almost a century ago henry ford suggested that it was a good thing that most americans did not know how the banking system worked because if they did there'd be a revolution before the next morning although several decades have passed since it was made the statement attributed to mr ford seems to be as true today as it was in the 1930s this is not to say that the idea of banking is a bad omen no banks do provide us with very useful services and have become an essential part of our lives everyone wants to keep their money where it's safe and secured you probably don't want to put your money under your mattress you also don't want to dig a hole in your backyard to hide your money the truth is that banks are cashing out big time most times at the expense of the unsuspecting public but because the financial institutions operate in complex and rigorous structures some unusual practices are concealed from the prying eyes of the public it doesn't matter which side of the coin you choose we're all in this together one way or the other whether you're taking a loan spending your money or saving it there are numerous ways that the banks make money off of you the sad part is that you do not know that you're being milked the multiple income sources that the banks enjoy could be one of the reason bank stocks have become an investor's delight here are some truths about money the banks don't want you to know the seven truths about money one you're losing money every year you probably have heard that the bank is the best place to keep your money but no one has told you that you're losing money every single year when you keep it in the bank this is not about the fees that you pay on your spending or someone stealing your money it has to do with inflation inflation is the increase in the prices of goods and services over some time what it means is that an item you could buy with a 50 note today would cost slightly higher in about a year and much more in 10 years if you're thinking that the money you have in your account is safe you would expect that the value remains constant over the years or even grows bigger because of interest every investor wants to keep up with inflation but this is not entirely so with most bank accounts on average inflation in the us sits at two percent if your money in the bank yields 0. 05 what it means is that you're losing up to 1. 95 on the value of your money every year i'm not talking about the money you invested in some financial platforms to yield returns rather i'm talking of the money you have sitting idle on your savings or checking account now i hope you're getting some value from this video so far if you are i'd like you to do something right now simply pause this video go ahead and hit the like button and then subscribe to this channel that way you'll be updated anytime we upload inspirational videos such as this one done great let's continue two banks earn from your card transactions first every time you swipe your credit card or debit card and make purchases banks make money through processing fees you may not know this because you were only debited for your actual purchase but the merchant pays the fees the merchant could also have included these fees in the sales price because he wouldn't want his profit to come short let's look at it this way let's pretend you made a purchase of an item at the cost of five hundred dollars and you paid with your card if the merchant is charged three percent on every payment made with a payment card that means a whopping fifteen dollars goes to the bank the bank gets this money just for providing the machines and the convenience for payment do you think the merchant will be glad to have the 15 taken off his profit you're the one paying this fee and i'll show you how let's say the item was supposed to sell at 480 the business owner must have raised the price to 500 the additional 20 will cover the 3 deduction that will go to the bank for card transactions that is taking into consideration that most people would rather pay with their cards secondly the bank makes so much money through your credit card there's the reason the banks offer so many incentives just for you to sign up for a credit card what you probably don't know is that the interest rates on your card can be raised at any time the average interest rate on a credit card is 17 but your bank can decide to make an increase to maybe 18 or 19 they could do this after serving you 15 to 30 days notice often you don't get to read these letters that contain lengthy legal jargon you ignore them so the banks get away with this while feeding fat on your ignorance now if you have compound credit card interests it'll simply continue to accumulate this will eventually work negatively against you if you don't pay off these debts you could be on your way to a difficult place financially i'm not suggesting that the idea of a credit card is bad in itself no the credit card is a useful service that provides convenience for most of us it's become a part of our daily lives but care should be taken so as not to accumulate debts that will be a dangerous place to be be sure to pay off your debts every single month three your money in the bank is not physical you could have tons of money in the bank but these are merely figures and electronic records this is because the banks use your money to do business they give out this money in the form of business loans car loans or mortgages to you your money is with the bank but in reality your money is in other places making extra money for the bank this reality came to play in 2008 during the depression out of panic people went to the banks demanding to withdraw their money but the banks had no money to pay everyone the banks could have that amount in liquidity but in the event of a crisis when everyone makes a run for their money the physical cash will not be there this comes as a result of a policy that is called fractional reserve banking this policy allows your bank to lend out your money to those who need them in the form of loans and mortgages does it mean the banks are not safe to keep your money not at all your money is protected by insurance also the government is there ready to step in should anything go wrong so if you have money in the bank feel free to go to sleep with your two eyes closed only know this having money in the bank is not like putting money in a box where you can access it at any moment your money is busy making money this time not for you but for your bank as an individual you can access your money whenever you want but if everyone wants their money at the same time no one gets it four bankers are not your friends i'm sure before now you thought they were your friends they know you by name they often call you chat you up show you love and adore you they remember your birthdays and celebrate you on your anniversaries voila you're hooked the truth is that these folks don't love you they're simply playing out a well-rehearsed script waiting for the right time to strike a banker friend of mine told me how he could become a friend to a customer he does all the things i mentioned earlier and wins their trust he makes them feel he's on their side and not on the side of the bank he then talks them into taking a loan they didn't even plan for can you imagine taking a 50 000 line of credit you never planned for but that's what happens with this kind of friendship with bankers all they care about is the figures they get targets from their managers and supervisors they don't meet these targets in record time they lose their job my friend also told me how some colleagues lost their jobs because they tried to be genuine because they cared about their clients and showed honest compassion they could not meet targets when the management found out they were shown the exit door so you better be on your guard when next year banker friend comes with bold smiles talking about his company's latest offers before signing up for any loan make sure it's what you need and you want to do it never allow yourself to be blackmailed emotionally with fake friendship 5.
foreign transaction fees another way that most banks make money out of customers is through foreign transaction fees your financial institution will not tell you this but when you travel outside the u. s and make purchases with your creditor debit card you will have additional charges some time ago a friend traveled and spent 15 days outside of the united states when he returned he was shocked when he opened up his bank statement he found a total of a hundred and five dollars and five cents in foreign transaction fee charges most banks won't disclose all of this to you because if you knew you could dump them and go for other money options some credit card programs have coverage in some countries outside of the us in this case if you use their services in the countries that they have coverage there will be no additional charges on your purchases but my friend didn't know this and wasn't part of any such program so he got milked six always check your accounts your bank account is an essential part of your life so don't be too busy or too lazy to check it regularly some hidden charges could be in your record of which you know nothing about anytime you see a charge that's not yours be quick to report it to your bank if you make a report within a 90-day window by law your bank has 48 hours to return the money into your account your bank doesn't like you to know this they may try to delay the process or try to get out of it but you can stick to your guns because you're legally protected they are under obligation to credit your money back to you 7.
