A Fair Fee That Banks Should Impose On Us Immediately


November 11, 2011


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Based on the rapid retreat by banks to charge us for using our debit cards, there’s no doubt that American consumers are unified in their outrage. Case closed. However, there is a fair fee that banks should impose on us immediately to help recoup the massive revenue loss from the government capping swipe fees.

Shut the front door! Yes, Your DailyDollar which focuses so much on saving money actually has a proposal for banks to consider which could cost you some money. Read on – we think you will find it fair too.

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Remember When?
Banks introduced online bill pay back in the mid-90s. Back then, it cost a monthly fee. Something like $4.95 if I recall correctly. I for one was happy to pay the fee to avoid the hassle of writing checks, addressing and licking envelopes and buying stamps. As banking became more competitive, the online bill pay fees went away and banks began packaging it as a free service. The same holds true today.

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What Is The Float?
Although you may not realize it, banks earn revenue from your money when you use online bill pay – even though you do not pay a monthly fee. Banks earn money on the float. The float is a period of time in between your money leaving your bank account and being deposited into the payee’s account. There is usually a 2-3 day window when your bill is in process of being paid and during that time the banks earn interest off your money. That is the float and when you aggregate billions of dollars of bills being paid the interest income becomes a huge figure.

2 Ways That Online Bill Pay Works
There are two ways the banks magically pay your bills. The first type is electronic payments. These are set-up with larger payees like mortgage companies, large retailers, etc. Electronic payments can be done instantly. But you will notice that when you set up a bill to be paid, you rarely can choose the current day or even the next day for delivery. Usually you have to schedule between 3-5 days. That delay is the float and is how the banks create a huge amount of interest revenue from investing those funds overnight.

The second way bills are paid by banks’ online bill pay service is snail mail. For payments meant for small shops like your dentist or even your Uncle Joe, bills are paid via paper check. Again, during that window of time that the funds are withdrawn from your account and mailed and until the recipient cashes that check, the bank is earning interest on your money.

Postage Stamp Prices Rising Again January 22, 2012
If you haven’t heard, the post office is raising stamp prices…again. The endless rise in stamp prices makes online bill pay even more attractive. 45 cents per stamp times 10 bills per month plus the cost of envelopes and checks adds up over the course of a year.

Banks Should Charge For Online Bill Pay
Banks have to make a profit. The government meddling with swipe fees has caused banks to lose over one billion dollars in revenue. So here is my proposal for banks. Online bill pay is a valuable service and it takes a big operation to get all those bills paid on time. For bills that are paid electronically I think banks should keep fee free. However, for bills that require snail mail I am more than willing to pay my bank the cost of postage. Banks incur big expense buying paper checks, ink toner, envelopes, postage and all the equipment to print and stuff envelopes. Why give this away for free?

Small businesses that use their bank’s online bill pay rack up even more monthly bills than you or I do with our personal affairs. Paying bills is a normal, expected cost of doing business so why shouldn’t it be paid for by the customer? For highly profitable bank customers, the banks can create packages that include totally free online bill pay if certain minimum balance or other criteria are met. But for everyone else, it’s time they pay their fair share.

Paying more fees is rarely popular just like paying more taxes would be. But the fact is that there are costs to run a bill pay operation just like it costs money to run our government. Everyone has to pay their fair share for things to operate normally. So go ahead Mr. Banker, sock it to me. Hit me up for 40 cents for each snail mail bill pay I process. You are still doing me a huge favor by purchasing and printing the paper check, purchasing and printing the envelope and licking it for me! And most of all, you always manage to get those payments delivered on time. Don’t you dare charge me for electronic bill payments to my BestBuy credit card, etc., but when I send $15 to my Aunt Sally, charge me. I won’t complain, I promise.

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