In most industries, those who use a company’s services or products regularly and pay their bills in full and on time, are considered the best customers. In banking, we think a little differently. Sure, we love customers who use our services regularly. But as far as paying one’s bills in full and on time, well, we don’t really value that so highly. We like lending out money and charging interest and we like charging dubious fees. Take credit cards, for example: Pay less than the full balance and we’ll charge you very high fees, which you agreed to in the tiny print of our agreement. We are allowed to keep charging those high rates on the next month’s charges, and the next, and the next, until you’ve paid in full.
Of course those who we see as our best customers are never paid in full. Run a balance of say, $500 in purchases for 24 months and you’ll end up paying us $715 over 24 months, and that’s assuming every payment is made on time. Every time you pay us even a day late, we get to hit you with high late fees.
We want you to think we like customers who pay in full on time, but they’re kind of PIAs. When they get hit with a weird fee, they march into the bank and demand we reverse it, threaten to take their business elsewhere, blah, blah. We have much better control of those who owe us money and are accustomed to penalties, and high interest. Not only do we make a lot more money from them, but they tend to be afraid to challenge us on any charges, legit or not.
Let’s take a look at some of the ways bankers and their marketing people have figured out how to make more money from their customer, us: