Banking, I don't understand. Help me out sages.

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  • Labeeman

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    Oct 11, 2010
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    For the last couple years and maybe longer, I've heard commercials on the radio about how banks can be a great place to get advice and information on your finances. The commercials allegedly have real people talking about how the bank helped them manage their money and make it through a tough time in their lives. What I want to know is what is said to these people to help them. I've been banking for a long time and don't ever recall receiving any information on managing my finances. I've recieved info on loans, credit cards and earning points on your credit card and debit cards, but never any information on how to manage my meager funds in their bank. Most of the info I received was also a way for the bank to make money off of me. I learned about money matters from my parents, family members, school and books I read. Maybe it's me and my jaded outlook on things, but for the average person with average money I can't see a bank reaching out and trying to help you very much. If someone works at a bank and can provide me with some true stories of a bank helping someone please respond. To me, a bank is a semi safe place to keep money to use in your day to day life such as paying bills, financing a purchase and maybe a safe deposit box. If I'm looking for money advice I'd go to a true financial planner ( I know, some banks have those also, but your run of the mill tellers I see do not have this knowledge) Help the beeman sleep better tonight !
     
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    Blue Diamond

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    For the last couple years and maybe longer, I've heard commercials on the radio about how banks can be a great place to get advice and information on your finances. The commercials allegedly have real people talking about how the bank helped them manage their money and make it through a tough time in their lives. What I want to know is what is said to these people to help them. I've been banking for a long time and don't ever recall receiving any information on managing my finances. I've recieved info on loans, credit cards and earning points on your credit card and debit cards, but never any information on how to manage my meager funds in their bank. Most of the info I received was also a way for the bank to make money off of me. I learned about money matters from my parents, family members, school and books I read. Maybe it's me and my jaded outlook on things, but for the average person with average money I can't see a bank reaching out and trying to help you very much. If someone works at a bank and can provide me with some true stories of a bank helping someone please respond. To me, a bank is a semi safe place to keep money to use in your day to day life such as paying bills, financing a purchase and maybe a safe deposit box. If I'm looking for money advice I'd go to a true financial planner ( I know, some banks have those also, but your run of the mill tellers I see do not have this knowledge) Help the beeman sleep better tonight !

    You have to deal with the investment banker which all banks have but first you have to have money.
     

    Labeeman

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    You have all confirmed what I knew, and I don't go to banks for money management advice. It aggravates the $&!+ out of me that they run these commercials.You can bet some of these young kids bite on them and end up going to the bank and are duped into taking out a loan or getting a credit card to " help" them solve their money problems.
     

    LACamper

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    They want you to come for them for advice so they can find a way to cross sell to you... banks are a sales business, so servicing is money lost.
     

    kpm

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    Most of that advice is electronic. Such as my bank has a budget tool and several calculators that show pie charts if you set them up correctly. The basic idea spend less than you make and then you have something to work with. Otherwise the only advice is get a handle on spending which starts with a budget.


    Sent from my iPad using Tapatalk
     

    Akajun

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    I can personally vouch for Brandon Leblanc with LPL Financial /Business First Bank on Coursey. He went over my wifes 401k and helped us clean it up to lessen the management fees, for no charge. He also reviewed what we had been doing on our own with IRA's and other investments and our goals for short term investing and retirement.
    He put us in some mutual funds that have done really well and has in fact told me in the past not to put cash in and wait for a more favorable condition. He does not pester me or try to put me in risky investments.
     

    ultrasonic

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    You have to deal with the investment banker which all banks have but first you have to have money.

    What he said. When you go into a bank you basically deal with salesman that try to get you to make loans, apply for credit cards, etc. But just about every branch has an investment banker that is a register financial advisor. He'll guide on a path but as previously stated 1.) they want to make money off of commissions so do your own diligence and 2.) most of their advice is slow grow extra safe investment vehicles geared towards people that have a large chunk to park there for extended amounts of time so what seems like a small margin to the regular guy is actually a bigger return. If you're reading books on it and doing your own research you can do better with smaller accounts through someone like e-trade who offers most of the same advice for free with much lower commissions.
     

    AustinBR

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    As I have mentioned previously, I worked for a bank for the past five years.

    An experienced banker realizes that helping customers leads to repeat sales. If I were to "upsell" you on a checking account, I might make a dollar or two more off of the account, but you likely won't be happy with something about it and not want to come back to me later for your other banking needs. I can say that over the years, I gave many people basic advice on how to manage their money, build their credit, or save for something important.

    What may seem like basic knowledge to many of you here really isn't basic. Most people don't know how to write checks, develop a plan to save money, build their credit, or leverage debt.

    Traditionally and historically, many people are told that all debt is bad which is a boldface lie told by people who don't know how to leverage debt. That being said, an average joe might not have the same needs as businesses, but using credit is still good. Example:

    Credit cards give points (1% - 5%) that lead to literally free money for using a card. I had plenty of elderly customers who were spending 10k or more on their debit cards monthly, but never considered a credit card because they were brought up "knowing" that credit cards / debt is bad. Yet if they used a reward card at 1% they are making $1,200 back a year for doing literally nothing different and they nevr pay a cent in interest.

    As for other financial advice, banks have qualified individuals to work on everything from basic investing to estate planning and the likes....often for free or much cheaper than seeking an outside professional's advice.
     

    Fred_G

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    Not trying to jerk your chain AustinBR, but unless you are trying to build or maintain a credit score, how is debt 'good'?

    Are there interest and fee free cards that give points?
     

    bigtattoo79

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    Not trying to jerk your chain AustinBR, but unless you are trying to build or maintain a credit score, how is debt 'good'?

    Are there interest and fee free cards that give points?

    I have a couple cash back cards with no annual fee and pay the balance off monthly to avoid the interest "free money".

    Also I find it easier to dispute charges using a credit card rather than a debit card. I carry a debit card but never use it I'd rather someone steal the credit cards companies money over my checking money.

    I think it's funny when people say "credit cards get you in trouble" NO the lack of personal responsibility gets you in trouble!
     

    bigtattoo79

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    Also I deal with a local bank and trust the person I deal with to give me the best possible advice. Twice he has sent me to other banks for better interest rates when he could have easily had my business.
     

    Jmfox3

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    The best help to get for your finances in order is self help. There are good and bad people in every walk of life. The tendency in the money arena is the more you have, the more unscrupulous people will stand in line to take it. The best thing you can do is educate yourself. The first step is to learn micro-economics, topics such as compound interest, loans, savings, CDs, bonds, depreciation, tax liability, inflation, and such. The next step is to learn about the stock market. A 'Random Walk Down Wall Street' is a good book to start with. Back in the day we used to have to know the Dewey Decimal System and go to the library. Today Google is your friend. Good luck and every minute you spend learning the subject is more dollars in your pocket!
     

    AustinBR

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    Not trying to jerk your chain AustinBR, but unless you are trying to build or maintain a credit score, how is debt 'good'?

    Are there interest and fee free cards that give points?

    No worries, that is actually a great question. Quickly though regarding your second question - yes, there are plenty of reward cards that give high percentages of cash back without interest or fees. Just pay them off every month. Also, credit cards offer more protection than debit cards in almost every case. Whenever you sign up for a credit card, they'll send you a benefits guide. Things often included in addition to cash back: Rental car insurance for free, doubled warranty of items you buy, theft protection if stolen in certain time after purchase, etc.

    Regarding your first question, debt can be leveraged by both individuals and businesses for many positive reasons. First, I am not referring to using a credit card to buy items you can't afford or buying cars / houses outside of one's means.

    For a business: Let's say you make widgets, but you only have $100,000 in your checking account, but someone places an order for 50,000 widgets. Each widget costs you $5 dollars to make, but you sell them for $15 dollars each. The client won't pay you until the widgets are delivered. It takes 3 months to make the widgets. The business would use debt (line of credit typically) to fund the $250k it costs to make the 50k widgets. At 5% interest, they are paying roughly $3,125 in interest over the 3 month period it takes to make the widgets. After the widgets are delivered, they pull in $500,000, pay off the $250k principle of the loan, the $3,125 of interest, and have money left over to pay other expenses and themselves in profit. Without having debt (credit) available, they wouldn't have sufficient cash flows to cover their expenses and buy the products to make widgets. This is just a very basic example from a business's standpoint, but one that many don't consider.

    As for an individual, debt can be leveraged in different ways. If you don't have a (reliable) vehicle, debt can be used to fund the vehicle which you can then use to go to / from work and ultimately profit and pay it off. Sure, paying it in full in cash or buying a cheaper car might be a better option for some, but it is not always feasible. Another example is student loans. Paying for college / grad school may not be financially feasible for many, but using student loans can lead to more money in the future and they will pay for themselves.

    The trick with debt in both cases is to pay it down to zero as quickly as possible to not pay unnecessary fees. That is where many people go wrong. They pay the minimum payment and end up paying many times more than their original principal.

    Did that answer your question?
     
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