12 Ways Banks Are Legally Stealing Your Money and What You Can Do About It

Day after day, month after month, banks pick your pockets with impunity. Not content with charging rip-off interest rates to borrowers, banks have now discovered that lots and lots of little fees add up to some serious cash flow and cause only minor irritation for most of their customers.

It doesn’t seem like enough to fight about, really. A couple of three dollar ATM fees here, a few”overdraft” charges there. It doesn’t seem enough to merit more than a bit of grumbling.

Added together, though, fees and overdrafts total some serious money. For example, in 2009, even as consumers were being stretched to the financial breaking point, banks collected a record $38 BILLION in overdraft fees alone, nearly double the amount collected in 2000!

The public outcry against these fees resulted in the government issuing more regulations, rules with little bite due to the cozy, symbiotic relationship banks enjoy with politicians. This relationship allows banks to continue to steal money from consumers and help themselves to our tax dollars at the same time.

The issue of bank scams and hidden charges is an important one, especially when you consider that every penny they get from you is one that you won’t have in your retirement account.

I strongly believe that by taking some simple actions, you can avoid many of these bogus fees and charges and keep more of your money for yourself.

In this article, I’d like to look at a few common and not-so-common ways banks are reaching into your pocket and show you how you can avoid becoming a victim of these barely legal scams.

Please remember: Not every bank is doing ALL of these things, but there is a chance that your bank is doing at least ONE of them. This list is designed so that you can be on the lookout for unnecessary fees every time you review your statement.

  1. Fees for Paying Online: Buying online has become HUGE over the past few years, a fact not lost on banks. Already, some banks are charging “online convenience fees” of anywhere from $2-$4.95 for purchases made over the internet. Other banks are eyeing this as a potential mother lode of revenue. Before you use your credit or debit card online, confirm that your bank DOES NOT charge online transaction fees.
  2. Free Checking “Low Balance” Fees: You’ve been a good customer, faithfully managing your checking account to avoid those pesky overdraft penalties, keeping a careful watch on how and where you use your ATM card, going paperless to keep from getting an account maintenance fee. Congratulations! Your frugal ways have earned you an additional FEE- the so-called “low balance” fee for not maintaining a minimum balance. Be sure you know your bank’s minimum balance requirements or, if possible, change to a bank that does not require a minimum. You could also try connecting your checking and savings accounts so that the combined amount is always above the threshold.
  3. Monthly Maintenance Fees: You get your supposedly “free” checking account and find that several months later it has been phased out and converted to another type of account that charges a monthly fee, sometimes as much as $15. The cure: Change banks or move your money to a credit union.
  4. Deposit Returned Fee: A rubber check gets deposited in your account and YOU get charged for it, meaning you get scammed by both the check writer AND the bank! Nice… Cure: Fight the fee. Banks will often back down when you call attention to their scammy ways.
  5. Yearly Membership Fee: This used to be limited to credit cards but with credit card revenues way down, what’s a poor bank to do? Some banks decided that the level of service they provide to their customers is worth up to $29 a year. I say, “NO WAY!” If your bank wants you to pay them so they can charge you more fees- drop them fast and don’t even say goodbye.
  6. Deposit Requirements: To ensure checking account profitability, a few banks require that you have a specified amount of money in monthly direct deposits. If you fail to meet these requirements, a maintenance fee kicks in. Avoid this by switching to an online bank or credit union.
  7. ATM Usage Fees: Most banks don’t charge for getting money from their own ATM’s (although a few are starting to do so) Avoid using the ATM’s of other banks and in convenience stores where the privilege can cost you as much as five dollars per transaction. If you MUST get cash from an ATM, get the maximum amount possible as the same fee applies whether you get $20 or $200. Getting your cash directly from the bank and using your debit card to pay for items can also help reduce ATM fees.
  8. Getting You Coming And Going -The “Close Your Account” Fee: I kid you not, there are banks who actually charge as much as $25 if you close your account before a certain time. Be sure to look at the fine print when you open a checking account to see if there are penalties for closing it.
  9. A Traveling Life For Me And Yet Another Fee: If you travel abroad and use your ATM or debit card, it’s reasonable to expect that you will be charged ATM fees. What is not reasonable, however, is the additional “foreign ATM transaction fee” charged by some banks. If you are afraid of carrying large sums of cash when you travel, traveler’s checks might be an option. Even with the fees, they will likely cost you less than using foreign ATM machines.
  10. Debit Card Fees- It used to be that there was no fee associated when you used your debit card to pay for an item. After all, banks were making scads of money off credit card interest and weren’t too concerned about debit cards as a source of revenue. The recession has changed things, however, and a growing number of banks are charging you monthly fees just for the privilege of having a debit card- whether you use it or not. Find out if your bank charges you and demand they stop- or change banks.
  11. Talk to the Hand… But It’ll Cost You: Back in the late 1990’s and early 2000’s, several banks toyed with the idea of charging you to talk to a live person inside the bank. While consumer backlash forced most of those banks to stop tacking on this charge, the idea of charging to speak with sentient beings is just too irresistible for banks to abandon completely. It is starting to make a comeback, with some banks urging you to open a “cyber account” and then charging you a live person fee if you decide to go inside the bank and chat to a teller. Don’t be afraid to call your bank out on this one and if they won’t fix it- go somewhere else.
  12. Legislation Legismation… Bring on The Professional Card: The Credit Card Accountability and Responsibility and Disclosure Act of 2009 (CARD) was supposed to put an end to controversial credit card issuer practices such as hair-trigger interest rate increases, inactivity fees, and usurious overdraft fees. However, the bankers and the politicians they own made sure there was a big loophole in the form of so-called “professional” cards. Originally, professional cards were special credit cards issued to business owners who could actually prove they were business owners by providing some form of business documentation (copy of licenses, DBA, etc.) Nowadays, however, all one has to do is check the business owner box on most professional card applications and VOILA!- a shiny new plastic professional cards arrives in a couple of days. What the consumer is not told, however, is that professional cards are exempt from all the provisions of the CARD act. Banks are tripping over themselves to flood your mailbox with these types of offers and the marketing material usually doesn’t make it clear that these cards are not subject to the new law. The cure? Cut up or stop using any professional cards you may own and set fire to solicitations for them. These are a very, very bad deal.

I have outlined just a few of the banking rip-offs I’ve come across in the last few years. You can be sure that with the recession dragging on banks and finance companies will become even more creative about separating you from your hard-earned cash.

Offshore Banking Services

Banking is one of the most important sectors of the world economy as it influences investment, consumption and other business activities. Furthermore, banking has a substantial impact on the circulation of money and thus influences economic growth. Offshore banking provides a unique opportunity to individuals, business people and companies to access the international market and implement their business and investment plans since offshore banking encompasses stronger privacy and security features. That is to say, the activities you launch through your offshore private banking are more confidential and secure. It should be underlined that you will be able to offer the same privacy to your customers together with other related benefits.

The procedures you need to follow in order to open an offshore bank account are not complex. In other words, every individual may open an offshore bank account within few hours. Note that each offshore banking jurisdiction has its own requirements. Among the most popular offshore banking centres are the Cayman Islands, Seychelles, Saint Vincent and Grenadines, Bahamas, Gibraltar and Netherlands Antilles.

BASIC REQUIREMENTS:

As it has been mentioned before, opening an offshore bank account is rather simple. The procedures you need to follow in order to open an offshore bank account are similar to the procedures you follow in order to open a bank account in your home country. First of all, offshore banks will ask for your personal details: name, date of birth, address, citizenship, occupation and submit a copy of your passport, identity card or any other identification document issued by a governmental authority. Second of all, you will have to verify you residence address by presenting a utility bill or any other document. It should be mentioned that all the submitted documents must be certified.

Some considerable benefits of offshore banking are:

  • Minimised political risk. In many cases, the biggest threat is not the market risk but the governments, i.e. capital controls measures and bail-ins.
  • Asset protection.
  • Currency diversification. Holding foreign currencies leads to the minimisation of the risks you confront.
  • More options for your business and investment plans.

JURISDICTIONS:

Cayman Islands:

One of the major advantages of the Cayman Islands is the political stability. The annual license fee is 9.000 US dollars. The international banking infrastructure is well-developed with many facilities. Another considerable advantage of the Cayman Islands is the zero taxation on international banking income. Nevertheless, the state’s approach toward international private banks owned by non-banker is poor. Despite the fact the Cayman Islands have well-developed banking structures, the poor attitude towards international banks owned by non-bankers discourages many investors and business people to launch offshore banking activities in the Cayman Islands.

Seychelles:

The major advantage of Seychelles is confidentiality since state authorities have no direct access to bank information without a Court order. Note that Seychelles has double tax treaties with Barbados, Botswana, China, Cyprus, Indonesia, Malaysia, Mauritius, Oman, Qatar, South Africa, Thailand, United Arab Emirates and Vietnam. Furthermore, it should be pointed out that Seychelles has signed Tax Information Exchange Agreements only with the Netherlands.

Saint Vincent and Grenadines:

The country maintains a degree of flexibility and confidentiality that many bank owners prefer. In particular, confidentiality regarding the incorporation and the launch of business of an International Banking License has been ensured by the Confidential Relationships Preservation (International Finance) Act 1996 and by the International Banks Act 1996. Among the major advantages of Saint Vincent and Grenadines is the absence of exchange control restrictions to offshore transactions and stamp duties. Furthermore, there are no corporate taxes, no income tax, no withholding tax, no capital gain tax and no estate/inheritance/succession duties.

The country has political stability, well-developed international banking infrastructures and skillful labour force.

The International Banks Act 1996 issues the following licenses:

  • Class I Offshore Banking License: The Licensee is involved in offshore banking activities outside the country. The minimum class requirement for Class I license is 500.000 US dollars.
  • Class II Offshore Banking License: The Licensee is engaged in offshore banking with individuals or groups detailed described in a written undertaking. The minimum class requirement for Class I license is 100.000 US dollars.

Bahamas:

Bahamas is considered one of the most attractive international banking centres in the world because of its excellent communications systems and the frequent air and sea connections with the USA. In addition, the country has a well-developed banking secrecy legislation. It should be taken into account that there are no taxes on international banking income.

There are two types of licenses, the unrestricted and restricted license. The unrestricted license can be obtained by private individual given that they can prove that they have a considerably high net worth. On the other point of view, restricted licenses are granted to financial institutions. Note that a restricted license enables the holder to offer banking and trust services exclusively to a particular class of associated individuals or businesses.

Gibraltar:

Gibraltar is a full member of the European Union. Therefore, banks incorporated in Gibraltar operate under the same legal framework as the banks in the UK. Nevertheless, Gibraltar has some additional advantages such as the efficient and effective bureaucratic procedures. Moreover, banks may operate completely free of tax.

Netherlands Antilles:

The Netherlands Antilles have a well-established international banking secrecy legal framework. Among the main advantages of this particular jurisdiction is the absence of license fees for an international bank establishment. Moreover, the international banking infrastructure is good, with many attorneys and accounting firms which handle international businesses. It should be considered that there is a small amount of tax imposed on international banking income. Nevertheless, the government’s attitude towards international banks owned by non-bankers is poor.

Banking Secrets 101 by a Reformed Banker

Before I became a stay-at-home mom, I had spent my career in the financial world. I spent almost a decade in that field and had worked for many large well-known banks and small credit unions and everything in between. I worked for a very large upscale banking institution in CA where I floored cars (between the manufacturer and the dealer) and touched millions of dollars a day. I’ve worked in small mom and pop financial institutions giving loans (between the dealer and the buyer). I’ve ran collections, I’ve given people loans for credit cards, houses, cars, personal loans. I’ve done data entry and stuffed envelopes. I’ve held a few managerial positions. I’ve held employee of the month titles. I’ve raised more capital in my first month working for a well-known bank than my co-workers who had been at their jobs for over 3 years. I sold credit cards, had great customer relationships, and above all, I outsold any of my fellow co-workers at every job I’ve worked. I’ve been bonded for a quarter of a million dollars. I’ve helped stop fraud, I’ve worked in fraud departments. I’ve helped stop employee theft, I’ve done payroll and accounting for entire financial institutions, customers included. I’ve done it all and seen almost everything. At least, I sure as heck hope I have!

Why am I telling you all this? Is it to sit all high and mighty? Absolutely not. But if you’re going to listen to what I have to say, you need to know that I KNOW what I’m talking about. That I have the credentials to speak, because, let’s face it, so many people claim all this and more and none of it is true. Many people online are experts in their own minds, not on paper, where it really counts.

In almost a decade of working in the financial setting, here are the most important things you should know.

1) Never work for a bank and never join a bank as a customer. Choose credit unions. Some of the biggest most well-known banks in America are nothing more than frauds. Banks have stock-holders and as such, they have one mission in life. To make Mr. Stockholder rich. You do all the work; they get all the pay. Some more friendlier banks offer incentives to employees in the form of bonuses, most, and it kills me to say this, incentitive with jobs. As an employee, if you don’t sell a certain amount, you don’t work there. I’ve seen 3 year old employees let go because they slipped up ONE month and came 20% less than quota. Banks don’t care. Why should they; they can hire someone else to fill that spot in a matter of days.

At a credit union, its employee based, much like Winco. YOU get a share of the profits. They call that dividends. You get interest on checking, savings, the whole sha-bang. When they profit, so do you! There’s no stockholder at the top sucking up all that cash. It’s distributed within the company, and you are equal with employees. Credit unions also tend to give regular bonuses to their employees and it’s not performance based, which means you don’t have to be ruthless, you can be NICE and still get paid.

Credit unions generally care about the people. Because the people are technically part owner and NCUA protects credit unions better than banks in my opinion. As a part of NCUA, your accounts are insured up to $100,000 if the credit union goes belly up and takes off and runs. If banks do that, you are not covered so well.

2) Banks push overdraft fees. Oh they LOVE overdraft fees. I have personally seen upwards of $600 in overdraft fees ALONE on a $20 overdraft tab! They encourage it. They literally make their rules around encouraging it. I remember one time in this ruthless bank, that a customer came through the doors so distraught. He said that he just pulled out $20 from the ATM and it didn’t say his balance until AFTER it gave him the cash. Red flag #1, it gave him cash automatically even though that would overdraft him! Red flag #2, it didn’t tell him his balance until AFTER he withdrew the money. You think that the bank doesn’t set that all up!!! He was frantically telling me to just deposit the money back into his account. He didn’t want to go overdraft as the fee was upwards of $40. He kept saying, just put it back, just put it back. Am I going to get charged for this. Of course, no one could guarantee him he wouldn’t. I checked his account the next day. Sure enough, there was an overdraft fee and he mentioned he didn’t get paid for another 3 days. Let me tell you something. Every DAY that your in the red, some banks charge. This man was out $120 for 3 mins of being in the red. I was outraged, but of course, there was nothing I could do. I asked my manager if we could waive those fees. The man didn’t know yet, but I’m sure he would find out. The manager said, listen, your new here, but we don’t waive fees. In fact, we like it when they overdraft. Still pretty naive. I didn’t get it at the time, but I would later figure out the scheme. There are so many major scams going on, it would make your head spin and due to uh MORALS, I had to quit.

3) Bankers are not your friends. OK, I know this is going to hurt a lot of you who think that your banker is the best banker and they know you by name and they love you, adore you, and would never steer you wrong. But I’m a straight shooter, so here goes. Remember in #1 where you HAVE to sell in order to keep your job. Uh yeah, that’s how they do it. You become a customer’s “friend,” gain their trust, make them feel like you are on their side and not the banks, and then bam, they just talked you into some $20,000 line of credit that you had no intention of applying for. But, they know best and you trust them so you do it. At every single institution I’ve worked for, that is the protocol. That is how banks and credit unions alike, sell. Now, I’ll grant you that credit unions care more than banks do, but it is always still about the American dollar. In every profession on every continent in the world, it’s always about the money. Maybe, just maybe, you have a wonderful banker friend who would never sell you something you don’t need. Yeah, uh, those don’t last long. They don’t produce enough sales and so are discarded and replaced once management finds out.

I remember working for a particular credit union and they had this specialist come in and we had training and everything, how to sell to a customer without them knowing their being sold. Psychology was the forerunner in all that. And I admit, I wasn’t saved at the time, and I could have sold you ocean front property in Idaho. I was good at it. I was one of the bests in every company I worked for because I did have 20% care for the customer.

4) Most banks are not robbed as much as the average person believes. Yes, I’ve known people held up and stuffed in the vault and yes, it can happen. But there is an amazing amount of security in all banks and credit unions, and we are taught exactly what to do to prevent it and what to do in each situation. We know when and where it’s most likely to happen, what most robbers do/how they act, and what to do to actually catch them while they are still in the bank. The training is horribly boring and horribly extensive and there are tests you need to pass to even get on the floor. I would say that anyone who robs a bank is just looking for an easy way to go to jail.

5) Tellers do not verify cash. I hear it all the time as I’m checking people’s cash they give me if I’m selling something say on Craigslist. “It’s good; I got it at the bank.” Yeah, do you really think bankers have enough time to sit there and check every single bill that comes through? No. The ONLY time we checked bills is if something looked odd to us and the longer you work in banking, the more you know a bill like the back of your hand. You can smell what denomination it is. OK, not really, haha. But close. So, as a customer it is YOUR job to check the bills AT THE COUNTER. Once you leave that teller counter, even with all the camera’s, they won’t do anything about it. On a similar note, all bills that have at least 3/4 of the bill in tact, whether taped together or washed in the washer, ARE valid. Anything less than 3/4 will not be accepted. It used to be 1/2 but there was too much fraud.

6) NEVER, I repeat NEVER EVER give your check to someone you don’t know. At a yard sale, on Craigslist, to a private party you just met, etc. Once that person has your account number, they don’t even need the routing number, you can call any bank and get that. Its public information, even if you don’t have an account. Once they have that number, they can do bad, bad things with it. It’s not worth it.

7) Never wire money out of the country unless you know the person personally. Now, I would think this is common sense, but that sensibility skipped a lot of people in my banking days. Banks do not cover you in such cases. I have personally seen one gal lose $600 in one transaction and oddly enough, she WORKED for the bank!

8) Don’t fall for the “phishing scheme.” It is basically a phone call, email, or text that says your bank account is overdraft or this is an urgent message, you need to login right away. You follow their link, they track your information, they get the login info, and your well in a boat without a paddle. A sitting duck, if you will. If you get such an email, login in under ANOTHER browser from your banks mainframe site. This will ensure no tracking of your personal information.

9) Check your accounts regularly. If you start to see a charge that is not yours, report it immediately. You have a 90 window to report it. If you report it within that specified amount of time, the bank has 48 hours, by law, in which to put ALL the money into your account. This is the part they don’t tell you. They will say, we will research it. Some try to get out of it, but they must, because it is governmentally audited! You ARE protected in such cases. Do not fear.

10) Most of the fraud at financial institutions occur in the night drop boxes and ATM’s. Look, I’ll tell you plainly, if you use the ATM or night drop, you are chancing something in 2 ways. First, it’s the most susceptible to robbery. Secondly, most of the time, those transactions are posted by ONE person… there is usually NO accountability. I’ve seen things, that’s all I can say. While its not the ‘norm,’ it has happened. When it does, what proof do you have?????? Checks you can prove, sure. Cash, you cannot. Don’t take that chance. P.S. If a banker is caught stealing, it’s an automatic fire. IF being the operative word.

11) At most financial institutions, they have some sort of bank check or teller check that is about $1. Some banks greedily charge $3, but most are $1. If you need a cashier’s check, your bank will NOT tell you about this option. Unless you know it walking in, they will NOT OFFER that information. Remember, its about money. Cashiers checks can range in fees from $5-$10 a piece. A teller/bank check is the same thing as a cashier’s check. It’s guaranteed funds. The funds are pulled out right then and there. The only difference is they don’t say “CASHIER’S CHECK” on them. I’ve never seen a recipient company care if it doesn’t have those words on it. So, save yourself some money and opt for teller/bank checks the next time you need one.

OK, one more and then I’ll stop or this will be a book and I’ll have to sell it for $24.95. haha.

12) Do not make a copy of legal monetary bills. Even if its just a gag gift or for personal use. It is against the law and highly punishable.

Disclaimer: These rules apply to most banks and credit unions. They may differ from your local bank, depending on government changes, and individual banking rules. This guide is generally speaking.