Comment by toomuchtodo | Hacker News Reader

Comment by toomuchtodo | Hacker News Reader

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I bank with a shitty national bank (long story, need access to Zelle/P2P transfers). My emergency fund is 6 months expenses, low 5 figures. 150-200 basis points of interest annually is trivial when 1 or 2 wire fees ($20) to get access to those funds same day blows away all of interest gains over 6-12 months.

If interest rate mattered to folks, more would move to providers offering higher rates (you see this sprouting up with Credit Karma, Personal Capital, and other fintech startups offering cash management accounts because they're making a fee for getting deposits to underlying banks hungry for them). But that doesn't seem to be the case. Which is unfortunate, because it should be not too difficult to offer a checking account with check access, ATM access, unlimited transactions, P2P payments, mobile deposits, and interest bearing (brokerages do it living off the float [1]).

Sidenote: This focuses on personal accounts. Brex's Cash Management account seems to be a great biz banking option for those who qualify. No affiliation. Banking infra in the US sucks, which is why everyone has to be a bank.

[1] https://www.kalzumeus.com/2019/6/26/how-brokerages-make-mone...

If you have 6 months expenses saved, you don't need same day access. You keep 1 month in an immediate access account and 5 in the high yield savings account.

I have had to come up with a dollar amount worth several months of expenses on very short notice (same day, life is unpredictable). YMMV, but there's no reason I shouldn't be able to get those funds within seconds (if I'm adequately authenticated). With a wire, I can get it same day (if executed by ~3pm eastern). I shouldn't need to pay for a wire, or talk to a human unless a fraud signal was detected. I'm not a hedge fund seeking tens of millions of dollars of liquidity of a cash equivalent in a moment. These dollar amounts are trivial (<$100k).

Financial services users should be able to have access to and be able to move their funds through financial plumbing inexpensively and rapidly. Fix the plumbing, raise the bar with regulations on financial services providers to commodify the offerings.

> I have had to come up with a dollar amount worth several months of expenses on very short notice (same day, life is unpredictable).

That seems like a perfect use case for using a credit card to cover the expense and then pay yourself back when your money moves out of the savings account.

I have trouble imagining a case outside of a hostage situation where you would need access to your emergency fund same day.

Two examples: Auto purchase where there was an issue with the banking partner of the vehicle manufacturer. Another is a real estate transaction. Bailing friends out of jail is always cheap (~$500), but not everyone takes credit cards (no chance for the first two scenarios).

Fundamentally, I should not have to explain why I would desire immediate access to my own cash reserves at a moment's notice to excuse broken financial infrastructure.

Your examples seem like cases that can easily be handled by a checking account.

> Fundamentally, I should not have to explain why I would desire immediate access to my own cash reserves at a moment's notice to excuse broken financial infrastructure.

Yes, if you are investing in less-liquid assets to get a better RoI then you absolutely do. If you don't like the terms then you are free to keep your cash in your checking account.

Most people are reluctant to accept large personal checks for one-shot transactions. Most people selling cars on Craigslist won't just take a personal check, for instance. It depends a bit on how reputable you look. You can't write one as bail, or to get your car out of the impound lot.

Most people are reluctant to accept large certified checks or money orders, going back to at least the 90s, because of counterfeits.

Personal and certified checks aren’t immediate or same day settlement, only wires or Zelle transfers are (Zelle transfers can take more than a day depending on the sending and receiving bank).

If the settlement isn’t rapid, you can’t guarantee the funds will actually settle (checks). Lots of situations where someone wants the same guarantee as cash or a wire.

Just bought a brand new car this week from a dealership (US) and the seller refused to accept a check.

They’ll generally accept a cashier’s check. Ours would also accept a personal one as long as you didn’t mind them delaying mailing the title for a few weeks.

I made a down payment on a car with a money order and the dealer yelled at me that the agreement said they weren't allowed. Eventually they relented, because they wanted to complete the deal.

Back in the 90s, I tried to pay for a computer with a certified check and CompUSA treated it as a likely counterfeit.

That’s crazy. I’ve never had that problem, even when buying cars out of state. Were you paying the full amount by check or something?

Yes, was attempting to pay full amount. Couldn't remember my PIN to unfreeze my credit, and just seemed like it would be easier since I was in a position to pay in full.

That makes somewhat more sense. Trading a signed title without a lien for a check places a lot of risk on the dealer. Although there are ways to mitigate this, maybe the dealer in your case didn’t feel like bothering or it didn’t occur to them.

I don't think the question is so much asking "why", but rather "what" does "access to my own ... reserves at a moment's notice" even mean in a debt-based financial system?

Writing a check is instantaneous, but you obviously don't mean that.

If you're talking about wires and the like, then what you're really paying for is the sending institution taking on liability if there turns out to be a cascading problem.

People buy cars in Europe using debit cards, at least in the UK.

I’ve bought one with a credit card in the US.

I wouldn't expect Shelby, Mercedes, and their sisters to be held for cash every day myself, but if you really want to bring them home one of the most worthwhile options is cashthedayofthesaleasiswhereisnowarrantiesofany kind.

http://www.classic-carauction.com/featured-cars?auctionid=10...

If you're buying a classic car with funds directly from your emergency fund, then more power to you I guess but maybe you should be less impulsive with money set aside for emergencies.

Personally, if I'm expecting to make a large cash purchase I have more than a few days notice.

Many people plan poorly and have to sell collectibles quickly for immediate cash. I know people who buy and sell cars purchased from folks who need money quickly (matter of hours) and will get crazy deals simply because they have cash on hand on eg a Sunday evening.

That particular auction is coming up in a few days.

Much more within reach to bid on a regular used car at the common auctions that regular used car dealers buy from.

Or you could purchase more leisurely from the dealer on his terms.

Either way their offices will often display a tattered old sign: _Cash Talks and BS Walks_.

You should see how easy it is to do these things in the Netherlands. No charge to wire money to an individual or business. No transaction cost for paying by card. Pay online with ideal for 0%, just scan qr code with bank app. Simple and easy.

Europe in general would be my example for how banking should be done.

Would you be willing to go into more detail on why banking is better in Europe? They seem to have their own problems, too.

If France is part of Europe, then no f’ing way. It’s a nightmare: arbitrary limits on debit cards, large transfers have to be done in person at your specific branch. The security requirements are Byzantine. For example, to get a new pin code, they actually mail you paper, you can do it in a branch. International money transfers require permission (only obtained at your specific branch.) They charge a monthly fee to have a Visa debit card and to get a “Gold” version with higher limits, you have to pay them more. Paper checks are still vastly preferred in France (for paying school fees, etc.) Banking in France is just one step above banking in Korea or China. French bank fees make American fees look positively discount by comparison.

That you have to go into your specific physical branch to do certain things is ridiculous. I can go into any Chase in the US and do anything I could do at my normal “home” branch.

N26 (a German bank) was vastly superior but even that had limitations, especially with moving money around internationally.

The grass is always greener on the other side.

YMMV I guess. I'm in France too and none of those points apply to my experience (except the monthly fee for the debit card and the snail mail for the new PIN). I have not set foot in my physical branch in 10 years, and have not written a paper check since 2011.

I'm from France and I'm using an online bank. Almost none of these apply to me - yes the pin code and the card come by mail but I can transfer arbitrary amounts online, I have a free gold card, there are basically no fees at all: the account is free, the card is free, transfers are free, I don't think this account cost me anything at all. I had to open the account with a significant amount to get the gold card but you can open it with a much lower amount or by receiving your salary there, and the only difference is that you get a regular card instead.

The only downside is that you don't have a physical branch you can go into but you can do basically anything online without ever interacting with anyone, or at worst you can always call them. Those are real banks btw, not pseudo-bank fintech companies.

I think what you are looking for is a direct bank. It's weird to complain about having to go to a branch when you sign up for a bank account at a bank whose primary selling point is the availability of a local branch.

So curious how he banks there make money?

With the pile of cash they hold for clients.

I'm sure they do in North America too, and make orders of magnitude more from it than for charging monthly or transaction fees. But if everyone else charges those, why not make that bit extra too?

It just needs some 'disruptor' to do it for free and drive the rest of them down, as is happening both there and here in Europe with trading accounts (where most money is made from order flow, but traditionally, why not make a bit extra from commission too?).

For individual mass market the big driver is loan margins, both for home mortgages and various short-term loans.

But the improvement in payments was mostly driven by legislation (e.g. the Payment Services Directive from 2007 with most of implementation at 2012) without which banks were quite happy to offer payments as slow and expensive as they could as it was too profitable for the industry to voluntarily agree to disrupt this, especially since most payments are cross-bank and so a single "defecting" institution can't simply offer cheap&fast payments if others don't want to play ball.

So I don't think that there's any way how USA financial industry might get to a similar point if gov't doesn't decide to force them (which might be taboo for many USA politicians) - I'm certainly convinced that European financial institutions would not have reached this point currently if they weren't forced to do so despite all the lobbying.

With 1.6% interest rates for mortgages... I don't know how dutch banks make money.

They sell insurance and offer consumer investment accounts -- which are not permitted for us citizens!

I don't know anything particular about the Dutch market, but some rough estimates:

Current 3m euribor is -0.4% so 1.6% interest rate means 2% margin. Assuming that your initial costs of selling/assessing/processing the mortgage are covered with fees, something like 0.5% would be enough to cover the main (non-systemic) risks and expenses for decent quality mortgages, so you get 1.5% of pure profit; for every billion in your portfolio you'd get 15 million profit each year; Dutch banks have 500B of housing loans so that's a capacity of something like 7-8 billion of profit per year from housing loans alone.

And various short-term loans have lower volumes, but much higher interest rates and room for profitability.

Looking at the stats in https://www.statista.com/topics/3442/the-banking-sector-in-t... it's clear that the net interest income dominates, it's something like 5x the fee income.

Banks usually add a flat percentage fee on top of the current interest rate. Lower interest rates mean people are willing to borrow more so low interest rates are beneficial to banks.

All of Europe, afaict. It's often so baffling to read about finance/payments in North America, ahead in other ways of course somehow that sector has just completely stagnated, from a consumer perspective anyway.

There is no transaction cost to pay with a card in the US either. ACS transfers are free and, if you have the right account, wires can be free as well. I bet at that Netherlands bank a non-SEPA wire isn’t free. There are plenty of options for “good” bank accounts in the US, they just aren’t always obvious.

What do you mean, no transaction costs? What are ACS transfers?

Can you share a "good" bank account?

I've moved after 36 years in the states -- and was shocked at the quality of ING Bank.

If you have a checking account with the same bank you keep your emergency fund in then you can access the funds at any time with an online transfer and a check. (Discover & Ally offer checking accounts) It doesn't have to be your main checking account.

Same with Alliant Credit Union.

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