Why do banks charge fees for making deposits?
THE EDITOR, Madam:
I’ve often wondered why no one has spoken out about the excessive fees charged by local banks. One in particular, fees on deposits, bothers me. Why do banks have to charge customers for making a deposit in local and foreign currency? Banks earn by using client deposits to offer loans and investment. They should make it easier and desirable to attract savings into the banking system, especially in foreign currency, which increases the pool of funds at their disposal and give a boost to foreign currency supplies. Instead, they charge for deposits.
A friend visiting from the United States (US) went to this particular 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 make 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 is the reason why the Jamaican dollar is constantly devalued. Yet bank clients must pay, to bring in US dollars to the bank. This makes no sense.
Of course, some fees are inevitable, banks are also in business. Some accounts have different rules, e.g., a minimum balance might be required to avoid monthly fee, or a cap might be set on number of free monthly transactions, etc. Withdrawals tend to attract fees to encourage savings, which is understandable. Customers are also encouraged to use ABM/ATM for transactions instead of dealing with a teller, but there are times when going to a teller is required.
Many of these fees do nothing more than to stifle and hurt customers, especially small businesses, and 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 operated different bank accounts. 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 with banks, which ultimately help the economy.