Bank fees around the world

By Felix Salmon
September 23, 2009
conclusion when it comes to the subject of bank fees:

High prices are directly linked to opaque price information. Therefore, consumers in countries with opaque price structures are likely to pay more for bank accounts.

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The EU, after a long and complicated study which I can’t even find on their website, has come to a simple and powerful conclusion when it comes to the subject of bank fees:

High prices are directly linked to opaque price information. Therefore, consumers in countries with opaque price structures are likely to pay more for bank accounts.

This is a universal law; it’s not confined to the EU. The poster child for high and opaque bank charges is Italy: there, someone who uses their bank account a lot gets charged €831 (over $1,200) a year, compared to just €27 for the same level of service in Bulgaria.

That number includes overdraft fees, of course, which are the cause du jour in the US. Yesterday’s news is kinda funny: as of October 19, Bank of America will “not charge overdraft fees on more than four items per day”. What they don’t mention in the press release is that the cap was increased from five to ten earlier this year: they seem to have adopted the yo-yo model of bank charging, where you maximally gouge your customers until the Senate Finance Committee starts asking questions, and then immediately scurry backwards in a desperate attempt to avoid regulation.

Regulation is still very much necessary, no matter how much BofA, JP Morgan, and others try to avoid it. Anything they announce this week could be unilaterally repealed next week, or next month, or whenever the issue gets forgotten about. A few simple rules would make everything much more transparent and customer-friendly.

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