Low funds fee

Mrs. S and I dipped into our meager retirement savings — again — in an effort to bridge the gap between now and whenever we can land jobs that will help us return to what historians refer to as the “middle class.”

As I am on the phone with the people who oversee our retirement fund, deciding how much we are going to need to survive in the near term and how many more years we are willing to work (assuming jobs exist then), the woman tells me that there is a low-funds fee of $35, to which they will be helping themselves before they send us a check.

Can someone tell me the purpose, or at least the rationale, for these fees, other than to set up a barrier for have-nots who are¬†on the cusp of¬†becoming have-somes, another hurdle for the poor who just don’t get it and insist on trying to live like the well-to-do, with accounts and savings and financial people and portfolios and such? I don’t see how accounts with less money cost a company more money or more time or more effort to maintain than those with more money in them. Seems to me that accounts with less money probably have less activity than larger ones and, therefore, should cost companies less to maintain. If that’s the case, shouldn’t they charge an “excess funds fee” for accounts with lots of money and lots of activity? I understand that companies don’t want to create a deterrent for people looking to open large accounts. But they don’t mind deterring poor people from having retirement accounts, mutual funds and other sources of capital gains. Fuck them, right?

Of course, these companies could charge fees based solely on the amount of account activity, without regard to the amount of money in the account.

Not discriminating against the poor? Gee, there’s a novel thought.

9 thoughts on “Low funds fee

  1. the point of the fee is to deter people who plan on not maintaining a high balance from opening an account with the bank. the traditional bank business model is to get people to put their money into accounts maintained by the bank so that the bank can then invest the money and pocket the profits (minus whatever small interest rate the bank promises its customers). the bank doesn’t want a lot of accounts with small balances, it wants accounts with relatively large balances, so it will have more money to gamble with in the markets and thus be able to reap larger returns. small account balances don’t cost the bank money, but they do make it harder for the bank to make money, so it that sense it does cost them imagined profits.

  2. snuzy is sort of correct. It has to do with a banks capitalization and the borrowing a bank has to do when their total accounts fall below a certain required amount. The difference between full capitalizaton and what the bank actually has on deposit must be borrowed from the Federal Reserve Bank at the discount window and is known as overnight funds. The float or fee charged by the FED depends on the amount the bank is required to borrow in order to stay fully capitalized. Think of it as a bookies daily vig. So your $35 dollars goes toward the fee your bank had to pay the FED to stay fully capitalized.

  3. I read somewhere that a typical 401(k) with a million bucks value on paper will only be worth about 60 percent of that amount by the time all the fees and surcharges are stolen from it.
    Great deal, huh?

  4. Major, that is simply untrue. That is if you know what your doing and don’t leave everything up to some clown your buddy claims is a great financial advisor. Do your own due diligence. Don’t give away your freedom by putting your well being into the hands of a third party. Always keep in mind that most people aren’t any smarter than you are, they just make you believe that they are. Take Obama for example.

  5. I’m cashed out of all institutional financial robbing houses now. I only ever used them as high-yielding savings accounts back in the day, in the Clinton salad days. I’ll never use one again. I don’t use big banks, either. Strictly a cash basis now. Put your money where your mouth is, derp.
    BANKS, how do they work!? Derp.

  6. No ordinary working person who started playing the Wall Street grifter’s game sooner than about a decade or 15 years ago will ever see any of their money.
    “Investment involves risk” it says in the fine print.
    –>Oves Emptor<–
    (Sheep beware)

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