How Banking has Changed!

This is Darnell's cash outlay for the month of April 2012.

The information above was automatically generated by my bank.


I can remember back in the 1950s, my father took me down to 8th and Amity in Homestead, Pa. to open a savings account at People’s National Bank. I was about the same age as my grandson Daniel and acted just like him. I opened my checking account at age 19 at that same bank. Banking has changed in the last 50 years. They posted my deposits and withdraws in my savings book. They also posted my yearly or semiannual interest in my book. We did not have personal computers to help us with that work. The bank used a very powerful computer, state of the art at the time using 8K of memory and filled a large room. Today, your cell phone uses far more than 8K of memory.

At least every month and sometime twice a month, I would have to balance my check book, accounting for all outstanding checks and withdraws. I would have to post my checks that I wrote in my check book. Plus I had to make sure that I posted all deposits including my paychecks. If you did not balance your check book, chances are that you will over draw your checking account and pay as much as $50 per bounced check. If you did not want to pay these fees you better maintain a balanced check book. Many banks started charging a fee just to have a checking or savings account starting in the 1980s.

It is 2012 not 1962 and I have not had to balance a check book in years. Because of computers at home and in the banks, all that is done for me. I can use my computer at home or at work to monitor my banking activities. My bank keeps up to the minute all my deposits and withdraws. I write very few checks but even these checks are credited to my account within two weeks. I just keep track of the checks that I write and wait until they show up in my account. In the month of April I wrote two checks. I mailed one check to pay for my car insurance. That one took a week to show up in my checking account. The other was because I needed cash so I wrote myself a check and cashed it at my bank, it showed up the next day. I have my rent and utilities taken directly out of my checking account. When they do, it shows up the same day.

So you may ask, what about the rest of my bills such as food, gas, car maintenance, eating out, clothing, and etc.? I use my credit card. My credit card company takes care of all my transactions. I can logon to my credit card account and see what and how much I spent on credit. I stay within a monthly budget and this helps me maintain that budget. In April I spent $1,686.25 in everyday items. That is 59% of all my spending for the month. My rent was only 24% and my utilities were 3% due to the warm weather in March. I can check each of these categories individually at any time that I want.

This is how banks changed and did not tell you about it!

Click on this short news video and see how the bank slowly put it to you.

http://www.huffingtonpost.com/2012/04/27/robert-whitten-bank-of-america_n_1458788.html?icid=maing-grid7%7Cmain5%7Cdl4%7Csec1_lnk1%26pLid%3D155914

How much does all this cost?

Most people pay monthly for a checking account. They pay as much as 36% interest on their credit card account. So many people are paying as much as $300 or more per year just to use their own money.

Except for individual checks and cash, all other money such as Pension and Paychecks are deposited automatically into my checking account. I move money  in and out of the brokerage firm. I buy everything with a credit card and the bill is paid by the bank automatically once a month. The bank pays my rent and utilities automatically once a month. I can monitor banking, brokerage, and credit cards at any time of day. Money is moved to my savings account from checking twice a month automatically. Not only is all this done for free but my brokerage firm, bank, and credit card companies pay me cash for being a customer.

I use a checking account from a bank that gives me free checking. I pay off my balance on my credit card every month so my credit is free. A benefit of that is that my credit rating is and stays above 800 points and I can buy whatever I want or need without the worry of my credit being not good enough. I get cash back from my credit card account that I place into my checking account once a year. In April, I paid less than $1 for postal stamps.

I set my checking account up to place money in my savings account every time I get paid. At the end of the year, I take that money and place it into my IRA and buy bonds giving me 7% to 20% interest. That interest is tax deferred. The yearly contribution money that I put into my IRA, I deduct it from my yearly income that I report to the IRS. That reduces the taxes that I pay and that savings goes back into my savings account for next year’s IRS contribution.

So in my banking situation, the credit company pays me, the bank pays me interest, the IRS pays me, and the corporations that I invest in pay me.

The question that you should be asking yourself, are you paying people for you using your own money or are they paying you?