Hacker News Reader

Comment by wyager | Hacker News Reader

American banks don't rip us off to that degree. They aren't nationalized.

The biggest rip-off in American banking is that narrow banking is effectively illegal (not the banks' fault), but HYSAs are starting to get around that.

View on HN

I don’t even feel ripped off by my banks at all. I’m selective about who I open accounts with and there’s no shortage of options.

Until the options go bankrupt

A risk in any market economy, but I feel pretty good about my choices and the options in my area where both First Republic and SVB were have not significantly diminished.

i've never heard the term narrow banking, but after looking it up isn't that effectively what this company is attempting:

https://jiko.io/

It's not. A narrow bank is one that effectively passes on the federal funds rate as interest to a demand checking account. T-bills are a completely different animal.

Merely substituting one low-risk instrument for another doesn't seem like a meaningful difference in this context.

Coincidentally, just two days ago I commented on the distinction to someone suggesting this kind of service: https://news.ycombinator.com/item?id=35790913

There's one critical difference, which is that only chartered banks within the Federal Reserve system can take advantage of the federal funds rate, whereas anyone (including individuals) can buy T-bills.

The Fed, for various reasons, implicitly disallow this type of narrow bank. Several people have tried but the Fed always denied their application to join the system.

Aren’t they basically the same rate?

> to that degree

An important qualifier! I get the impression that probably 95% of consumer deposits in the US either earn zero interest or some comically low rate like 0.00121% that all of the big banks offer on their savings, Interest Checking, and even "money market" accounts. And they also exploit people with monthly fees that can only be waived with minimum balances or by jumping through hoops like debit card usage. And "using other ATM" fees from 2 banks at once usually.

But apparently it could be worse with transaction fees and negative interest!

I feel like the few in the US who are savvy about personal finance have found the banks/CUs (i won't list them to avoid sounding promotional) that don't do any of the above. It doesn't say in the article where they are seeing these outflows actually go. I wonder if Europe also has good banking options that not everyone is aware of.

Only the absolute worst bank accounts in the US have monthly fees. And effectively no credit unions do. I certainly wouldn't sign up for an account that charges me anything, but I've never had to bail on making an account because they would have.

> Only the absolute worst bank accounts in the US have monthly fees

Sure, and those worst banks have massive market share[1]. I'm sure maybe 50-60% of the people with these accounts actually manage to correctly avoid the fees by minimum balances or direct deposits or the "use your debit card 10 times a month" policies. But like, Chase, BofA, Wells Fargo, Citibank... combined, their market share is massive. Chase, BofA and Citi are $12, Wells is $10. All require you to do certain things each month to waive the fee -- which seems easy to me with a steady job and savings, but a lot of people don't have that.

[1] https://wallethub.com/edu/sa/bank-market-share-by-deposits/2...

Reply on news.ycombinator.com