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Old 11-02-2011, 12:23 AM   #21
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Originally Posted by haha View Post
How about those 18% credit cards? The banks are experiencing excellent spreads. I don't think we need shed any tears for them.
Not all banks have a large credit card portfolio. For instance according to this earnings release

https://www.wellsfargo.com/downloads...Supplement.pdf

Wells Fargo had $760 billion in loans and $800+ billion in deposits as of 9/30/2011. Only $22 billion (3%) were credit cards. Typically about half of the credit card customers don't carry a balance. A good portion of that $22 billion don't bring in interest because they are paid in full every month. Then you have to account for charge-offs -- uncollectible loans. Wells Fargo's charge-off rate on the credit card portfolio was 4.9% in 3Q 2011.

Lending to people who must pay 18% interest is quite risky. You will see if you try it on a P2P lending site like Lending Club or Prosper.
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Old 11-02-2011, 07:15 AM   #22
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I live in New Jersey, just outside NYC, so maybe it's different in my area. But, in my entire adult life I have never paid for a checking account (including no minimum balance), or Debit card, or debit card fees. And I get excellent service from the few times per year that I go into the branch for help.
Maybe I am naive, but I have to think that, due to competition, there is always a local bank that offers the same deal, wherever one lives. It can be a temporary hassle to switch banks, if one has auto-pays set up, but that hassle is short-lived.
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Old 11-02-2011, 07:40 AM   #23
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Yes but the value of that interest-free borrowing isn't very high these days. Banks used to lend at say 8% on a car loan. Now they lend at 4%. The value they get from your 0% deposit just dropped in half. They still have to give you the same banking service as before. A fee makes up some of the difference.
Can't banks also go to the fed window and borrow $ at 0.25%. That is still a nice spread I would take all day every day.
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Old 11-02-2011, 08:06 AM   #24
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Why, do you think any of them have Debit Cards?
No I don't but I was told too keep my politics to myself.
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Old 11-02-2011, 02:41 PM   #25
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Can't banks also go to the fed window and borrow $ at 0.25%. That is still a nice spread I would take all day every day.
They can but they don't unless there's a special need. If you look at the Wells Fargo earnings release supplement I linked in the previous post

https://www.wellsfargo.com/downloads...Supplement.pdf

you will see WF had $760 billion in loans outstanding, funded by $880 billion in deposits. How much did they borrow from the Fed? Not $760 billion or $880 billion for sure. They actually noted that too much in deposits lowered their net interest margin.

Quote:
NIM down 17 bps driven primarily by strong deposit flows, 12 bps impact
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Old 11-02-2011, 03:31 PM   #26
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I'm happy to see the free market work the way it should. THey institute fees, and people vote with their feet/money, which is how it should be. I'd much rather see it this way than for our government to pass laws about how much fees they can charge. I hope many BoA customers leave and don't go back...these are free-market lessons that the banks will need to learn.
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Old 11-04-2011, 09:44 PM   #27
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I'm happy to see the free market work the way it should. THey institute fees, and people vote with their feet/money, which is how it should be. I'd much rather see it this way than for our government to pass laws about how much fees they can charge. I hope many BoA customers leave and don't go back...these are free-market lessons that the banks will need to learn.
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