Charging fees on deposits: Ridiculous!Friday, July 30, 2021
I've often wondered why no one has spoken out about the excessive fees charged by local banks.
The fees charged on deposits at one in particular bothers me. Why do banks have to charge customers for making a deposit in local and/or foreign currency? Banks make much of their income by using clients' deposits to offer loans and make investments; therefore, they should seek to make it easier and more desirable for customers to deposit their funds into the banking system, especially foreign currency, which increases the pool of funds at their disposal and gives a boost to foreign currency supplies. Instead, they charge fees for deposits.
A friend visiting from the USA went to the bank to deposit US$ 2,000 into his personal account. He was shocked when he was told about the fee and presented with a copy of a flier explaining fees on deposits.
Out of principle, he decided not to bother making the deposit, and returned to the US with his funds. Isn't this a loss to Jamaica and the banks, especially if there is a multiplier effect? The limited supply of foreign currency matched against the increase in demand for said currency is the reason the Jamaican dollar is constantly being devalued; yet customers must pay to deposit their US dollars at the bank – makes no sense.
Of course, some fees are justified as banks are in business to make money. Some accounts have different rules, for example, a minimum balance might be required to avoid a monthly fee, a cap might be set on a number of free monthly transactions, etc.
Withdrawals tend to attract fees to encourage savings, which is understandable. Customers are also encouraged to use automated banking machines (ABM) for transactions instead of dealing with a teller, but there are times when the use of a teller is required.
Many of these fees do nothing more than stifle the economy and hurt customers, especially small businesses. They are an impediment to economic growth. It doesn't make sense that even when there is an economic slump banks are reporting huge profits.
I've lived and worked in four different countries in the Caribbean and North America, where I have operated different bank accounts. As such, I can say without any reservation: Jamaican banks are the worst when it comes to excessive fees and poor customer service.
Government must impose regulations to force banks to do better and make it more attractive for customers to do business, which will ultimately help the economy.
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