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Minimum balance requirements? Why is that a thing?
by jeltz 4y ago
Minimum balance requirements? Why is that a thing?
- kube-system 4y agoBanks make money by lending on deposits. If you have no deposits, they can't make any money. Although, almost universally, banks will allow you to pay a few dollars per month for your account instead. But, people who don't have very much money usually don't have much of a need to spend spend money for a service to hold on to their money, because they don't have any.
- kwhitefoot 4y agoBut it still needs an explanation because European banks don't charge for a current account.
- kube-system 4y agoI don't think a few dollars here and there is not really indicative of a huge difference in anything but product/marketing strategies and consumer preferences. Banks have a lot of different fees that vary not only between continents, but between banks that literally sit across the street from each other.
- eru 4y agoThere's lots of other differences. For example historically and until fairly recently, most American banks were prohibited from having more than one branch. In total. That's called unit banking. And that's why you have those small-town American banks, and national chains almost everywhere else. Obviously, that bank with only one location is much more dependent on the fortunes of its only location. This makes for a hilariously brittle financial system.
- Scoundreller 4y agoI thought most European banks do charge for basic accounts? "Free" accounts seems like a big US thing because there's lots of competition between a highly fractionated banking industry. Something like 4000 banks in USA and next biggest is Russia with ~400 https://www.helgilibrary.com/charts/what-country-has-the-most-banks/ https://www.helgilibrary.com/charts/what-country-has-the-mos... Reviewing some traditional French banks and their "mobile" offerings are still 2EUR/month, and students can get a 1EUR/month plan.
- kwhitefoot 4y agoPerhaps it's just UK and Norway then
- aidenn0 4y agoSo they can make money charging you fees when you go under the minimum? /S
- heavyset_go 4y agoNo sarcasm needed, this is a big reason.