The war on cash continues.
The Wall Street Journal published a report over the weekend that talks about how United States financial institutions are viewing big cash deposits as being harmful to their overall financial health. In order to circumvent the threat, the big banks are imposing new rules to dissuade customers from depositing cash.
It’s reported that, for instance, State Street Corp. has started charging customers for large dollar deposits for the very first time. JPMorgan Chase & Co has also deterred customers from depositing large amount of cash by charging fees, which has resulted in a reduction of unwanted deposits by $150 billion this year alone.
What’s the reason for this? Financial experts say the banks are being driven to these actions because of low interest rates and heightened regulations since the financial crisis. Indeed, banks don’t want types of cash in their books because it costs too much to maintain (hence the increased fees).
Markets are flushed in cash right now. In the second quarter, domestic deposits in U.S. banks have reached $10.59 trillion, which is up 38 percent from just five years.
Jerome Schneider, head of Pacific Investment Management Co.’s short-term and funding desk, tells the newspaper: “Clients have been put on warning.”
This comes as it was reported that U.S. banks are imposing higher fees just to access your money (SEE: Are U.S. banks quietly imposing capital controls with record ATM, checking account fees?). Not only are ATM fees higher, checking account and overdrafts are very expensive, and many of the benefits that usually come with a checking account (free account minimums) are quickly vanishing.
Now that the greedy bankers do not need our deposits to create debt, they don’t want to be bothered with paying us less than 1% on our savings. My credit union just started to charge $4.95 per month for what used to be free checking. It might be time for me to dump the checking account.