Not a Great Article

Kind of as a follow-up, I was reading this article on how bank and interchange fees are levied against the poor and pay up to the rich. I kind of get it, but there are a couple things that make the argument fall apart.

1. Banks make money by having money. When a well off person has $10k in a checking account then the bank invests that (nominally by loaning it out, though more recently by gambling on Wall Street) earning a return and, possibly, paying a pittance to the account holder. A 5% return generates $500 for the bank on that account. If they pay 0.25% to the account holder (common) then they are out $25 of that and only make $475 on the account--enough to service the account, and still profit. When a lower income person who has an average of $25 in their account, then the investment return to the bank likely doesn't even cover the cost to service the account. Yes, overdraft fees more heavily impact people with less money, but in the balance it is people with lots of $ deposited that pay for people with little...not the other way around.

2. If you really believe that evil banks are robbing the poor to give to the rich then the argument isn't that everyone needs to pay for checking, but that people should get the hell out of the worst offending banks. Might I suggest credit unions?

Banks are for-profit institutions. They profit from wealthier people by investing that money. They can't do that for the poor so they profit from fees. Credit unions are similar, but with the important note: they do not profit! Therefore their fees can be lower, and their returns often higher.