Ephron writes: "Why are the banks paying only 0.4 percent interest on a savings account if they can afford to open offices on every other block in Greenwich Village?"



Banks offer historical low, almost microscopic interest rates on savings accounts. (photo: Jason Ford/The Economist)

Banks Taketh, but Don't Giveth

By Delia Ephron, The New York Times

anks are eating up all the real estate in my neighborhood. I live on a basically residential street, and within three and a half short blocks of my house are eight banks: two Chase, one Wells Fargo, one Citi, one HSBC, one Bank of America, one Sovereign and one Capital One. Go two more blocks and there are 10 banks (one more Chase and one more Citi).

Why are the banks paying only 0.4 percent interest on a savings account if they can afford to open offices on every other block in Greenwich Village?

The other day I was catching up on balancing my account and realized that, for the last six months, I had earned about $4 in interest but had been charged $35 a month for service.

I went to the bank at the corner (the southwest corner). "This is insane," I said.

The banker explained that I had a service charge because I didn't maintain a high enough balance.

"At this rate I will have no balance. Besides, what about my C.D.? I have a C.D. here."

"Oh," he said, looking it up on the computer. "Someone forgot to bundle that in."

"Reverse the charges," I said, and he said that they would reverse three months but not six. To get all six reversed I had to go to my originating branch.

"This is my originating branch," I said.

"No, it isn't."

"Yes, it is. I opened my account here. I live down the block."

"Sorry. You have to go to your originating branch at 79th and Broadway."

"Just call them and tell them to reverse it."

"You have to do it in person."

Now, I had shut down an account on the Upper West Side about a decade ago and, after a six-year break, opened a new one when I moved downtown. But even if there was some justification for their confusion, that wasn't the point.

"There are three branches within walking distance, but I have to take two subways to reverse my charges? That is insane."

Insane is what I said, but actually it was fishy.

At that point I threatened to withdraw my meager savings from the bank. The bank manager appeared and reversed the charges for all six months, and gave me his card. "Let us invest for you," he said.

"Why would I let you do that?"

"Because you're not earning anything on your money."

Not the next day, but practically, my husband went to his bank's A.T.M. at the corner (the southeast corner) to withdraw money from his business account, and his card, which he hadn't used for a while, was rejected. He went into his bank.

"You're not on the account," he was told.

"Who is?"

"No one," said the banker. "But how is that possible?" said my husband. "I've had this account for 30 years. You won't even open an account without a signatory."

"The computer must have lost your name."

"How?"

After pressing a few buttons on her keyboard and scrolling around, she gave up and speculated that this must have happened when Wells Fargo ate Wachovia. "You have to prove that the company is yours," she said. "Until then, you can deposit money but you can't withdraw."

Proving it involved a call to his lawyer, who had to locate my husband's articles of incorporation in storage, and a bill for $145, which - after my husband threatened to withdraw his money - the bank agreed to pay.

"This is insane," he told them, but later pointed out that actually, from the bank's point of view, it was brilliant: a bank where you can only deposit.

Which perhaps explains what all these new branches are for. Since no one actually needs to go into a bank to withdraw money, simply to the A.T.M., the banks must be in the business of taking our money but not in the business of giving it back.

I don't have credit card debt because Suze Orman advises against it, but I was having lunch with a friend the other day, who was a wreck because her bank charges 18 percent interest. There was no way she could ever pay down her credit card debt. So I was thinking that all of us earning 0.4 percent could instead loan money to our friends at 0.5 percent. It was a bit odd thinking of myself as a benevolent loan shark, but, hey, my friend would get out of debt, I would earn $5 a month instead of $4, and the banks would make so much less money that they would have to close half their branches and give us our city back.

I mentioned the idea to my accountant, who told me it was insane.

"You can't trust your friends," he said.

Delia Ephron is the author of the forthcoming novel "The Lion Is In."