incurred AS A RESULT OF WORK AND NOTHING MORE, factoring only gas used on delivery, not even the commute to and from, repairs, and car payment, exceeded \$8,500. That “simple arithmetic” comes out to a LOSS of ~\$900. That figure is not accounting for car insurance, gas to school or (hah, as if) recreation, or even FOOD.

So whats the “responsible” solution to this situation? Don’t take out a loan for \$2,500 the next time my car breaks down and lose my job, then fail out of school because I can’t make it to class? Or maybe keep trying to find a new job, like I’ve been doing since 2009, and hear the same “We can’t hire you because your school schedule may conflict with the job” a few hundred more times, spending more in gas that i don’t have on the hunt?

Also, the “poor surcharge” issue: You get charged 12 dollars monthly for not having an average of at least \$5,000 dollars during a period(month) at my bank. Translation: If you don’t have enough money, you pay more. That sounds like being charged for being poor to me. I make that threshold \$5,000 in about 9 months of work, IF I HAD EXACTLY ZERO EXPENSES. Responsibility has nothing to do with it, not everyone has the same luxury of being able to afford things like food and gas, even while working, you haughty ass.

you do realize that 22 years ago, the general public had no internet, much less a phone or computer to use it one. and as a college student, im sure you were no exception. you werent competing in a global economy. i’m gona go out on a limb here, but you probably didnt have kids. if youre a white male, you were at the top of the totem pole to begin with. with ur college education, you could afford to work at taco bell cuz you had bigger opportunities to look forward.

honestly, you be ashamed of yourself for this comment. you are the proverbial ‘old fool’. you dont even know what youre talking about, youre not even operating in this century. i’m sure most of us have overcome more obstacles at age 22 than youve had in your whole life. your winning 1st place in a local race doesnt mean crap to the people struggling in the olympics.

Fantastic article! I wish somehow this could be read by more and more people! I’ve been to different check cashing places… the poorer the community, it seems the more they charge to cash it. The foreigner-run-stores charge up to 15%….FIFTEEN PERCENT! I’ve been in situations where i simply couldn’t cash my check because i didn’t have a bank account*, and all the places charged too much. I needed every penny (literally) to pay the rent and water bill so i could have a decent place to live. I had to beg my employer to cash my check for a few months. I ended up having to leave because i wasn’t making enough money to maintain my apartment…in a low-income government housing community.

* – couldn’t get a bank account because my ex stole my debit card and ran up over \$400 in charges and overdraft fees. I couldn’t prove he did it and couldn’t claim fraud because he lived with me at the time (couldn’t get rid of him, he was abusive… wouldn’t leave.)and I was afraid of the repercussions. See, everyone’s situation is different, and for someone to charge me to use my own money is an outrage, and a down low, dirty, disgusting way of running a business if you ask me.

I just recently added up all the fee’s it takes just to pay a bill these days. It’s \$2.95 just to pay the: water, gas, cable and car insurance. \$5 to pay the electric bill. There are other fees here but i estimated it costs about \$17 a month in fees just to pay bills. that’s approximately \$200 a year. Add this to the fees associated with banks or cashing checks at walmart and it comes out to be what a single, working (way under poverty line) person gets back on their tax return in February. I shit you not, my tax returns were \$300 – \$350 for about 5 years. And that’s what i was paying in fees to pay my bills. This pisses me off like you wouldn’t believe!

Thank you Fred for writing this!

Fantastic article! I wish somehow this could be read by more and more people! I’ve been to different check cashing places… the poorer the community, it seems the more they charge to cash it. The foreigner-run-stores charge up to 15%….FIFTEEN PERCENT! I’ve been in situations where i simply couldn’t cash my check because i didn’t have a bank account*, and all the places charged too much. I needed every penny (literally) to pay the rent and water bill so i could have a decent place to live. I had to beg my employer to cash my check for a few months. I ended up having to leave because i wasn’t making enough money to maintain my apartment…in a low-income government housing community.

* – couldn’t get a bank account because my ex stole my debit card and ran up over \$400 in charges and overdraft fees. I couldn’t prove he did it and couldn’t claim fraud because he lived with me at the time (couldn’t get rid of him, he was abusive… wouldn’t leave.)and I was afraid of the repercussions. See, everyone’s situation is different, and for someone to charge me to use my own money is an outrage, and a down low, dirty, disgusting way of running a business if you ask me.

I just recently added up all the fee’s it takes just to pay a bill these days. It’s \$2.95 just to pay the: water, gas, cable and car insurance. \$5 to pay the electric bill. There are other fees here but i estimated it costs about \$17 a month in fees just to pay bills. that’s approximately \$200 a year. Add this to the fees associated with banks or cashing checks at walmart and it comes out to be what a single, working (way under poverty line) person gets back on their tax return in February. I shit you not, my tax returns were \$300 – \$350 for about 5 years. And that’s what i was paying in fees to pay my bills. This pisses me off like you wouldn’t believe!

Thank you Fred for writing this!

Solution for check cashing fees – go to the issuing bank.  They must cash it and may not charge a fee.  In all places I have worked, it was inconvenient (no idea why they chose to use local banks that have only one branch that isn’t close to any of the business’ locations or the owner’s house), but the option is there.

Incidentally, the few times I used this option, my credit union account was overdrawn, and I didn’t feel like paying them the \$27 fee (cheap!  Relatively…) for overdrafting by less than a dollar or because they’ll pay electronic check transactions even when it would overdraw the account.  If only they made ATMs that could use that type of transaction, I’d catch up bills with cash and only owe the bank \$27 up to 60 days later!

• P J Evans

Works if it’s a bank with a branch you can get to. If it’s an out of state bank – you got a check from your favorite aunt, or something like that, then what would you suggest?

Also, ATM fees….

• Brrryce

Absolutely not true, weirdly enough. I sold a bracelet to a jeweler, saw their bank was near my next stop and popped in to cash it. The teller told me it would be five dollars to cash a check — drawn on their bank! I was flabbergasted. I said, no way. Luckily, the teller said, “I can waive that fee this time.” WTF?

• Anonymous

They’ve got that one figured out too.  You can’t just go to the issuing bank – you have to go to the branch where the check-writer’s account is based.

• Nancy Irving

I suppose that the law on this must vary state-to-state, as I remember, years ago, having a bank in Pennsylvania refuse to cash a \$6 or \$8 check drawn on them, because I didn’t have an account with them.  (I don’t remember the exact amount of the check, but it was less than \$10.)

(I literally started screaming at them, and the bank manager made a “special exception” and cashed the check to get me out of there, LOL.  I don’t recommend the screaming route, however, as I was probably lucky they didn’t call the police.)

Hmm, I wonder how it was that people found this old post of fred’s to comment on now. That said, it’s an excellent post and certainly deserves attention!

… under #5, right above the pic of the guy walking in the door
flipping everyone off.

• ArisuZawa
• Trollworx
• alytron

• CaliMom

It’s linked in a cracked.com article, “5 Things Nobody Tells You About Being Poor” dated May 27, 2011. That’s how I got here, lol. This is definitely a great post on greedy banks, though. I hate banks to the point that I’m hyper paranoid over the possibility of going in the red (I hardly ever do but that’s because I stress so much about it…way to live, eh?) The only thing that has given me some relief is I downloaded a checkbook register in excel from the microsoft website & as long as I make sure I write everything down (again, hyper paranoid about it…thanks banks for the daily anxiety) the spreadsheet does the math for me. Oh and I use to work for a company that worked daily w/the banks & my manager was a former BofA manager. They are a\$\$holes & hold people’s money hostage all the time, sometimes if they “think” you might be overdrawn this week (verified by the former BofA manager).

• Sgt. Pepper’s Bleeding Heart

Ooh, I love the resurrection of the posts in the ‘class warfare’ category.

Shorter jeffp: to avoid penalties, don’t be poor. Cheers mate, that’s really helpful and shows a thorough understanding of Fred’s point.

A few years ago my bank sent me a letter outlining its exciting new changes to serve me better (ie fees). It also gave handy suggestions for keeping fees low. One was, effectively, “have more spare money!” Jeffp, you don’t work for St George, do you?

Shorter Javert: all kneel before my awesomeness, ye verily, and weep that thou arst not at awesome as I.