HOW DARE THOSE BANKS CHARGE FEES! – Pragmatic Capitalism

I don’t expect to make a lot of new friends with this post, but I don’t really understand the uproar over the news that banks will start charging for debit card usage. And this is all coming from one of the banking sector’s harshest critics mind you….This is all stemming from the recent news that Bank of America will start charging $5 for users of their debit cards. I think it’s important to make a few points here:

Banks are in the business of making money. As for profit entities they are not in the business of providing services for free. If you find the usage of a debit card to be convenient and eases your every day transaction process then Bank of America has the right to charge you for providing this service.

There are plenty of other options out there. We have grown far too accustomed to the conveniences of modern banking and we take many of these services for granted. If you don’t like the debit card fee use a credit card. Or worse, go to the ATM and take out some cash. If the ease of using a debit card is worth the saved hassle then in all likelihood you should be thanking Bank of America of whoever your bank is for providing that time saving service.

Don’t like Bank of America? Tell them to take a hike. There are plenty of other options.

Look. I understand the outrage here. We’re all sick and tired of feeling like the banking sector is a leach sucking off US households and consumers. But if we want big changes in the ways our banks work then we need to be more vocal about this. We need to decide, as a society, what purpose we want our banks to serve. Do we want our banks to serve the average consumer or do we want banks to serve their shareholders? The current banking construct has them serving their shareholders. And they are attempting to maximize profits.

If we want banks to serve a purpose more akin to public utilities then we need to arrange for much greater regulation of these entities so that they serve a public purpose and not necessarily a profit maximizing purpose. I fought hard for this back last year. We lost. Thus far, the American public hasn’t decided that these sorts of regulations are necessary and we’ve allowed the banks to get away with rather meager regulatory changes via Dodd Frank.

Cullen Roche

Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.

He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.